What changed in this filing

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Item 9A. Controls and Procedures

2026-02-12 compared with 2025-02-14 · 293 added, 293 removed, 1149 unchanged (34% of the section changed)

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Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of December 31, 2025.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2024, the end of the period covered by this annual report on Form 10-K (Annual Report), to ensure that the information required to be disclosed by us in the reports that we file or submit under the

Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2025, the end of the period covered by this annual report on Form 10-K (Annual Report), to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

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During the fiscal quarter ended December 31, 2025, none of our directors or officers informed us of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Furthermore, during the fiscal quarter ended December 31, 2024, we did not adopt or terminate a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Furthermore, during the fiscal quarter ended December 31, 2025, we did not adopt or

terminate a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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Polymeropoulos, M.D.

/s/ Kevin Moran Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) February 14, 2025

/s/ Kevin Moran Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

February 12, 2026

/s/ Richard W.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowances for the Medicaid Drug Rebate Program

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(ii) comparing the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate;

and (iii) testing, on a sample basis, rebate claims processed by the Company, including evaluating those claims for consistency with the statutory or contractual terms of the Medicaid Drug Rebate Program.

Income Taxes - Realizability of U.S.

Federal Deferred Tax Assets

As described in Note 15 to the consolidated financial statements, the Company has approximately $81.4 million of net deferred tax assets as of December 31, 2024, of which a significant portion relates to the U.S.

federal jurisdiction.

The Company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence.

Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized.

The analysis is highly dependent upon historical and projected pretax income.

As of December 31, 2024, after considering all available positive and negative evidence, including but not limited to cumulative income in recent periods, historical, current and future projected results and significant risks and uncertainties related to forecasts, the Company concluded, consistent with prior periods, that it is more likely than not that substantially all of its deferred tax assets in the U.S.

are realizable in future periods.

The principal considerations for our determination that performing procedures relating to the realizability of U.S.

federal deferred tax assets is a critical audit matter are (i) the significant judgment by management in determining whether the U.S.

federal deferred tax assets are more likely than not to be realized in the future and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realizability of U.S.

federal deferred tax assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s assessment of the realizability of U.S.

federal deferred tax assets, including controls over projected results, including projected pretax income.

These procedures also included, among others, (i) evaluating the positive and negative

evidence available to support management’s assessment of the realizability of U.S.

federal deferred tax assets;

(ii) testing the completeness and accuracy of underlying data used in management’s assessment;

and (iii) evaluating the reasonableness of management’s projected results, including projected pretax income.

Evaluating the reasonableness of management’s projected results of the Company involved considering (i) the current and past performance of the Company;

(ii) the consistency with external market and industry data;

and (iii) the consistency with evidence obtained in other areas of the audit.

and (iii) testing, on a sample basis, transactional data underlying management’s estimate including but not limited to channel inventory and rebate claims processed by the Company, including evaluating those claims for consistency with the statutory or contractual terms of the Medicaid Drug Rebate Program.

/s/ PricewaterhouseCoopers LLP

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721,264 712,706

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit ( 394,766 ) ( 174,292 )

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Total operating expenses 367,273 239,432 206,592

Income (loss) from operations

Loss from operations

( 151,168 ) ( 40,660 ) ( 13,952 )

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1 ( 40 ) ( 326 )

Other comprehensive income (loss), net of tax

Other comprehensive income, net of tax

555 104 1,163

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Net income — — — — 2,509 2,509

Other comprehensive loss, net of tax — — — ( 1,018 ) — ( 1,018 )

Other comprehensive income, net of tax

— — — 1,163 — 1,163

Balances at December 31, 2023 57,534,499 58 700,274 ( 30 ) ( 155,392 ) 544,910

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Stock-based compensation expense — — 12,432 — — 12,432

Net income — — — — 2,509 2,509

— — — — ( 18,900 ) ( 18,900 )

Other comprehensive income, net of tax

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Balances at December 31, 2024 58,310,644 58 712,706 74 ( 174,292 ) 538,546

Issuance of common stock from the exercise of stock options and settlement of restricted stock units

Issuance of common stock from the exercise of stock options and settlement of restricted stock units, net of shares withheld for taxes

790,986 1 ( 916 ) — — ( 915 )

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Amortization of premiums and accretion of discounts on marketable securities ( 2,053 ) ( 6,994 ) ( 8,799 )

Loss (gain) on sales of marketable securities

Loss on sales of marketable securities

Intangible asset amortization 7,007 7,273 2,090

Right-of-use asset amortization

3,807 1,667 1,324

Deferred income taxes

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Principal payments on finance leases

Proceeds from exercise of stock options — — 734

( 1,991 ) ( 155 ) —

Tax obligations paid in connection with settlement of restricted stock units

Net cash provided by (used in) financing activities

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The Company commenced its operations in 2003.

The Company’s commercial portfolio is currently comprised of three products:

Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease.

The Company’s commercial portfolio is currently comprised of four products:

Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease and NEREUS TM for the prevention of vomiting induced by motion (collectively, our commercial products).

HETLIOZ ® is the first product approved by the United States Food and Drug Administration (FDA) for patients with Non-24 and for patients with SMS.

In addition, the Company has a number of drugs and/or additional indications for current products in development, including:

• Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia;

• Bysanti TM (milsaperidone), the active metabolite of Fanapt ® (iloperidone), for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD);

• Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia and hypertension;

• Bysanti TM (milsaperidone), the active metabolite of Fanapt ® , for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD);

• HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24;

• PONVORY ® (ponesimod) for the treatment of psoriasis and ulcerative colitis;

• Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis;

• NEREUS TM (tradipitant) for the prevention of vomiting induced by GLP-1 receptor agonists, the treatment of gastroparesis and the treatment of atopic dermatitis;

• Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP);

• VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis and hematologic malignancies and with potential use as a treatment for several oncology indications;

• VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and onychomycosis and with potential use as a treatment for several oncology indications;

• Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera;

• VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders;

• VQW-765, a small molecule alpha-7 nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders;

• Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy.

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Cash and cash equivalents $ 84,851 $ 102,316

Restricted cash included in non-current inventory and other 469 469

Restricted cash included in:

Prepaid expenses and other current assets

Non-current inventory and other

Total cash, cash equivalents and restricted cash

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The Company builds demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage and generic competition.

The Company capitalizes inventory costs associated with its products upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized;

The Company capitalizes inventory costs associated with its products when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized;

otherwise, such costs are expensed as research and development.

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See Note 3, PONVORY ® Acquisition , for further discussion of the Company’s acquisition of the United States (U.S.) and Canadian rights to PONVORY ® from Actelion Pharmaceuticals Ltd.

(Janssen), a Johnson & Johnson Company, which the Company accounted for as an asset acquisition under ASC 805-50.

(Janssen), a Johnson & Johnson Company, and Note 11, Commitments and Contingencies , for further discussion of the Company’s exclusive global license agreement with AnaptysBio, Inc.

(Anaptys) under which it acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab, both of which the Company accounted for as asset acquisitions under ASC 805-50.

Intangible Assets

Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as research and development expense.

Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as research and development expense, unless, based on management judgment, future commercialization is considered probable.

Obligations for milestone payments to other pharmaceutical companies that may result in a capitalized intangible asset are recognized when it is deemed probable that the milestone event will occur.

In the event a product has been approved by the FDA or an alternative future use exists for a product, patent and license costs are capitalized and amortized on a straight-line basis over the estimated useful economic life of the related product patents.

For intangible assets related to HETLIOZ ® , the estimated useful life is through 2035, which is the estimated economic useful life of the related product patents.

For intangible assets related to HETLIOZ ® and NEREUS TM , the estimated useful life is through the estimated economic useful life of the related product patents.

Useful lives for acquired intangible assets accounted for under ASC 805 are generally estimated based on the market participant methodology.

For intangible assets related to PONVORY ® , the estimated useful life is through 2042, which is the estimated economic useful life of the related acquired product patents.

For intangible assets related to PONVORY ® , the estimated useful life is through the estimated economic useful life of the related acquired product patents.

Intangible assets related to Fanapt ® have been fully amortized on a straight-line basis to 2016.

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The Company determines if an arrangement contains a lease at inception.

Determination of whether a lease is a finance or operating lease is made at lease commencement.

Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease.

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Total net product sales $ 216,105 $ 198,772 $ 192,640

The Company’s HETLIOZ ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods.

The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023.

During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024.

Going forward, HETLIOZ ® net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers or may be variable depending upon when specialty pharmacy customers need to purchase again.

HETLIOZ ® net product sales will likely decline in future periods, potentially significantly, related to continued generic competition in the U.S.

The Company constrained HETLIOZ ® net product sales for the years ended December 31, 2024 and 2023 to an amount not probable of significant revenue reversal.

The amount of revenue recognized during the year ended December 31, 2024 related to changes in estimates on revenue constrained during 2023 was $ 1.3 million.

HETLIOZ ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

The Company's PONVORY ® net product sales for the year ended December 31, 2024 include approximately $ 3.0 million of variable consideration that may be subject to dispute but that the Company believes is not probable of significant revenue reversal.

Since the entrance of generic competition in the first quarter of 2023, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition.

The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration.

HETLIOZ ® net product sales have been and may continue to be variable depending on when specialty pharmacy customers purchase again.

Further, HETLIOZ ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

An amount of variable consideration related to Fanapt ® net product sales is subject to dispute, of which approximately $ 3.0 million was recognized for the three months ended December 31, 2025.

An amount of variable consideration related to PONVORY ® net product sales is subject to dispute, of which approximately $ 3.0 million was recognized for the three months ended December 31, 2024.

The Company recognized $ 5.5 million and $ 3.2 million of net product sales during the years ended December 31, 2025 and 2024, respectively, for changes in estimates on variable consideration for performance obligations satisfied in previous periods across all the Company’s commercial products.

