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What changed in Harmony Biosciences Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Harmony Biosciences Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+575 added−494 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-21)

Top changes in Harmony Biosciences Holdings, Inc.'s 2023 10-K

575 paragraphs added · 494 removed · 392 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

157 edited+77 added−35 removed171 unchanged
Biggest changeFailure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. 18 Table of Contents The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; ● submission to the FDA of an IND which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to commercial marketing or sale of the drug in the United States; and ● Compliance with any post-approval requirements, including the potential requirement to implement a REMS program or to conduct a post-approval study.
Biggest changeThe process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice (“GLP”) regulations and other applicable regulations; ● submission to the FDA of an IND which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (“IRB”) or ethics committee at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice (“GCP”) regulations to evaluate the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA after completion of all pivotal trials; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● satisfactory completion of potential inspection of selected clinical investigation sites to assess compliance with GCPs; and ● FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
In October 2020, we paid $2.0 million Bioprojet to extend the Cataplexy Milestone Payment due date to within 90 days. In January 2021, we made the $100.0 million Cataplexy Milestone Payment in full to Bioprojet.
In October 2020, we paid $2.0 million to Bioprojet to extend the Cataplexy Milestone Payment due date to within 90 days. In January 2021, we made the $100.0 million Cataplexy Milestone Payment in full to Bioprojet.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, and advertising and promotion and reporting of adverse experiences with the product.
Additionally, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs, implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected expanded the types of entities eligible for the 340B drug discount program; expanded eligibility criteria for Medicaid programs; creates a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Additionally, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs, implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected expanded the types of entities eligible for the 340B drug discount program; expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to a seven-year period of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same indication, except in limited circumstances, such as a subsequent product’s showing of clinical superiority over the product with orphan exclusivity or where the original applicant cannot produce sufficient quantities of product.
If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to a seven-year period of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same disease or condition, except in limited circumstances, such as a subsequent product’s showing of clinical superiority over the product with orphan exclusivity or where the original applicant cannot produce sufficient quantities of product.
Consistent with this objective, on July 31, 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, use and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.
Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, use and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.
This fact, along with pitolisant being highly selective for the H 3 receptor (as opposed to H 1 receptors, H 2 receptors and H 4 receptors), is the reason we 10 Table of Contents believe in pitolisant’s unique MOA and its potential to improve symptoms in patients living with rare neurological diseases, in which impaired histamine signaling is part of the underlying pathophysiology. ​ ​ ● Role of histamine in normal physiologic functioning beyond wake promotion (e.g. attention, vigilance, behavior, cognition) ● Location of H 3 receptors in hypothalamus, brainstem, and cerebral cortex account for different functions (and potential symptoms in different disorders) ● Limited H 3 receptor populations outside the CNS ​ ​ We have continued to seek new indications in rare neurological disease patient populations that have EDS as a prominent symptom, along with other symptoms mediated by CNS histamine signaling.
This fact, along with pitolisant being highly selective for the H 3 receptor (as opposed to H 1 receptors, H 2 receptors and H 4 receptors), is the reason we 11 Table of Contents believe in pitolisant’s unique MOA and its potential to improve symptoms in patients living with rare neurological diseases, in which impaired histamine signaling is part of the underlying pathophysiology. ​ ​ ● Role of histamine in normal physiologic functioning beyond wake promotion (e.g. attention, vigilance, behavior, cognition) ● Location of H 3 receptors in hypothalamus, brainstem, and cerebral cortex account for different functions (and potential symptoms in different disorders) ● Limited H 3 receptor populations outside the CNS ​ ​ We have continued to seek new indications in rare neurological disease patient populations that have EDS as a prominent symptom, along with other symptoms mediated by CNS histamine signaling.
Pitolisant dosing was based on three age cohorts (children 6 to Topline study results include: ● 65 patients were enrolled in the trial, 91% of which completed treatment and all but one patient opted to continue into the open-label extension. ● Mean baseline ESS-CHAD (Parent/Caregiver Version) ranged from 14.7 to 15.7. ● Mean change from baseline to EOT on the ESS-CHAD Parent/Caregiver Version scores ranged from -3.7 to -5.5 across all age groups and treatment groups, representing a clinically meaningful change (which is defined as a ≥ 2-point improvement on this scale). ● In two of the three age groups (children and adults), there was a clinically meaningful difference (minimum of 2 points) between pitolisant and placebo, driven by the high dose pitolisant treatment group. 12 Table of Contents ● In the adolescent age group, there was a high placebo response of a magnitude three times that seen in the other two age groups, which resulted in no clinically meaningful difference between pitolisant and placebo in this age group. ● A responder analysis (defined as an improvement on the ESS-CHAD Parent/Caregiver Version of ≥ 3-points or a score at EOT of ≤10 for this analysis) showed response rates of 70% in the high dose pitolisant group, 55.6% in the low dose pitolisant group, and 52.6% in the placebo group. ● Overall safety/tolerability profile was consistent with the known safety/tolerability profile of pitolisant. ● Adverse events were reported in 57% of patients on pitolisant and 65% of patients on placebo. ● Treatment-related adverse events were reported in 26% of patients on pitolisant and 30% of patients on placebo. ● There was one serious adverse event in a patient in the placebo treatment group.
Pitolisant dosing was based on three age cohorts (children 6 to Topline study results include: ● 65 patients were enrolled in the trial, 91% of which completed treatment and all but one patient opted to continue into the open-label extension. ● Mean baseline ESS-CHAD (Parent/Caregiver Version) ranged from 14.7 to 15.7. ● Mean change from baseline to EOT on the ESS-CHAD Parent/Caregiver Version scores ranged from -3.7 to -5.5 across all age groups and treatment groups, representing a clinically meaningful change (which is defined as a ≥ 2-point improvement on this scale). ● In two of the three age groups (children and adults), there was a clinically meaningful difference (minimum of 2 points) between pitolisant and placebo, driven by the high dose pitolisant treatment group. ● In the adolescent age group, there was a high placebo response of a magnitude three times that seen in the other two age groups, which resulted in no clinically meaningful difference between pitolisant and placebo in this age group. ● A responder analysis (defined as an improvement on the ESS-CHAD Parent/Caregiver Version of ≥ 3-points or a score at EOT of ≤10 for this analysis) showed response rates of 70% in the high dose pitolisant group, 55.6% in the low dose pitolisant group, and 52.6% in the placebo group. ● Overall safety/tolerability profile was consistent with the known safety/tolerability profile of pitolisant. ● Adverse events were reported in 57% of patients on pitolisant and 65% of patients on placebo. ● Treatment-related adverse events were reported in 26% of patients on pitolisant and 30% of patients on placebo. ● There was one serious adverse event in a patient in the placebo treatment group.
These agencies and other federal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our product candidates. U.S.
These agencies and other federal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our products and product candidates. U.S.
Some of the current therapies have significant side effects (such as increased heart rate and blood pressure) and boxed warnings due to the risk of respiratory depression, abuse and dependence. These therapies also have the potential for rebound and withdrawal symptoms.
Some of the current therapies have significant side effects (such as increased heart rate and blood pressure) and boxed warnings due to the risk of respiratory depression, abuse, dependence and diversion. These therapies also have the potential for rebound and withdrawal symptoms.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
Xywav (low sodium formulation of Xyrem) received the same indication in July 2020. ​ We are working with our partner Bioprojet in consideration of gaining a pediatric indication for both EDS and cataplexy.
Xywav (low sodium formulation of Xyrem) received the same indication in July 2020. ​ We are working with our partner Bioprojet in gaining a pediatric indication for both EDS and cataplexy.
We recognize our website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with our disclosure obligations under SEC Regulation FD.
We recognize our website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with our disclosure obligations under Regulation FD.
To drive patient awareness of WAKIX and its differentiated product profile, we have been communicating with the narcolepsy patient community and providing them with educational materials and information on WAKIX. ● Payor Coverage : Recognizing the importance of payor coverage, our field market access team has been engaging with national and regional payors over the past two plus years to educate them on the clinical data and value proposition of WAKIX.