The amount of net product sales recognized as a result of changes in estimates on variable consideration during the year ended December 31, 2023 was not material.

Fanapt ® is available in the U.S.

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for distribution primarily through a limited number of specialty distributors and specialty pharmacies.

The Company invoices and records revenue when its customers, wholesalers, specialty pharmacies and specialty distributors, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer.

which control is transferred to the customer.

Revenues and accounts receivable are concentrated with these customers.

Outside the U.S., the Company has a distribution agreement for the commercialization of Fanapt ® in Israel and sells HETLIOZ ® in Germany.

Receivables are carried at transaction price, net of allowance for credit losses.

Receivables are carried at transaction price paid by the wholesalers, specialty pharmacies and specialty distributors, net of estimated prompt pay discounts and allowance for credit losses.

Payment terms differ by customer, but are based on customary commercial terms and typically range between thirty and sixty days.

Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.

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Customer E * * 20 %

Customer F * * 16 %

Total net product sales from major customers

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Customer E * 18 %

Customer F * *

Total accounts receivable, net from major customers

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If actual results in the future vary from the Company’s estimates, it adjusts its estimates in the period identified, which would affect net product sales in the period such variances become known.

During the year ended December 31, 2024, the Company constrained the variable consideration for HETLIOZ ® net product sales.

The constrained revenue relates to the uncertainties of payor utilization, patient demand and chargeback and rebate amounts, including Medicaid, related to the elevated levels of inventory on hand at the specialty pharmacies.

Reserves for variable consideration are classified as product revenue allowances on the Consolidated Balance Sheets, with the exception of prompt-pay discounts which are classified as reductions of accounts receivable.

The reserve for product returns for which the product may not be returned for a period of greater than one year from the balance sheet date is included as a component of other non-current liabilities in the Consolidated Balance Sheets.

Uncertainties related to variable consideration are generally resolved in the quarter subsequent to period end, with the exception of Medicaid rebates, which are dependent upon the timing of when states submit reimbursement claims, Medicare inflationary rebates, which are expected to be billed on an annual basis beginning in 2025, and product returns that are resolved during the product expiry period specified in the customer contract.

Due to increased inventory stocking at specialty pharmacy customers of HETLIOZ ® in 2024 and 2023, the time it takes to resolve these uncertainties could be longer than the Company has historically experienced.

Uncertainties related to variable consideration are generally resolved in the quarter subsequent to period end, with the exception of Medicaid rebates, which are dependent upon the timing of when states submit reimbursement claims, Medicare inflationary rebates, which are billed on an annual basis beginning in 2025, and product returns that are resolved during the product expiry period specified in the customer contract.

Furthermore, inventory stocking of HETLIOZ ® at specialty pharmacy customers since the entrance of generic competition in early 2023 has resulted in longer periods to resolve these uncertainties related to variable consideration.

The Company currently records sales allowances for the following:

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The Company expects that these direct customers will earn prompt payment discounts and, therefore, deducts the full amount of these discounts from total product sales when revenues are recognized.

Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program as well as contracted rebate programs with other payors, including the Medicare Part D inflationary rebate effective October 1, 2022.

Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program as well as contracted rebate programs with other payors, including the Medicare Part D inflationary rebate.

Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid and Medicare.

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• Medicare Part D Rebates:

The Medicare Part D prescription drug benefit requires manufacturers to fund approximately 70 % of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs.

The Company accounts for the Medicare Part D coverage gap using a point of sale model.

Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when the Company has validated the insurance benefits.

Prior to January 1, 2025, the Medicare Part D prescription drug benefit required manufacturers to fund approximately 70 % of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs.

The Company accounted for the Medicare Part D coverage gap using a point of sale model.

Beginning January 1, 2025, the Medicare Part D coverage gap discount program was replaced with a new discounting program under the Inflation Reduction Act of 2022.

The Medicare Part D benefit redesign is expected to result in higher discounts for our Medicare payor segment relative to the current Medicare Part D prescription drug coverage gap discount program.

Under the redesigned Medicare Part D program, applicable drugs dispensed to applicable beneficiaries will be subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase.

Manufacturers may be eligible for phase-in of discounts, such as for applicable beneficiaries who are Low Income Subsidy (LIS) eligible under section 1860D-14(a) of the Social

Security Act.

The Company is a specified manufacturer whose applicable drugs for applicable beneficiaries who are LIS eligible will be subject to lower applicable discounts during the phase-in period.

The Medicare Part D benefit redesign has resulted in overall higher discounts for our Medicare payor segment relative to the previous Medicare Part D prescription drug coverage gap discount program.

Under the redesigned Medicare Part D program, applicable drugs dispensed to applicable beneficiaries are subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase.

Under the Medicare Part D benefit redesign, the Company is a specified manufacturer whose applicable drugs for applicable beneficiaries who are Low Income Subsidy eligible under section 1860D-14(a) of the Social Security Act are subject to lower applicable discounts during the phase-in period.

Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when the Company has validated the insurance benefits.

• Service Fees:

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These fees are based on contracted terms and are known amounts.

The Company accrues service fees at the time of revenue recognition, resulting in a reduction of product sales and the recognition of an accrued liability, unless it is a payment for a distinct good or service from the customer in which case the fair value of those distinct goods or services are recorded as selling, general and administrative expense.

The Company accrues service fees at the time of revenue recognition, resulting in a reduction of product sales and the

recognition of an accrued liability, unless it is a payment for a distinct good or service from the customer in which case the fair value of those distinct goods or services are recorded as selling, general and administrative expense.

• Co-pay Assistance:

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There was no right of return asset as of December 31, 2025 or 2024.

The following table summarizes activity for product returns as of and for the years ended December 31, 2024, 2023 and 2022, all of which relates to sales of Fanapt ® :

The following table summarizes activity for product returns as of and for the years ended December 31, 2025, 2024 and 2023, all of which relates to sales of Fanapt ® and PONVORY ® :

(in thousands) Reserve for Product Returns

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Balances at December 31, 2025 $ 6,369

The Company’s balance of rebates and chargebacks was $ 63.4 million and $ 49.9 million as of December 31, 2025 and 2024, respectively.

The Company’s balance of discounts, returns and other product allowances was $ 14.7 million and $ 12.4 million as of December 31, 2025 and 2024, respectively.

Cost of Goods Sold

Cost of goods sold includes royalties payable, the cost of inventory sold, costs to write down inventory to net realizable value, manufacturing and supply chain costs and product shipping and handling costs related to sales of HETLIOZ ® and Fanapt ® to the Company’s distribution partners.

Cost of goods sold includes royalties payable, the cost of inventory sold, costs to write down inventory to net realizable value, manufacturing and supply chain costs and product shipping and handling costs related to sales of its commercial products to the Company’s distribution partners.

Research and Development Expenses

Research and development expenses consist primarily of fees for services provided by third parties in connection with the clinical trials, costs of contract manufacturing services for clinical trial use, milestone payments made under licensing agreements prior to regulatory approval, costs of materials used in clinical trials and research and development, costs for regulatory consultants and filings, depreciation of capital resources used to develop products, related facilities costs, and salaries, other employee-related costs and stock-based compensation for research and development personnel.

The Company expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval.

Upon and subsequent to FDA approval, manufacturing and milestone payments made under license agreements are capitalized.

The Company generally expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval.

Upon and subsequent to FDA approval or if, based on management judgment, future commercialization is considered probable, manufacturing and milestone payments made under license agreements are capitalized.

Milestone payments are accrued when it is deemed probable that the milestone event will be achieved.

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Selling, general and administrative expenses consist of salaries, other employee-related costs and stock-based compensation, and facilities and third-party expenses.

Selling, general and administrative expenses are associated with the

activities of the corporate, finance, accounting, information technology, business development, commercial support, trade and distribution, sales, marketing, legal, medical affairs and human resource functions.

Selling, general and administrative expenses are associated with the activities of the corporate, finance, accounting, information technology, business development, commercial support, trade and

distribution, sales, marketing, legal, medical affairs and human resource functions.

Additionally, selling, general and administrative expenses include an estimate for the annual Affordable Care Act fee.

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The Company recognizes the expense over the award’s vesting period.

The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method.

The grant date fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method.

As stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

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Advertising Expense

The Company expenses the costs of advertising, including branded promotional expenses, as incurred.

Branded advertising expenses, recorded in selling, general and administrative expenses, were $ 1.9 million, $ 0.5 million and $ 2.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company expenses the costs of advertising, including branded product promotional expenses, as incurred.

Branded product advertising expenses, recorded in selling, general and administrative expenses, were $ 28.6 million, $ 1.9 million and $ 0.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Foreign Currency

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The Company’s products under development require approval from the FDA or other international regulatory agencies prior to commercial sales.

There can be no assurance the products will receive the necessary clearance.

If the Company is denied clearance or clearance is delayed, it may have a material adverse impact on the Company.

There can be no assurance the products will receive the necessary approval.

If the Company is denied approval or approval is delayed, it may have a material adverse impact on the Company.

The Company’s products are concentrated in rapidly changing, highly competitive markets, which are characterized by rapid technological advances, increasing generic competition, changes in customer requirements and evolving regulatory requirements and industry standards.

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Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which is intended to provide enhanced segment disclosures.

The standard will require disclosures about significant segment expenses and other segment items and identifying the Chief Operating Decision Maker and how they use the reported segment profitability measures to assess segment performance and allocate resources.

These enhanced disclosures are required for all entities on an interim and annual basis, even if they have only a single reportable segment.

The standard is effective for years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024 and early adoption is permitted.

The adoption of this standard for the year ended December 31, 2024 did not have a material impact on the Company’s consolidated financial results, but resulted in enhanced disclosures as included in Note 17, Segments .

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures.

The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements.

The standard requires more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements.