To drive patient awareness of WAKIX and its differentiated product profile, we have been communicating with the narcolepsy patient community and providing them with educational materials and information on WAKIX. ● Payor Coverage : Recognizing the importance of payor coverage, our field market access team has been engaging with national and regional payors over the past four plus years to educate them on the clinical data and value proposition of WAKIX.
We routinely make important information available on our website, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
We routinely make important information available on our website free of charge, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
This disorder affects men and women equally, with typical symptom onset in adolescence or young adulthood; however, it can take up to a decade after onset of symptoms to be properly diagnosed. The U.S. narcolepsy market had an approximate net sales value of $2.3 billion in 2022.
This disorder affects men and women equally, with typical symptom onset in adolescence or young adulthood; however, it can take up to a decade after onset of symptoms to be properly diagnosed. The U.S. narcolepsy market had an approximate net sales value of $2.5 billion in 2022.
Progress to date includes (i) opening an IND for PWS in October 2019, (ii) completion of a Phase 1 PK trial in patients with PWS in December 2019, with patients actively rolling over into an open-label, long-term safety trial, and (iii) completion of a Phase 2 proof-of-concept clinical trial with topline data reported in November 2022.
Progress to date includes (i) opening an IND for PWS in October 2019, (ii) completion of a Phase 1 PK trial in patients with PWS in December 2019, with patients actively rolling over into an open-label, long-term safety trial, and (iii) completion of a Phase 2 proof-of-concept signal detection clinical trial with topline data reported in November 2022.
In March 2010, the ACA was signed into law, which substantially changed the way healthcare is financed by both governmental and private insurers in the United States and significantly affected the pharmaceutical industry. The ACA contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and fraud and abuse changes.
In March 2010, the ACA was signed into law, which substantially changed the way healthcare is financed by both governmental and private insurers in the United States and significantly affected the pharmaceutical industry. The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and fraud and abuse changes.
Narcolepsy Market Overview Narcolepsy is a rare, chronic and debilitating neurological disorder of sleep-wake state instability that is estimated to affect approximately 165,000 Americans, with fewer than 50% diagnosed. Narcolepsy is characterized by EDS, which is present in all patients with narcolepsy and is the primary reason why patients seek treatment.
Narcolepsy Market Overview Narcolepsy is a rare, chronic and debilitating neurological disorder of sleep-wake state instability that is estimated to affect approximately 170,000 Americans, with fewer than 50% diagnosed. Narcolepsy is characterized by EDS, which is present in all patients with narcolepsy and is the primary reason why patients seek treatment.
Through December 31, 2022, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States. Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020.
Through December 31, 2023, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States. Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020.
We also have registered trademark protection in the United States for “KNOW NARCOLEPSY,” “REM AT THE WRONG TIME” and “NON-REM AT THE WRONG TIME,” as well as our brand and logo “HB,” “HB HARMONY BIOSCIENCES” and “HARMONY BIOSCIENCES.” Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.
We also have registered trademark protection in the United States for “KNOW NARCOLEPSY,” “REM AT THE WRONG TIME” and “NON-REM AT THE WRONG TIME,” as well as our brand and logo “HB,” “HB HARMONY BIOSCIENCES” and “HARMONY BIOSCIENCES.” 21 Table of Contents Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.
During the exclusivity period, the FDA may not approve or even accept for review an abbreviated new drug application (“ANDA”) or an NDA submitted under Section 505(b)(2) (“505(b)(2) NDA”) submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.
During the exclusivity period, the FDA may not approve or even accept for review an 26 Table of Contents abbreviated new drug application (“ANDA”) or an NDA submitted under Section 505(b)(2) (“505(b)(2) NDA”) submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenue of the noncompliant company, whichever is greater.
Label Expansion of WAKIX in Narcolepsy Pediatric Narcolepsy Approximately 5% of diagnosed narcolepsy patients (approximately 3,600 patients) are under the age of 18 years. Symptoms often have a more profound effect in children, resulting in reduced function and greater psychological impact.
Label Expansion of WAKIX in Narcolepsy Pediatric Narcolepsy Approximately 5% of diagnosed narcolepsy patients (approximately 3,600 patients in the U.S.) are under the age of 18 years. Symptoms often have a more profound effect in children, resulting in reduced function and greater psychological impact.
The market is expected to continue to grow based on several factors, including, but not limited to, the introduction of new innovative therapies that offer novel mechanisms of action resulting in improved safety/tolerability profiles while delivering clinically meaningful efficacy, additional investment in education, increased rates of diagnosis, and population growth.
The market is expected to continue to grow based on several factors, including, but 6 Table of Contents not limited to, the introduction of new innovative therapies that offer novel mechanisms of action resulting in improved safety/tolerability profiles while delivering clinically meaningful efficacy, additional investment in education, increased rates of diagnosis, and population growth.
Pursuant to the 2017 LCA, we agreed to pay royalties on the net sales of the product at tiered royalty rates of 13% to 24% based on annual total net sales during the period commencing on first commercial sale of the product and ending on the latest of 10 years from first commercial sale of the product, expiration of all regulatory exclusivity, or expiration of the last Bioprojet patent covering the product.
Pursuant to the 2017 LCA, we agreed to pay royalties on the net sales of the product at tiered royalty rates of 13% to 24% based on annual 19 Table of Contents total net sales during the period commencing on first commercial sale of the product and ending on the latest of 10 years from first commercial sale of the product, expiration of all regulatory exclusivity, or expiration of the last Bioprojet patent covering the product.
In addition, on August 4, 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.
In August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.
In addition to having the potential for abuse, all of the treatments approved for narcolepsy, except WAKIX, require a Risk Evaluation and Mitigation Strategy (“REMS”) program, 6 Table of Contents which is required by the FDA for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks.
In addition to having the potential for abuse, all of the treatments approved for narcolepsy, except WAKIX, require a Risk Evaluation and Mitigation Strategy (“REMS”) program, which is required by the FDA for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks.
Of those living with narcolepsy in the United States, it is estimated that fewer than 45,000 are on narcolepsy medications, which we believe indicates a significant unmet medical need.
Of those living with narcolepsy in the United States, it is estimated that fewer than 40,000 are on narcolepsy medications, which we believe indicates a significant unmet medical need.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. 22 Table of Contents Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Once an approval is granted, the FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products in an attempt to control drug costs.
Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between 31 Table of Contents pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products in an attempt to control drug costs.
We believe that these novel characteristics differentiate it from other narcolepsy treatments. ● First-and-only non-scheduled treatment for narcolepsy . WAKIX is the first-and-only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance by the DEA. We believe one of the most significant unmet needs is the availability of non-scheduled treatment options.
We believe that these novel characteristics differentiate it from other narcolepsy treatments. 7 Table of Contents ● First-and-only non-scheduled treatment for narcolepsy . WAKIX is the first-and-only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance by the DEA. We believe one of the most significant unmet needs is the availability of non-scheduled treatment options.
The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity.
The FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity.
WAKIX competes with currently FDA-approved products for the treatment of EDS or cataplexy in adult patients with narcolepsy, all of which are controlled substances. Jazz Pharmaceuticals’ Xyrem (sodium oxybate) is an FDA-approved 14 Table of Contents product for the treatment of cataplexy or EDS in patients 7 years of age and older with narcolepsy.
WAKIX competes with currently FDA-approved products for the treatment of EDS or cataplexy in adult patients with narcolepsy, all of which are controlled substances. Jazz Pharmaceuticals’ Xyrem (sodium oxybate) is an FDA-approved product for the treatment of cataplexy or EDS in patients 7 years of age and older with narcolepsy.
We opened an IND for pitolisant for the treatment of PWS in November 2019 and completed a Phase 1 PK clinical trial in pediatric patients with PWS in December 2019. We then initiated a long-term, open-label safety trial in those patients who participated in the Phase 1 PK trial.