The standard is effective for years beginning after December 15, 2024 and early adoption is permitted.

The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

The Company adopted this standard on a retrospective basis as of January 1, 2025 and included the additional required disclosures, including additional detail in the rate reconciliation table, in Note 15, Income Taxes .

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40), which addresses the disaggregation of income statement expenses.

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Janssen has agreed to indemnify the Company against losses arising from its activities prior to the closing, and the Company has agreed to indemnify Janssen against losses arising from the Company’s activities pertaining to PONVORY ® after the closing.

Simultaneously and in connection with the Purchase Agreement, the parties also entered into certain supporting agreements, including a customary transition agreement, pursuant to which, during a transition period, Janssen will continue PONVORY ® operations.

The Company announced in May 2024 that ownership of the U.S.

New Drug Application (NDA) and Investigational New Drug applications for PONVORY ® had been transferred to Vanda from a Johnson & Johnson Company, fully allowing the Company to commercialize PONVORY ® in the U.S.

In May 2024, ownership of the U.S.

New Drug Application (NDA) and Investigational New Drug applications for PONVORY ® were transferred to Vanda from a Johnson & Johnson Company, fully allowing the Company to commercialize PONVORY ® in the U.S.

The acquisition of PONVORY ® has been accounted for as an asset acquisition in accordance with ASC 805-50 because substantially all of the fair value of the assets acquired is concentrated in a single asset, the PONVORY ® product rights.

The PONVORY ® products rights consist of certain patents and trademarks, regulatory approvals, marketing assets, and other records, and are considered a single asset as they are inextricably linked.

The total consideration of $ 104.9 million was fully allocated to the acquired intangible asset for the U.S.

The PONVORY ® product rights consist of certain patents and trademarks, regulatory approvals, marketing assets, and other records, and are considered a single asset as they are inextricably linked.

The total consideration of $ 104.9 million was

fully allocated to the acquired intangible asset for the U.S.

and Canadian rights to PONVORY ® .

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The Company’s assets classified in Level 1 and Level 2 as of December 31, 2025 and 2024 consist of cash equivalents and available-for-sale marketable securities.

The valuation of Level 1 instruments is determined using a market approach and is

based upon unadjusted quoted prices for identical assets in active markets.

The valuation of Level 1 instruments is determined using a market approach and is based upon unadjusted quoted prices for identical assets in active markets.

The valuation of Level 2 instruments is also determined using a market approach based upon quoted prices for similar assets in active markets, or other inputs that are observable for substantially the full term of the financial instrument.

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Total assets measured at fair value $ 272,327 $ 227,830 $ 44,497 $ —

Total assets measured at fair value as of December 31, 2024 include no cash equivalents.

Total assets measured at fair value as of December 31, 2023 include $ 63.8 million cash equivalents.

The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash, accounts receivable, restricted cash, accounts payable and accrued liabilities and product revenue allowances, the carrying values of which materially approximate their fair values.

Total assets measured at fair value as of December 31, 2025 and 2024 include no cash equivalents.

The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash, accounts receivable, restricted cash, accounts payable and accrued liabilities, milestone obligations under licensing agreements and product revenue allowances, the carrying values of which materially approximate their fair values.

Inventory consisted of the following as of December 31, 2025 and 2024:

1 unchanged sentence

Current assets

Work-in-process $ — $ 27

Finished goods 1,852 1,726

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The Company’s inventory balance consisted of $ 2.1 million of Fanapt ® product, $ 7.8 million of HETLIOZ ® product and $ 0.3 million of PONVORY ® product as of December 31, 2025.

The Company’s inventory balance consisted of $ 3.0 million of Fanapt ® product and $ 7.2 million of HETLIOZ ® product as of December 31, 2023.

The Company’s inventory balance consisted of $ 2.0 million of Fanapt ® product, $ 7.3 million of HETLIOZ ® product and $ 0.2 million of PONVORY ® product as of December 31, 2024.

Property and Equipment

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and London, England and vehicle finance leases for its fleet program.

The Company recognized ROU assets and lease liabilities related to fixed payments for these long-term leases in its Consolidated Balance Sheets as of December 31, 2024 and 2023.

The Company recognized ROU assets and lease

liabilities related to fixed payments for these long-term leases in its Consolidated Balance Sheets as of December 31, 2025 and 2024.

The Company also has short-term leases, including office space in Berlin, Germany.

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The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions.

In May 2016, the Company entered into an operating lease agreement under which it leases 2,880 square feet of office space in London, England.

In November 2022, the Company extended the non-cancellable portion of the lease term from 2023 to 2026.

Following the expiration of the sublease in July 2026, the Company will lease this space under a separate lease arrangement with a different counterparty, which was signed in June 2025.

This lease term will commence in August 2026 upon expiration of the sublease for that space for a period of two years .

The lease may be terminated early by the Company or the landlord under certain circumstances.

In May 2016, the Company entered into an operating lease agreement under which it leases 2,880 square feet of office space in London, England, which will end in 2026.

In August 2024, the Company entered into a master lease agreement for vehicles to be utilized by the Company’s sales force.

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The contractual period of each lease is three years .

The Company continued to lease additional cars under the master lease agreement during 2025.

Total fixed payments for the vehicle leases that had not yet commenced as of December 31, 2025 are estimated to be $ 1.5 million, payable over initial term of three years, and subject to change upon finalization of each vehicle lease contract.

The following is a summary of the Company’s ROU assets and lease liabilities as of December 31, 2025 and 2024:

40 unchanged sentences

2028 1,099 1,218

Thereafter — —

Total minimum lease payments 5,670 8,080

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These milestone payments were determined to be additional consideration for the acquisition of HETLIOZ ® and capitalized as an intangible asset and are being amortized on a straight-line basis over the estimated economic useful life of the related product patents.

On December 7, 2023, the Company acquired the U.S.

In December 2023, the Company acquired the U.S.

and Canadian rights to PONVORY ® from Janssen.

The total purchase price was allocated to the acquired intangible asset for the U.S.

The total purchase price of $ 104.9 million, $ 100.7 million of which was paid in 2023 and the remaining $ 4.2 million in 2024, was allocated to the acquired intangible asset for the U.S.

and Canadian rights to PONVORY ® .

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The PONVORY ® intangible asset is being amortized on a straight-line basis over the estimated economic useful life of the related product rights.

During the first quarter of 2024, the estimated useful life for the PONVORY ® intangible asset was changed from 2035 to 2042 based on a change in the estimated economic useful life of the related product rights.

During the first quarter of 2024, the estimated useful life for the

PONVORY ® intangible asset was changed from 2035 to 2042 based on a change in the estimated economic useful life of the related product rights.

In December 2025, the Company announced that the FDA had approved the NDA for NEREUS TM .

As a result of this approval, the Company met a milestone under its license agreement with Eli Lilly and Company (Lilly) that required the Company to make a license payment of $ 10.0 million to Lilly, which was accrued in the Company’s Consolidated Balance Sheets as of December 31, 2025 and represented a non-cash investing activity for the year ended December 31, 2025.

This milestone obligation was determined to be additional consideration for the acquisition of NEREUS TM and capitalized as an intangible asset and is being amortized on a straight-line basis over the estimated economic useful life of the related product patents.

The following is a summary of the Company’s amortizing intangible assets as of December 31, 2025:

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2042 104,894 11,942 92,952

2036 10,000 — 10,000

Total amortizing intangible assets

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$ 1,463 $ 1,463 $ 1,502

5,544 5,810 588

Total amortization expense

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92,952 5,544 5,544 5,544 5,544 5,544 65,232

10,000 941 941 941 941 941 5,295

Total amortization expense

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Compensation and employee benefits 10,322 8,465

Operating lease liabilities 2,456 2,398

Milestone obligations under license agreements 10,000 —

Finance lease liabilities

Operating lease liabilities 2,152 2,456

Royalties payable 2,057 1,665

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(Sanofi) a fixed royalty of 3 % of net sales through December 2019 related to manufacturing know-how.

The Company is also obligated to pay Sanofi a fixed royalty on Fanapt ® net sales equal to 6 % on Sanofi know-how not related to manufacturing under certain conditions for a period of up to 10 years in markets where the new chemical entity (NCE) patent has expired or was not issued.

The Company is obligated to pay this 6 % royalty on net sales in the U.S.

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The Company is obligated to use its commercially reasonable efforts to develop and commercialize HETLIOZ ® .

In April 2012, the Company entered into a license agreement with Eli Lilly and Company (Lilly) pursuant to which the Company acquired an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize an NK-1 receptor antagonist, tradipitant, for all human indications.

Lilly is eligible to receive future payments based upon achievement of specified development, regulatory approval and commercialization milestones as well as tiered-royalties on net sales at percentage rates up to the low double digits .

As of December 31, 2024, the Company has paid Lilly $ 5.0 million in upfront fees and development milestones, including a $ 2.0 million milestone paid to Lilly during the year ended December 31, 2023 for the filing of the first application for marketing authorization for tradipitant in either the U.S.

In April 2012, the Company entered into a license agreement with Lilly pursuant to which the Company acquired an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize NEREUS TM for all human indications.

Lilly is eligible to receive future payments based

upon achievement of specified development, regulatory approval and commercialization milestones as well as tiered-royalties on net sales at percentage rates up to the low double digits .

As of December 31, 2025, the Company has paid Lilly $ 5.0 million in upfront fees and development milestones, including a $ 2.0 million milestone paid to Lilly during the year ended December 31, 2023 for the filing of the first application for marketing authorization for NEREUS TM in either the U.S.

or European Union (E.U.).

As of December 31, 2024, remaining milestone obligations include $ 10.0 million and $ 5.0 million milestones for the first approval of an application for marketing authorization for tradipitant in the U.S.

and E.U., respectively, and up to $ 80.0 million for sales milestones.