We opened an IND for pitolisant for the treatment of PWS in November 2019 and completed a Phase 1 PK clinical trial in pediatric patients with PWS in December 2019. We then initiated a long-term, open-label safety trial in those patients who participated in 8 Table of Contents the Phase 1 PK trial.
Building upon the EDS and cataplexy indications in adult patients with narcolepsy, we are working with our partner Bioprojet in consideration of gaining a pediatric indication for both EDS and cataplexy. Bioprojet has completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the data to the EMA seeking approval for a pediatric narcolepsy indication.
Building upon the EDS and cataplexy indications in adult patients with narcolepsy, we are working with our partner Bioprojet in gaining a pediatric indication for both EDS and cataplexy. Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the data to the EMA seeking approval for a pediatric narcolepsy indication.
We cannot guarantee that patents will be granted with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or 17 Table of Contents manufacture of those products.
We cannot guarantee that patents will be granted with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products.
One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service and the level of coverage and reimbursement can differ significantly from payor to payor.
One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service and the level of coverage and reimbursement can differ significantly from payor 30 Table of Contents to payor.
Pediatric exclusivity is another type of marketing exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of exclusivity if a sponsor conducts 23 Table of Contents clinical trials in children in response to a written request from the FDA.
Pediatric exclusivity is another type of marketing exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA.
We may also engage with external organizations and experts to benchmark performance and identify best practices. 29 Table of Contents Corporate Information Our principal executive offices are located at 630 W. Germantown Pike, Plymouth Meeting, PA 19462, and our telephone number is (484) 539-9800. Our internet website is www.harmonybiosciences.com.
We may also engage with external organizations and experts to benchmark performance and identify best practices. Corporate Information Our principal executive offices are located at 630 W. Germantown Pike, Plymouth Meeting, PA 19462, and our telephone number is (484) 539-9800. Our internet website is www.harmonybiosciences.com.
The patents have claims directed to certain human MCH-1 receptor-selective antagonists as compositions of matter, and are expected to expire in June 2031 (the ‘308 patent) and January 2029 (the ‘743 and ‘378 patents, as well as the international patents).
The patents have claims directed to certain human MCH-1 receptor-selective antagonists as compositions of matter, and are expected to expire in June 2031 (the ‘308 patent) and January 20 Table of Contents 2029 (the ‘743 and ‘378 patents, as well as the international patents).
For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems 27 Table of Contents provide reimbursement and to control the prices of medicinal products for human use.
For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.
As we continue our commercial growth and advancement of our clinical development programs with pitolisant, a key component of our strategy is to expand our pipeline beyond pitolisant by partnering, co-developing or acquiring assets focused on rare neurological diseases and/or other neurological diseases serving patients with unmet medical needs that are complementary to our existing research and development expertise and/or commercial footprint.
As we continue our commercial growth and advancement of our clinical development programs with pitolisant, a key component of our strategy is to expand our pipeline and diversify our portfolio beyond sleep/wake disorders by partnering, co-developing or acquiring assets focused on rare neurological diseases and/or other neurological diseases serving patients with unmet medical needs that are complementary to our existing research and development expertise and/or commercial footprint.
We believe WAKIX offers a meaningfully differentiated product profile that is competitive with each of the products listed above, some of which are only approved for EDS while others (Xyrem and Xywav) are approved for the treatment of both EDS or cataplexy in patients with narcolepsy.
We believe WAKIX offers a meaningfully differentiated product profile that is competitive with each of the products listed above, some of which are only approved for EDS while others (Xyrem, Xywav, Lumryz and generic sodium oxybate) are approved for the treatment of both EDS or cataplexy in patients with narcolepsy.
Records must be 24 Table of Contents maintained for the handling of all controlled substances, and periodic reports made to the DEA, for example distribution reports for Schedule I and II controlled substances, Schedule III substances that are narcotics, and other designated substances.
Records must be maintained for the handling of all controlled substances, and periodic reports made to the DEA, for example distribution reports for Schedule I and II controlled substances, Schedule III substances that are narcotics, and other designated substances.