The Company is obligated to use its commercially reasonable efforts to develop and commercialize tradipitant.

In January 2025, the Company entered into an exclusive global license agreement with Anaptys under which it acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab, an IL-36R antagonist.

Under the terms of the agreement, the Company made an upfront payment of $ 10 million to Anaptys and an additional $ 5 million for existing drug supply.

Anaptys is eligible to receive up to $ 35 million in future regulatory approval and sales milestones.

Additionally, the Company is obligated to pay Anaptys a 10 % royalty on global net sales of imsidolimab.

In the fourth quarter of 2025, as a result of the FDA approving the Company’s NDA for the prevention of vomiting induced by motion, the Company accrued $ 10.0 million as a current liability on the Consolidated Balance Sheets as of December 31, 2025.

As of December 31, 2025, remaining milestone obligations include a $ 5.0 million milestone for the first approval of an application for marketing authorization for NEREUS TM in the E.U.

and up to $ 80.0 million for sales milestones.

The Company is obligated to use its commercially reasonable efforts to develop and commercialize NEREUS TM .

In January 2025, the Company entered into an exclusive global license agreement with Anaptys under which it acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab.

Under the terms of the agreement, which was accounted for as an asset acquisition, the Company made an upfront payment of $ 10.0 million to Anaptys and an additional $ 5.0 million payment for drug supply, $ 14.4 million of which is included in research and development expense on the Consolidated Statements of Operations for the year ended December 31, 2025.

Anaptys is eligible to receive future payments based upon achievement of specified regulatory approval and commercialization milestones as well as a 10 % royalty on global net sales.

As of December 31, 2025, remaining milestone obligations include up to $ 35.0 million for future regulatory approval and sales milestones, including $ 5.0 million each for the first approval of an application for marketing authorization for imsidolimab in the U.S.

and $ 25.0 million for a sales milestone.

The Company is obligated to use its commercially reasonable efforts to develop and commercialize imsidolimab.

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Included in the $ 11.9 million of development milestones are $ 1.1 million of milestone obligations due upon the conclusion of clinical studies for each licensed product, not to exceed $ 3.2 million in total for the CFTR portfolio.

In connection with a settlement agreement with Novartis relating to Fanapt ® , the Company received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.

Pursuant to the license

agreement, the Company is obligated to use its commercially reasonable efforts to develop and commercialize VQW-765 and is responsible for all development costs.

Pursuant to the license agreement, the Company is obligated to use its commercially reasonable efforts to develop and commercialize VQW-765 and is responsible for all development costs.

The Company has no milestone obligations, but Novartis is eligible to receive tiered-royalties on net sales at percentage rates up to the mid-teens .

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The Company is funding the research and development activities and has the option to license jointly developed intellectual property upon successful development.

Shareholder Rights Plan.

On April 17, 2024, the Company’s board of directors authorized and declared a dividend distribution of one right (each, a Right) for each outstanding share of common stock of the Company to stockholders of record as of the close of business on April 29, 2024 (the Record Date).

Each Right entitles the registered holder to purchase from the Company, subject to certain conditions which have not yet occurred, one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.001 per share (the Preferred Stock), of the Company at an exercise price of $ 25.00 (the Exercise Price), subject to adjustment.

The complete terms of the Rights are set forth in a Rights Agreement, dated as of April 17, 2024, between the Company and Equiniti Trust Company, LLC, as rights agent (the Rights Agent), as amended by that certain Amendment No.

1 to the Rights Agreement, and that certain Amendment No.

2 to the Rights Agreement, each, by and between the Company and the Rights Agent (as amended, the Rights Agreement).

In general terms, subject to certain enumerated exceptions, the Rights Agreement works by imposing a significant penalty upon any person or group that acquires beneficial ownership of 10 % or more of the shares of common stock without the prior approval of the board of directors.

In general, any person will be deemed to beneficially own any securities (a) as to which such person has any agreement, arrangement or understanding with another person for the purpose of acquiring, holding, voting or disposing of any shares of Common Stock or (b) that are the subject of a derivative transaction or constitute a derivative security.

As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the board of directors.

However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the board of directors.

Clinical Trial Agreement.

In December 2024, the Company entered into an agreement with a third party to jointly design and complete a pediatric study for PONVORY ® required by the FDA and the European Medicines Agency.

Pursuant to the agreement, the Company will bear the primary responsibility for completing the clinical trial, and the third party will bear primary responsibility for manufacturing the clinical study product.

All costs associated with the pediatric study will be shared equally by the Company and the third party.

As the Company and the third party are both active participants in the research activities and both parties are exposed to significant risks and rewards, the agreement is being accounted for under ASC 808.

Furthermore, no parts of the agreement are within the scope of ASC 606, because the Company determined that performing research and development activities on behalf of other parties is not part of the ordinary activities of its business.

Therefore, reimbursements from the third party for research and development costs are recorded as reductions to research and development expense as incurred.

Expenses recognized by the Company related to activities under the collaborative arrangement, which commenced during the first quarter of 2025, were $ 4.0 million for the year ended December 31, 2025, which were reduced by amounts reimbursable from the third party of $ 1.3 million.

Purchase Commitments

In the normal course of its business, the Company regularly enters into agreements with third-party vendors under fee service arrangements, which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured but not paid for through the effective date of termination and other costs incurred by the Company’s contractors in closing out work in progress as of the effective date of termination.

The Company’s non-cancellable purchase commitments for agreements longer than one year primarily relate to commitments for data services.

The Company’s non-cancellable purchase commitments for agreements with a remaining non-cancellable term longer than one year from December 31, 2025 primarily relate to commitments for data services and marketing activities, of which $ 13.5 million, $ 11.0 million, $ 6.4 million, and $ 2.6 million are expected to be paid in 2026, 2027, 2028 and 2029, respectively.

Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement that are within our control.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income

The accumulated balances related to each component of other comprehensive income (loss), net of taxes, were as follows for the years ended December 31, 2025 and 2024:

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Foreign currency translation $ 68 $ ( 13 )

Unrealized gain (loss) on marketable securities

Accumulated other comprehensive income (loss)

$ 74 $ ( 30 )

Unrealized gain on marketable securities

Accumulated other comprehensive income

Stock-Based Compensation

1 unchanged sentence

The 2006 Plan expired by its terms in April 2016, and the Company adopted the 2016 Plan.

Outstanding options under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted

under the 2006 Plan.

Outstanding options under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan.

In June 2016, the Company’s stockholders approved the 2016 Plan.

The 2016 Plan has been amended a number of times since to increase the number of shares reserved for issuance, among other administrative changes.

The 2016 Plan has been amended a number of times since to increase the number of shares reserved for issuance, among other administrative changes, including, but not limited to, an amendment to eliminate its term.

Each of the amendments to the 2016 Plan was approved by the Company’s stockholders.

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Outstanding at December 31, 2024 4,603,581 $ 12.71 5.60 $ —

Granted 190,514 5.41

Expired ( 113,257 ) 11.24

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Vested and expected to vest at December 31, 2025 4,485,793 12.75 4.73 2,690

There were no options granted for the year ended December 31, 2025.

The weighted average grant-date fair value of options granted was $ 2.95 and $ 3.53 per share for the years ended December 31, 2024 and 2023, respectively.

There were no options exercised for the year ended December 31, 2025, 2024 and 2023.

The total intrinsic value of options exercised was $ 1.6 million for the year ended December 31, 2022.

There were no proceeds from the exercise of stock options for the year ended December 31, 2024 and 2023.

Proceeds from the exercise of stock options amounted to $ 0.7 million for the year ended December 31, 2022.

Restricted Stock Units

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Subsequent annual service RSUs granted to directors vest on the first anniversary of the date of grant.

Service RSUs granted to executive officers and certain other employees provide for accelerated vesting if the executive officer or employee is subject to an involuntary termination within 24 months after a change in control of the Company.

Service RSUs granted to directors provide for accelerated vesting if there is a change in control of the Company.

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Total stock-based compensation expense $ 9,474 $ 12,432 $ 14,040

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table.

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model.

Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors.

The expected terms are determined based on a combination of historical exercise data and hypothetical exercise data for unexercised stock options.

The expected terms are determined based on a combination of historical exercise data and hypothetical exercise data for

unexercised stock options.

The risk-free interest rates are based on the U.S.

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The Company has never paid cash dividends to its stockholders and does not plan to pay dividends in the foreseeable future.

There were no options granted during the year ended December 31, 2025.

Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2024 and 2023 were as follows:

Year Ended December 31,

2024 2023 2022

Expected dividend yield — % — %

3 unchanged sentences

Employee Benefit Plan

The Company has a defined contribution plan under IRC Section 401(k).

The Company has a defined contribution plan under Internal Revenue Code of 1986, as amended, Section 401(k).

This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

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$ 81,827 $ ( 4,021 ) $ 3,830

The Company assesses the need for a valuation allowance against its deferred tax asset each quarter through the review of all available positive and negative evidence.

Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The analysis is highly dependent upon historical and projected pretax income.

are realizable in future periods.

The Company maintains a valuation allowance against certain state net deferred tax assets.

The Company generated a pretax loss for the year ended December 31, 2024.

If the Company continues to generate pretax losses and/or if the Company’s projections indicate pretax losses in future periods, the conclusion about the appropriateness of the valuation allowance could change in a future period.

An increase in the valuation allowance would result in a non-cash income tax expense during the period of change.

The analysis to determine that a valuation allowance is necessary is highly dependent upon historical and future projected earnings, among other factors.

Any such adjustment could have a material impact on the Company’s results of operations.

Projected pretax income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt ® in bipolar I disorder, PONVORY ® in RMS and NEREUS TM in the prevention of vomiting induced by motion, which was approved on December 30, 2025, and HETLIOZ ® generic competition, as well as commercial and research and development activities, including spend on our commercial launches and late-stage clinical activities, and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors.