Pursuant to our Right of Use Agreement with Paragon, we also utilize office space at 330 N. Wabash Ave, Suite 3500, Chicago, Illinois 60611, where approximately eight of our employees are located.
Pursuant to our Right of Use Agreement with Paragon, we also utilize office space at 330 N. Wabash Ave, Suite 3500, Chicago, Illinois 60611, where 8 of our employees are located.
Our current supply chain for WAKIX involves several manufacturers that specialize in specific operations of the manufacturing process, specifically, intermediate and starting material manufacturing, drug substance manufacturing, and drug product manufacturing, labeling and secondary packaging, and distribution services: ● Interor S.A. manufactures our BF4 and BF6 intermediate and starting material used in the active pharmaceutical ingredient (“API”). ● Corden Pharma Chenôve SAS, a full-service contract development and manufacturing organization (“CDMO”) manufactures our API. ● Patheon UK Limited, a CDMO owned by Thermo Fisher Scientific Inc., manufactures our finished product tablets and fills them into unlabeled bottles. ● Pharma Packaging Solutions, LLC dba Tjoapack, LLC, handles our labeling and secondary packaging. ● Integrated Commercialization Solutions, LLC (ICS), a division of AmerisourceBergen Corporation, is our third-party logistics provider. 15 Table of Contents ● Inmar Rx Solutions, Inc., an advanced technology and data analytics company, specializes in reverse distribution of our product and manages our pharmaceutical returns and product recall, if needed.
Our current supply chain for WAKIX involves several manufacturers that specialize in specific operations of the manufacturing process, specifically, intermediate and starting material manufacturing, drug substance manufacturing, and drug product manufacturing, labeling and secondary packaging, and distribution services: ● Interor S.A. manufactures our BF4 and BF6 intermediate and starting material used in the active pharmaceutical ingredient (“API”). ● Corden Pharma Chenôve SAS, a full-service contract development and manufacturing organization (“CDMO”) manufactures our API. ● Patheon UK Limited, a CDMO owned by Thermo Fisher Scientific Inc., manufactures our finished product tablets and fills them into unlabeled bottles. ● Pharma Packaging Solutions, LLC dba Tjoapack, LLC, handles our labeling and secondary packaging. ● Cardinal Health, Inc. is our third-party logistics provider. ● Inmar Rx Solutions, Inc., an advanced technology and data analytics company, specializes in reverse distribution of our product and manages our pharmaceutical returns and product recall, if needed.
We began our commercial HCP outreach in August 2019 following FDA approval of WAKIX for the treatment of EDS in adult patients with narcolepsy and our efforts continue following the approval of the cataplexy indication in October 2020. 8 Table of Contents ● Patient Awareness : It is estimated that narcolepsy affects approximately 165,000 Americans with fewer than 50% diagnosed.
We began our commercial HCP outreach in August 2019 following FDA approval of WAKIX for the treatment of EDS in adult patients with narcolepsy and our efforts continue following the approval of the cataplexy indication in October 2020. ● Patient Awareness : It is estimated that narcolepsy affects approximately 170,000 Americans with fewer than 50% diagnosed.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.
Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.
Other legislative changes have also been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year, which was temporarily suspended from May 1, 2020 through December 31, 2022 under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and further reduced payments to several types of Medicare providers.
Other legislative changes have also been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers, which was temporarily suspended from May 1, 2020 through March 31, 2022 under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and further reduced payments to several types of Medicare providers.
Additionally, as of December 31, 2022, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.
Additionally, as of December 31, 2023, we had secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.
The primary efficacy endpoint in the study is the change in ESS score from the end of the Stable Dose Period (Week 8) to the end of the 4-week Double-Blind Randomized Withdrawal Phase (Week 12) for pitolisant compared with placebo.
The primary efficacy endpoint in the study was the change in the Epworth Sleepiness Scale (ESS) score from the end of the Stable Dose Period (Week 8) to the end of the 4-week Double-Blind Randomized Withdrawal Phase (Week 12) for pitolisant compared with placebo.