In the fourth quarter of 2025, after considering all available positive and negative evidence, including but not limited to historical, current and future projected results and significant risks and uncertainties related to forecasts, the Company concluded that it is not more likely than not that substantially all of its deferred tax assets are realizable in future periods and recorded a valuation allowance against all net deferred tax assets, resulting in a non-cash income tax expense of $ 113.7 million for the year ended December 31, 2025.

If the Company has cumulative pretax income in future periods and/or if the Company’s projections indicate pretax income in future periods or if there are meaningful changes to the Company’s business operations, the conclusion about the appropriateness of the valuation allowance could change in a future period.

A future reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction.

The potential timing and amount of any future valuation allowance release has yet to be determined and requires an analysis that is highly dependent upon historical and future projected earnings, among other factors.

Any such adjustment could have a material impact on the Company’s financial position and results of operations.

The following is a reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2025, 2024 and 2023:

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2025 2024 2023

(in thousands, except percentages) Amount Percent Amount Percent Amount Percent

federal tax at statutory rate

State taxes 4.3 % 5.0 % 4.8 %

$ ( 29,116 ) 21.0 % $ ( 4,813 ) 21.0 % $ 1,331 21.0 %

State and local taxes, net of federal tax effect*

2,414 ( 1.7 ) % ( 2,017 ) 8.8 % 1,178 18.6 %

Foreign tax effects

126 ( 0.1 ) % 29 ( 0.1 ) % 43 0.7 %

Effects of changes in tax laws or rates enacted in the current period

— — % — — % — — %

Effect of cross-border tax laws

( 4 ) — % 3 — % 1 — %

Research and development credits

( 2,493 ) 1.8 % ( 1,672 ) 7.3 % ( 4,391 ) ( 69.3 ) %

Orphan drug credits

( 775 ) 0.6 % ( 237 ) 1.0 % ( 288 ) ( 4.5 ) %

Change in valuation allowance

Research and development credit 12.8 % ( 69.3 ) % ( 25.9 ) %

Orphan drug credit 1.0 % ( 4.5 ) % ( 0.9 ) %

107,490 ( 77.5 ) % — — % — — %

Nontaxable or nondeductible items

Section 162(m) limitation

Other tax rate changes ( 0.5 ) % ( 23.4 ) % 1.7 %

Other changes in state deferred taxes

791 ( 0.6 ) % 1,043 ( 4.5 ) % 1,088 17.2 %

Uncertain tax positions ( 5.9 ) % 41.0 % 24.5 %

Stock-based compensation

Settlements ( 0.1 ) % 2.7 % 2.6 %

Non-deductible items

968 ( 0.7 ) % 1,623 ( 7.1 ) % 1,916 30.2 %

Other items ( 0.3 ) % ( 0.3 ) % 0.2 %

Nondeductible meals & entertainment expense

1,243 ( 0.9 ) % 479 ( 2.1 ) % 295 4.6 %

121 ( 0.1 ) % 178 ( 0.8 ) % 57 0.9 %

Changes in unrecognized tax benefits

1,062 ( 0.8 ) % 1,363 ( 5.9 ) % 2,600 41.0 %

Effective tax rate $ 81,827 ( 59.0 ) % $ ( 4,021 ) 17.6 % $ 3,830 60.4 %

*The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, New Jersey, and Florida for the year ended December 31, 2025, California and Florida for the year ended December 31, 2024, and Pennsylvania for the year ended December 31, 2023.

The following is a summary of the components of the Company’s net deferred tax assets and the related tax valuation allowance as of December 31, 2025 and 2024.

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Capitalized research and development expenses 50,432 38,393

Intangible assets

Other 6,201 4,537

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The Company has NOL and other tax credit carryforwards in several jurisdictions.

As of December 31, 2024 and 2023, the Company had utilized all of its federal NOL carryforwards.

As of December 31, 2024 the Company has deferred tax

assets of $ 18.3 million and $ 17.9 million related to U.S.

As of December 31, 2025, the Company has $ 13.8 million of deferred tax assets relating to U.S.

federal NOL carryforwards.

As of December 31, 2025 the Company has deferred tax assets of $ 20.6 million and $ 18.6 million related to U.S.

federal and state research and development credits and orphan drug credits, respectively.

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NOLs for the District of Columbia will begin to expire in 2032 and state NOLs will begin to expire in 2034 .

Cash paid for income taxes was $ 2.4 million and $ 3.6 million for the years ended December 31, 2024 and 2023.

Cash paid for income taxes for the year ended December 31, 2022 was no t material.

Cash taxes beginning in 2023 include federal tax payments as a result of utilizing the Company’s remaining federal net operating loss carryover.

For federal tax purposes, utilization of the Company’s tax credits is limited to 75 percent of federal income tax each year.

A valuation allowance is recorded against these U.S.

federal and state deferred tax assets.

The following is a summary of cash paid for income taxes, net of refunds received, for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

(in thousands) 2025 2024 2023

Federal $ 140 $ 2,010 $ 2,525

( 294 ) 334 341

Foreign 64 103 17

Total cash paid for income taxes, net of refunds received

$ ( 90 ) $ 2,447 $ 3,563

* Income taxes paid, net of refunds received, did not rise to the level of separate disclosure (5%) during tax year.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

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The amount of uncertain tax benefits that, if recognized, would impact the effective tax rate is $ 19.6 million.

Unrecognized tax benefits are not expected to change materially over the next 12 months.

Generally, the tax years 2022 through 2024 remain open to examination by the major taxing jurisdiction to which the Company is subject.

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however, future ownership changes may cause the Company’s existing tax attributes to have additional limitations.

In July 2025, the One Big Beautiful Bill Act (OBBBA), which contains a broad range of tax reforms affecting businesses, was signed into law in the U.S.

The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire.

Additionally, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and development expenditures over five years and provides the option to make these expenditures fully deductible in the period incurred.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

Earnings per Share

15 unchanged sentences

6,078,795 6,493,140 6,464,057

The Company incurred a net loss for the year ended December 31, 2024 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent.

The Company incurred a net loss for the years ended December 31, 2025 and 2024 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent.

The Company operates in one reportable segment, which includes all activities related to the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients.

The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (CODM), which is its chief executive officer, who reviews and evaluates consolidated net income (loss) for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods.

The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (CODM), which is its president, chief executive officer and chairman of the board, who reviews and evaluates consolidated net income (loss) for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods.

The measure of segment assets is reported on the balance sheet as total assets.

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Legal Matters

Between April 2018 and March 2021, the Company filed numerous Hatch-Waxman lawsuits in the U.S.

District Court for the District of Delaware (Delaware District Court) against Teva Pharmaceuticals USA, Inc.

(Teva), MSN Pharmaceuticals Inc.

and MSN Laboratories Private Limited (MSN) and Apotex Inc.

In December 2022, the Company filed patent infringement lawsuits, including Hatch-Waxman Act claims, against each of Teva Pharmaceuticals USA, Inc.

(Teva) and Apotex Inc.

and Apotex Corp.

(Apotex, and collectively with Teva and MSN, the HETLIOZ ® Defendants) asserting that U.S.

RE46,604 (‘604 Patent), 9,060,995, 9,539,234, 9,549,913, 9,730,910 (‘910 Patent), 9,844,241, 10,071,977, 10,149,829 (‘829 Patent), 10,376,487 (‘487 Patent), 10,449,176, 10,610,510, 10,610,511, 10,829,465, and 10,611,744 will be infringed by the HETLIOZ ® Defendants’ generic versions of HETLIOZ ® for which they were seeking FDA approval.

As initially disclosed in the Company’s Current

Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2022, in January 2022, the Company entered into a license agreement with MSN and Impax Laboratories LLC (Impax) resolving the lawsuits against MSN (the MSN/Impax License Agreement).

The MSN/Impax License Agreement grants MSN and Impax a non-exclusive license to manufacture and commercialize MSN’s generic version of HETLIOZ ® in the U.S.

effective as of March 13, 2035, unless prior to that date the Company obtains pediatric exclusivity for HETLIOZ ® , in which case the license will be effective as of July 27, 2035.

The MSN/Impax License Agreement also provides that MSN and Impax may launch a generic version of HETLIOZ ® earlier under certain limited circumstances.

In January 2023, MSN and its commercial partner, Amneal Pharmaceuticals, Inc.

(Amneal), informed the Company of their belief that such circumstances have occurred and have since launched their generic version.

The Company disagreed with this position and sought to defend its legal rights to exclusivity for HETLIOZ ® .

The consolidated lawsuits against the remaining HETLIOZ ® Defendants were tried in March 2022.

In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe the ‘604 Patent, and that the asserted claims of the ‘604, ‘910, ‘829 and ‘487 Patents were invalid.

In December 2022, the Company appealed the Delaware District Court’s decision to the U.S.

Court of Appeals for the Federal Circuit (Federal Circuit) and an oral argument for the appeal was held in March 2023.

In May 2023, a three-judge panel of the Federal Circuit affirmed the Delaware District Court’s ruling, and in June 2023, the Company requested a rehearing or rehearing en banc from the Federal Circuit.

In August 2023, the Federal Circuit denied the Company’s petition for a rehearing.

In January 2024, the Company filed a petition for a writ of certiorari with the U.S.

Supreme Court to review the Federal Circuit’s decision.

In April 2024, the U.S.

Supreme Court denied the Company’s petition for a writ of certiorari.

In December 2022, the Company filed patent infringement lawsuits, including Hatch-Waxman Act claims, against each of Teva and Apotex in the U.S.

(Apotex) in the U.S.

District Court for the District of New Jersey (NJ District Court) asserting that U.S.

11,285,129, a method of administration patent that was not litigated in the Delaware District Court cases (‘129 Patent), will be infringed by Teva’s and Apotex’ generic versions of HETLIOZ ® , each of which was approved by the FDA.

The Company asked the NJ District Court to, among other things, order that the effective date of the FDA’s approval of Teva’s and Apotex’ generic versions of HETLIOZ ® be a date that is no earlier than the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine, and enjoin each of Teva and Apotex from the commercial manufacture, use, import, offer for sale and/or sale of their generic versions of HETLIOZ ® until the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine.

In February 2023, the case was transferred to the Delaware District Court.

11,285,129 (‘129 Patent), will be infringed by Teva’s and Apotex’ generic versions of HETLIOZ ® , each of which was approved by the FDA.

The Company asked the NJ District Court to, among other things, order that the effective date of the FDA’s approval of Teva’s and Apotex’ generic

versions of HETLIOZ ® be a date that is no earlier than the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine, and enjoin each of Teva and Apotex from the commercial manufacture, use, import, offer for sale and/or sale of their generic versions of HETLIOZ ® until the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine.

In February 2023, the case was transferred to the U.S.

District Court for the District of Delaware (Delaware District Court).

In April 2023, Teva and Apotex moved for judgment on the pleadings.

In June 2024, the Delaware District Court denied those motions, allowing the Company’s lawsuit to proceed.

The Company’s lawsuit remains pending.

In March 2025, the Delaware District Court held a claim construction hearing, which resolved two claim term disputes in the Company’s favor and deferred ruling on a third dispute between the parties.

In May 2025, the Delaware District Court consolidated this action with the Company’s action relating to the ‘556 Patent (as defined below).

The Company’s lawsuit remains pending, and a trial is scheduled to begin on August 3, 2026.

In January 2023, the Company filed a lawsuit in the NJ District Court against Teva challenging Teva’s advertising and marketing practices related to its at risk launch of its generic version of HETLIOZ ® for the single indication of Non-24.

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In February 2025, the Delaware District Court denied Teva’s motion to dismiss, allowing the Company’s lawsuit to proceed.

The Company’s lawsuit remains pending.

In March 2025, Teva filed its answer and asserted counterclaims against the Company for alleged violations of the Lanham Act, antitrust and state trade laws.

In the same month, the Delaware District Court declined to consolidate this action with the Company’s cases alleging infringement of the ‘129 Patent and the ‘556 Patent (as defined below).

In January 2026, the parties filed a stipulation to dismiss the case.

In January 2023, the Company filed a lawsuit in the U.S.

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In February 2025, the DC District Court denied the Company’s motion and granted the FDA and Teva’s cross motions for summary judgment.

The Company is evaluating options with respect to this litigation.

In September 2023, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s approval of MSN’s ANDA for its generic version of HETLIOZ ® capsules under the APA, the FDCA, FDA regulations and the Appointments Clause of the U.S.

In February 2025, the Company appealed to the U.S.

Court of Appeals for the District of Columbia Circuit (DC Circuit).

In October 2025, the DC Circuit granted the FDA’s motion for a stay of the briefing schedule that it filed in October 2025 due to the government shutdown, and the stay was lifted in November 2025.

The Company’s appeal remains pending, and oral argument is scheduled for March 12, 2026.

In September 2023, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s approval of an ANDA filed by MSN Pharmaceuticals Inc.

and MSN Laboratories Private Limited (MSN) for its generic version of HETLIOZ ® capsules under the APA, the FDCA, FDA regulations and the Appointments Clause of the U.S.

Constitution.

The Company believes that MSN’s underlying approval data, particularly its bioequivalence studies, are faulty.

On this basis, the Company asked the DC District Court to, among other things, vacate the

FDA’s approval of MSN’s ANDA, declare that the approval of the ANDA was unlawful, arbitrary, and capricious, is unconstitutional under the Appointments Clause, and compel the FDA to order MSN to recall its generic HETLIOZ ® product.

On this basis, the Company asked the DC District Court to, among other things, vacate the FDA’s approval of MSN’s ANDA, declare that the approval of the ANDA was unlawful, arbitrary, and capricious, is unconstitutional under the Appointments Clause, and compel the FDA to order MSN to recall its generic HETLIOZ ® product.

In December 2023, the Company filed a motion for summary judgment.

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In September 2024, the DC District Court granted in part the FDA’s motion to dismiss as to the Company’s APA claims and denied the FDA’s motion to dismiss as to the Company’s claims under the Appointments Clause.

In August 2025, the Company filed a motion for summary judgment based on its Appointments Clause claims, to which the FDA filed an opposition and cross-motion for summary judgment in September 2025.

In January 2026, the DC District Court denied the cross-motions for summary judgment without prejudice and stayed the case pending resolution of an agency appeal.

The Company’s lawsuit remains pending.

In April 2024, the Company filed a lawsuit in the Delaware District Court against MSN, Amneal, and Impax alleging claims for false advertising in violation of the Lanham Act and unfair competition under several state laws as well as claims for breach of express representation and fraudulent inducement of a license agreement.

In July 2024, the defendants filed a motion to dismiss and in September 2024, the Company opposed the motion.

In April 2024, the Company filed a lawsuit in the Delaware District Court against MSN and its commercial partner Amneal Pharmaceuticals, Inc.

(Amneal), and Impax Laboratories LLC (Impax) alleging claims for false advertising in violation of the Lanham Act and unfair competition under several state laws as well as claims for breach of express representation and fraudulent inducement of a license agreement.

In July 2024, the defendants filed a motion to dismiss and in September 2024, the Company opposed the motion, to which the defendants replied in October 2024.

In July 2025, the Delaware District Court issued its report and recommendation to deny the defendants’ motion to dismiss as to standing but granted their motion to dismiss the Lanham Act claims, to which the Company objected in August 2025.

In September 2025, the Delaware District Court overruled the Company’s objections.

In October 2025, the Company appealed the Delaware District Court’s decision.

The Company’s lawsuit remains pending.

In December 2024, the Company filed a lawsuit in the Delaware District Court against each of Teva and Apotex in the Delaware District Court, in each case, asserting U.S.

In December 2024, the Company filed a lawsuit in the Delaware District Court against each of Teva and Apotex asserting U.S.

11,918,556 (‘556 Patent), a method of administration patent that was not litigated in the prior Delaware District Court cases, will be infringed by Teva’s and Apotex’s generic versions of HETLIOZ ® , each of which was approved by the FDA.

The Company has asked the Delaware District Court to, among other things, order that the effective date of the FDA’s approval of Teva’s and Apotex’ generic versions of HETLIOZ ® be a date that is no earlier than the expiration of the ‘556 Patent, or such later date that the Delaware District Court may determine, and enjoin each of Teva and Apotex from the commercial manufacture, use, import, offer for sale and/or sale of their generic versions of HETLIOZ ® until the expiration of the ‘556 Patent, or such later date that the Delaware District Court may determine.

The Company’s lawsuit remains pending.

In March 2025, Teva filed its answer and asserted counterclaims against the Company, including, among other things, for alleged violation of the antitrust laws and inequitable conduct, which the Company opposed in May 2025.

The Delaware District Court declined to consolidate this action with the Company’s case alleging Lanham Act violations against Teva but consolidated this action with the Company’s action relating to the ‘129 Patent.

The Company’s lawsuit remains pending, and a trial is scheduled to begin on August 3, 2026.

HETLIOZ LQ ® .

In July 2024, the Company filed a Hatch-Waxman lawsuit against MSN in the Delaware District Court asserting that U.S.

10,179,119, 11,266,622, 11,285,129, 11,850,229, 10,610,510, 10,980,770, and 11,759,446 (together, the Asserted Patents) will be infringed by MSN’s generic version of HETLIOZ LQ ® for which MSN is seeking FDA approval.

10,179,119, 11,266,622, 11,285,129, 11,850,229, 10,610,510, 10,980,770, and 11,759,446 will be infringed by MSN’s generic version of HETLIOZ LQ ® for which MSN is seeking FDA approval.

In June 2025, the Company filed an amended complaint against MSN, further alleging that U.S.

10,071,977, 11,566,011 and 11,918,556 (all asserted HETLIOZ LQ ® patents together, the Asserted Patents) will also be infringed by MSN’s generic version of HETLIOZ LQ ® .

The Company has asked the Delaware District Court to, among other things, enter judgment that MSN has infringed at least one claim of each of the Asserted Patents by submitting or causing to be submitted its ANDA to obtain FDA approval for the commercial manufacture, use, import, offer for sale and/or sale in the U.S.

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before the expiration of each of the Asserted Patents will directly infringe at least one claim of each of the Asserted Patents, order that the effective date of any approval by the FDA of MSN’s generic version of HETLIOZ LQ ® be a date that is no earlier than the expiration of the last expiring Asserted Patent(s), or such later date as the Court may determine, enjoin MSN from the commercial manufacture, use, import, offer for sale and/or sale of its generic version of HETLIOZ LQ ® until the expiration of each of the Asserted Patents or such later date as the Court may determine, and award monetary damages, to the extent applicable.

The Company’s lawsuit remains pending, and a trial is scheduled to begin on June 15, 2026.

The Company’s lawsuit remains pending, and a trial is scheduled to begin on September 14, 2026.

Other Matters .

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cases in which the FDA waived its putative requirement of a 9-month non-rodent toxicity study before drugs can be tested on human patients for extended durations;

communications external to and within the FDA relating to tradipitant, HETLIOZ ® and Fanapt ® ;

communications external to and within the FDA relating to NEREUS TM , HETLIOZ ® and Fanapt ® ;

a warning letter that the FDA sent to the Company concerning its webpages for HETLIOZ ® and Fanapt ® ;

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and bioequivalence and other study reports submitted relating to the FDA’s consideration of tasimelteon ANDAs.

Eight of these lawsuits have since been resolved in the Company’s favor and the other ten remain outstanding.

The FDA has failed to respond and provide the requested documents within the statutory timeframe with respect to each of these ten outstanding cases.

Nine of these lawsuits have since been resolved in the Company’s favor and the other nine remain outstanding.

The FDA has failed to respond and provide the requested documents within the statutory timeframe with respect to each of these nine outstanding cases.

The Company has asked the DC District Court to, among other things, compel the FDA to comply with its obligations and declare that its lack of compliance violates FOIA.

In April 2022, the Company filed a lawsuit in the U.S.

District Court for the District of Maryland (MD District Court) against the Centers for Medicare & Medicaid Services (CMS) and the Administrator of CMS challenging CMS’ rule broadly interpreting the defined terms “line extension” and “new formulation” under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA), which went into effect in January 2022 (the Rule).

The Company believes that the Rule is unlawful and contrary to the intent of Congress when it passed the ACA.

the Rule, certain of the Company’s products would be treated as line extensions and new formulations subject to enhanced rebates, despite the statutory text and CMS’ own long-standing practice, under which such products would not constitute line extensions or new formulations.

In March 2023, the MD District Court ruled that CMS’ interpretation of the terms was reasonable and consistent with Congress’ intent.

In April 2023, the Company appealed the ruling to the U.S.

Court of Appeals for the Fourth Circuit (Fourth Circuit).

In January 2024, the Fourth Circuit held an oral argument.

In April 2024, the Fourth Circuit ruled against the Company.

In September 2024, the Company filed a petition for a writ of certiorari with the U.S.

Supreme Court to review the Fourth Circuit’s decision.

In January 2025, the U.S.

Supreme Court denied the Company’s petition for a writ of certiorari.

In May 2022, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s denial of Fast Track designation for tradipitant.

In October 2021, the Company submitted to the FDA a request for Fast Track designation for tradipitant under the Food and Drug Administration Modernization Act of 1997 (FDAMA).

In May 2022, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s denial of Fast Track designation for NEREUS TM .

In October 2021, the Company submitted to the FDA a request for Fast Track designation for NEREUS TM under the Food and Drug Administration Modernization Act of 1997 (FDAMA).

The FDAMA provides for expedited development and review of drugs that receive Fast Track designation from the FDA.

Under the FDAMA, the FDA must designate a drug as a Fast Track product if it both (1) is intended to treat a serious or life-threatening disease or condition and (2) demonstrates the potential to address unmet medical needs for such disease or condition.

Although Fast Track designation is non-discretionary when the criteria are satisfied, the FDA denied the Company’s request for Fast Track designation.

Fast Track designation is non-discretionary when the criteria are satisfied, the FDA denied the Company’s request for Fast Track designation.

The Company does not believe that the FDA based its decision on the relevant criteria.

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In December 2024, the Court of Appeals affirmed the DC District Court’s ruling.

The Company is currently evaluating options with respect to this litigation.

In May 2025, the Company filed a petition for a writ of certiorari with the U.S.

Supreme Court to review the Court of Appeals’ decision, to which the FDA filed an opposition in October 2025.

In November 2025, the U.S.

Supreme Court denied the Company’s petition for certiorari.

In September 2022, the Company filed a lawsuit in the DC District Court against the FDA to compel the FDA to comply with two separate non-discretionary obligations under the FDCA and its implementing regulations:

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The DC District Court ruled that the FDA violated the statute and ordered the FDA to either finally resolve the Company’s application or commence a hearing on or before March 5, 2024.

In March 2024, the Company and the FDA filed a consent motion for entry of final judgment in the Company’s favor on its Administrative Procedure Act claim for the FDA’s unreasonable delay in resolving the hearing request, following which the FDA refused to hold a hearing or approve the Company’s sNDA for HETLIOZ ® in the treatment of jet lag disorder.

The Company subsequently filed a petition for review in the U.S.

Court of Appeals for the District of Columbia Circuit (DC Circuit).

In March 2024, the Company and the FDA filed a consent motion for entry of final judgment in the Company’s favor on its APA claim for the FDA’s unreasonable delay in resolving the hearing request, following which the FDA refused to hold a hearing or approve the Company’s sNDA for HETLIOZ ® in the treatment of jet lag disorder.

The Company subsequently filed a petition for review in the DC Circuit.

Under the FDCA, the FDA has an obligation to either approve an sNDA or to hold a hearing on the application’s approvability.

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In January 2025, the DC Circuit held an oral argument.

The Company’s petition remains pending.

In August 2025, the DC Circuit issued a decision in favor of the Company against the FDA, setting aside the FDA’s refusal to hold a hearing on the Company’s sNDA for HETLIOZ ® in the treatment of jet lag disorder and remanding the case back to the FDA.

In October 2025, the Company announced that it had entered into a collaborative framework with the FDA for the resolution of certain of its disputes regarding HETLIOZ ® and NEREUS TM (the FDA Agreement), pursuant to which, the FDA agreed to conduct an expedited re-review of the sNDA and the Company sought a temporary abeyance in these proceedings.

In January 2026, the FDA notified the Company that, following its re-review of the sNDA, it has determined that the sNDA cannot be approved in its current form.

In January 2026, the Company requested that the FDA Commissioner resume hearing proceedings.

In May 2023, the Company filed a lawsuit in the U.S.

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In December 2024, the Federal Claims Court held an oral argument on the motion for judgment on the pleadings and in January 2025, the Federal Claims Court ruled against the Company.

In February 2025, the Company appealed the ruling.

In February 2025, the Company appealed the ruling to the U.S.

Court of Appeals for the Federal Circuit.

The Company’s appeal remains pending.

In February 2024, the Company filed a lawsuit in the DC District Court against the FDA to compel the FDA to comply with its statutory obligations under the FDCA and its implementing regulations, and to challenge the FDA’s complete response letter and 60-day filing regulations, which the Company believes do not absolve the FDA of its statutory responsibilities.

the FDCA, the FDA has an obligation to either approve the Company’s sNDA for HETLIOZ ® in the treatment of insomnia characterized by difficulties with sleep initiation within 180 days of the filing of the sNDA or give the Company a notice of an opportunity for a hearing.

Under the FDCA, the FDA has an obligation to either approve the Company’s sNDA for HETLIOZ ® in the treatment of insomnia characterized by difficulties with sleep initiation within 180 days of the filing of the sNDA or give the Company a notice of an opportunity for a hearing.

The Company submitted the sNDA on May 4, 2023.

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In September 2024, the DC District Court held an oral argument on the dispositive cross motions.

In March and April 2025, the parties provided supplemental briefing.

the DC District Court held a further hearing on the supplemental briefings.

In September 2025, the Company filed a motion to stay proceedings in the case until January 2026 pursuant to the FDA Agreement.

In January 2026, the Company and the FDA asked the DC District Court to lift the abeyance.

The Company’s lawsuit remains pending.

In March 2024, the Company filed a petition for review in the U.S.

Court of Appeals for the District of Columbia Circuit (DC Circuit) seeking review of the FDA’s final order refusing to hold a hearing or to approve the Company’s sNDA for HETLIOZ ® in the treatment of jet lag disorder.

Under the FDCA, the FDA has an obligation to either approve an sNDA or to hold a hearing on the application’s approvability.

The Company’s petition asks the DC Circuit to set aside the FDA’s order refusing to hold a hearing and refusing approval.

In January 2025, the DC Circuit held an oral argument.

The Company’s petition remains pending.

On April 22, 2024, a purported stockholder of the Company filed a lawsuit in the Court of Chancery of the State of Delaware (Delaware Chancery Court) against the members of the Company’s board of directors and the Rights Agent, along with the Company as nominal defendant (collectively, the Defendants), captioned Steamfitters Local 449 Pension Fund v.

Polymeropoulos, et al., CA No.

2024-0416-KSJM .

The lawsuit contended, among other things, that the members of the Company’s board of directors breached their fiduciary duties in adopting the Rights Agreement.

The lawsuit sought relief declaring, in part, that provisions of the Rights Agreement be deemed unenforceable and sought to enjoin the use of such provisions as well as damages, costs, and other remedies, and also sought to enjoin for 30 days the Company’s 2024 Annual Meeting of Stockholders (the Annual Meeting) that was held on May 17, 2024.

At a hearing on May 7, 2024, the Delaware Chancery Court denied the plaintiff’s request to enjoin the Annual Meeting.

A three-day trial in the case was scheduled to begin on November 4, 2024.

On August 7, 2024, the Company amended the Rights Agreement to, among other things, clarify certain of the provisions that were the subject of the lawsuit.

On August 12, 2024, the parties filed with the Delaware Chancery Court a stipulation and order dismissing the lawsuit with prejudice, pursuant to which, the plaintiff agreed that the amendment to the Rights Agreement mooted the plaintiff’s claims.

The plaintiff filed a petition in the Delaware Chancery Court for an award of attorney’s fees and reimbursement of expenses, which the Company is opposing.

In February 2025, the Delaware Chancery Court held a hearing, and a decision remains pending.

In August 2024, the Company filed a lawsuit against the FDA in the DC District Court challenging FDA decisionmakers’ authority under the Appointments Clause of the U.S.

Constitution to render a decision on the Company’s new drug application for tradipitant to treat symptoms of gastroparesis.

In September 2024, the Company filed a motion for a preliminary injunction to enjoin the FDA from subjecting the Company’s NDA for tradipitant for the treatment of symptoms of gastroparesis to a final decision prior to the PDUFA target date of September 18, 2024.

Constitution to render a decision on the Company’s new drug application for NEREUS TM to treat symptoms of gastroparesis.

In September 2024, the Company filed a motion for a preliminary injunction to enjoin the FDA from subjecting the Company’s NDA for NEREUS TM for the treatment of symptoms of gastroparesis to a final decision prior to the PDUFA target date of September 18, 2024.

In September 2024, the DC District Court denied the motion.

The Company filed a motion for summary judgment in December 2024, and in January 2025, the FDA opposed the motion and cross-moved to dismiss and for summary judgment.

In February 2025, the Company filed its reply and opposition, to which the FDA replied in March 2025.

The Company’s lawsuit remains pending.

In January 2025, the Company and a co-plaintiff filed a lawsuit against the FDA in the Middle District of Florida District Court (Florida District Court) challenging the FDA’s partial clinical hold preventing the Company from studying the effects of tradipitant for the prevention of motion sickness for more than 90 total doses per patient over a period of two years.

In January 2025, the Company and a co-plaintiff filed a lawsuit against the FDA in the U.S.

District Court for the Middle District of Florida (Florida District Court) challenging the FDA’s partial clinical hold preventing the Company from studying the effects of NEREUS TM for the prevention of motion sickness for more than 90 total doses per patient over a period of two years.

The FDA based its partial clinical hold on the Company’s refusal to perform a repeat-dose toxicity study in a non-rodent species of at least a 6-month duration.

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The Company and co-plaintiff have asked the Florida District Court to, among other things, set aside the FDA’s partial clinical hold and declare the FDA’s partial clinical hold as unlawful.

In March 2025, the FDA moved to dismiss the lawsuit and subsequently moved to stay summary judgment briefing in April 2025.

The Company subsequently opposed the FDA’s motion to stay, following which the Florida District Court granted the FDA’s motion.

In October 2025, the Company dismissed the case pursuant to the FDA Agreement.

In February 2025, the Company filed a lawsuit in the DC District Court against the FDA to compel the FDA to comply with its statutory obligations under the FDCA and its implementing regulations and to challenge the FDA’s reliance on PDUFA deadlines and its complete response letter and 60-day filing regulations, which the Company believes do not absolve the FDA of its statutory responsibilities.

Under the FDCA, the FDA has an obligation to either approve the Company’s NDA for NEREUS TM to prevent vomiting induced by motion within 180 days of the filing of the NDA or give the Company a notice of an opportunity for a hearing.

The Company submitted the NDA on December 30, 2024.

The Company has asked the DC District Court to, among other things, compel the FDA to comply with its obligations, declare that its lack of compliance violates the FDCA and the FDA regulations and declare the FDA’s complete response letter and 60-day filing regulations and adherence to PDUFA deadlines unlawful.

Separately, under the FDCA, the FDA has an obligation to commence a hearing on the Company’s NDA for NEREUS TM in gastroparesis within 120 days of a timely accepted notice of opportunity for a hearing, which the FDA issued on January 7, 2025.

In April 2025, the Company filed a motion for summary judgment regarding its motion sickness NDA and requested to file summary judgment regarding its gastroparesis NDA.

In May 2025, the DC District Court held a hearing on the motion regarding the motion sickness NDA, and the FDA approved the motion sickness NDA in December 2025.

The Center for Drug Evaluation and Research issued a proposed order denying a hearing on the gastroparesis NDA in July 2025.

In September 2025, the Company filed a motion to stay proceedings in the DC District Court regarding the gastroparesis NDA until January 2026 pursuant to the FDA Agreement.

In January 2026, the Company and the FDA asked the DC District Court to lift the abeyance.

The Company’s lawsuit remains pending.

In April 2025, the Company filed a petition for review in the U.S.

Court of Appeals for the DC Circuit seeking review of the FDA’s final order refusing to hold a hearing or to approve the Company’s sNDA for HETLIOZ ® in the treatment of insomnia associated with difficulties with sleep initiation.

Under the FDCA, the FDA has an obligation to either approve an sNDA or to hold a hearing on the application’s approvability.

The Company’s petition asks the DC Circuit to set aside the FDA’s order refusing to hold a hearing and refusing approval.

The Company’s petition for review remains pending.

In April 2025, the Company and two co-plaintiffs filed a lawsuit against the FDA in the U.S.

District Court for the Southern District of Texas (Texas District Court) challenging the FDA’s prohibition of the Company’s proposal to disclose truthful, non-misleading information to prescribers and patients, including the co-plaintiffs, about the off-label use of HETLIOZ ® to treat jet lag disorder.

The Company believes that the FDA’s prohibition of truthful, non-misleading speech promoting off-label uses of drugs is content-based speech regulation and unconstitutional under the First Amendment.

The Company has asked the Texas District Court to, among other things, declare that the Company has a right under the First Amendment to engage in truthful, non-misleading speech regarding the potential use of HETLIOZ ® as a treatment for jet lag disorder and enjoin the FDA from taking adverse action against the Company relating to such communications.

In July 2025, the FDA moved to stay case deadlines pending resolution of a forthcoming motion that it will file to dismiss or transfer the case.

In October 2025, the Company dismissed the case pursuant to the FDA Agreement.

VANDA PHARMACEUTICALS INC.

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001-34186) on February 24, 2022 and incorporated herein by reference).

Rights Agreement, dated as of April 17, 2024, by and between Vanda Pharmaceuticals Inc.

and Equiniti Trust Company, LLC as rights agent (filed as Exhibit 4.1 to the registrant’s current report on Form 8-K (File No.

001-34186) on April 17, 2024, and incorporated herein by reference).

Amendment No.

1 to the Rights Agreement, dated as of May 3, 2024, by and between Vanda Pharmaceuticals Inc.

and Equiniti Trust Company, LLC, as rights agent (filed as Exhibit 4.1 to the registrant’s current report on Form 8-K (File No.

001-34186) on May 3, 2024, and incorporated herein by reference).

Amendment No.

2 to the Rights Agreement, dated as of August 7, 2024, by and between Vanda Pharmaceuticals Inc.

and Equiniti Trust Company, LLC, as rights agent (filed as Exhibit 4.1 to the registrant’s current report on Form 8-K (File No.

001-34186) on August 8, 2024, and incorporated herein by reference).

10.1 Amended and Restated License, Development and Commercialization Agreement, dated July 24, 2005, by and between Bristol-Myers Squibb Company and the registrant (relating to HETLIOZ®) (filed as Exhibit 10.3 to Amendment No.

19 unchanged sentences

001-34186) on April 19, 2010 and incorporated herein by reference).

Number Description

10.9 Ninth Amendment to Amended and Restated License, Development and Commercialization Agreement, dated as of May 24, 2012, by and between Bristol-Myers Squibb Company and the registrant (filed as Exhibit 10.46 to the registrant’s current report on Form 8-K (File No.

2 unchanged sentences

001-34186) on August 3, 2012 and incorporated herein by reference).

Number Description

10.11 Tenth Amendment to Amended and Restated License, Development and Commercialization Agreement, dated as of April 25, 2013, by and between Bristol-Myers Squibb Company and the registrant (filed as Exhibit 10.50 to the registrant’s current report on Form 8-K (File No.

32 unchanged sentences

10.23† Vanda Pharmaceuticals Inc.

Amended and Restated 2016 Equity Incentive Plan, as amended effective as of May 17, 2024 (filed as Exhibit 10.1 to the registrant’s registration statement on Form S-8 (File No.

333-279591) on May 21, 2024 and incorporated herein by reference).

Amended and Restated 2016 Equity Incentive Plan, as amended effective as of June 5, 2025 (filed as Exhibit 10.1 to the registrant’s registration statement on Form S-8 (File No.

333-287808) on June 5, 2025 and incorporated herein by reference).

10.24† UK Sub Plan under the Amended and Restated 2016 Equity Incentive Plan (filed as Exhibit 10.4 to the registrant’s registration statement on Form S-8 (File No.

3 unchanged sentences

001-34186) on February 24, 2022 and incorporated herein by reference).

Number Description

10.26 Second Amendment to Lease Agreement, dated June 20, 2016, by and between Square 54 Office Owner LLC and the registrant (filed as Exhibit 10.43 to the registrant’s quarterly report on Form 10-Q (File No.

2 unchanged sentences

001-34186) on July 28, 2016 and incorporated herein by reference).

Number Description

License Agreement, dated October 24, 2016, by and among Taro Pharmaceuticals USA, Inc., Taro Pharmaceuticals Industries Ltd.

26 unchanged sentences

10.40† Form of Restricted Stock Unit Award Agreement for Senior Management under the Amended and Restated 2016 Equity Incentive Plan (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q (File No.

001-34186) on November 9, 2023 and incorporated herein by reference).

001-34186) on May 8, 2025 and incorporated herein by reference).

10.41† Form of Restricted Stock Unit Award Agreement for Outside Directors under Amended and Restated 2016 Equity Incentive Plan, as amended (filed as Exhibit 10.3 to the registrant’s quarterly report on Form 10-Q (File No.

2 unchanged sentences

001-34186) on November 9, 2023 and incorporated herein by reference).

Number Description

10.43† Form of Notice of Stock Option Grant and Stock Option Agreement for U.S.

3 unchanged sentences

001-34186) on November 9, 2023 and incorporated herein by reference).

Number Description

10.45† Form of Notice of Stock Option Grant and Stock Option Agreement for Outside Directors under Amended and Restated 2016 Equity Incentive Plan, as amended (filed as Exhibit 10.7 to the registrant’s quarterly report on Form 10-Q (File No.

5 unchanged sentences

001-34186) on February 8, 2024 and incorporated herein by reference).

S ecurities Trading Polic y

Seventh Amendment to Lease Agreement, dated June 24, 2025, by and between Square 54 Office Owner LLC and the registrant (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q (File No.

001-34186) on July 31, 2025 and incorporated herein by reference).

Securities Trading Policy

21.1 List of Subsidiaries (filed as Exhibit 21.1 to the registrant’s annual report on Form 10-K (File No.

19 unchanged sentences

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-K

Item 9A. Controls and Procedures