Our Commercialization Strategy We launched WAKIX into the narcolepsy market in November 2019 and we continue to engage with HCPs, patients and payors through the focused commercialization strategy outlined below to optimize adoption of WAKIX in the marketplace: ● HCP Awareness and Adoption : To facilitate HCP awareness and adoption of WAKIX, we have deployed our dedicated, in-house, over 80-person sales team to educate a defined prescriber base of approximately 9,500 HCPs comprised of neurologists, pulmonologists, sleep specialists, psychiatrists and high-prescribing primary care physicians who specialize in or focus on sleep disorders.
We continue to opportunistically execute our share repurchase program to return value to shareholders. 9 Table of Contents Our Commercialization Strategy We launched WAKIX into the narcolepsy market in November 2019 and we continue to engage with HCPs, patients and payors through the focused commercialization strategy outlined below to optimize adoption of WAKIX in the marketplace: ● HCP Awareness and Adoption : To facilitate HCP awareness and adoption of WAKIX, we have deployed our dedicated, over 80-person sales team to educate a defined prescriber base of approximately 9,500 HCPs comprised of neurologists, pulmonologists, sleep specialists, psychiatrists and high-prescribing primary care physicians who specialize in or focus on sleep disorders.
Clinician and patient global impression of disease severity using the CGI-S and PGI-S, respectively, will be measured as well as disease-specific patient assessments of overall disease burden. Plasma samples will be collected to 13 Table of Contents generate pharmacokinetic data and a PK/PD analysis will be performed.
Clinician and patient global impression of disease severity using the CGI-S and PGI-S, respectively, were measured as well as disease-specific patient assessments of overall disease burden. Plasma samples were collected to generate pharmacokinetic data and a PK/PD analysis were performed.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with 25 Table of Contents specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse midwives) and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
Progress to date includes working with key opinion leaders to develop the scientific rationale for the investigation of pitolisant in patients with DM, development of a Phase 2 clinical protocol, submission of an IND at the end of 2020, the opening of an IND in January 2021, and initiation of a Phase 2 proof-of-concept clinical trial in adult patients with DM1 in June of 2021, from which we anticipate topline results in the fourth quarter of 2023.
Progress to date includes working with key opinion leaders to develop the scientific rationale for the investigation of pitolisant in patients with DM, development of a Phase 2 clinical protocol, submission of an IND at the end of 2020, the opening of an IND in January 2021, and initiation of a Phase 2 proof-of-concept clinical trial in adult patients with DM1 in June of 2021.
We also seek to expand our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
We remain committed to obtaining pediatric exclusivity for WAKIX. We also seek to expand our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
The Phase 2 proof-of-concept clinical trial is a randomized, double-blind, placebo-controlled trial to assess the safety and efficacy of pitolisant in adult patients with DM1 ages 18 to 65. It is not powered to demonstrate statistical significance and is designed for signal detection.
We announced topline results for the Phase 2 proof-of-concept clinical trial in the fourth quarter of 2023. The Phase 2 proof-of-concept clinical trial was a randomized, double-blind, placebo-controlled trial to assess the safety and efficacy of pitolisant in adult patients with DM1 ages 18 to 65. It was not powered to demonstrate statistical significance and was designed for signal detection.
Germantown Pike Plymouth Meeting, Pennsylvania. In December 2020, we leased additional office space at this same location, which increased our footprint to approximately 28,638 square feet of office space. As of December 31, 2022, 68 of our employees are located at our corporate headquarters.
Germantown Pike Plymouth Meeting, Pennsylvania. In December 2020, we leased additional office space at this same location, which increased our footprint to approximately 35,781 square feet of office space. As of December 31, 2023, 85 of our employees are located at our corporate headquarters.
Secondary efficacy endpoints will evaluate the effect of pitolisant on other symptoms of IH, including overall burden of disease, sleep-related impairment, 11 Table of Contents sleep inertia, and cognitive function. Patients who complete the trial will be eligible to participate in an open-label extension phase to assess the long-term safety and effectiveness of pitolisant in adult patients with IH.
Secondary efficacy endpoints evaluated the effect of pitolisant on other symptoms of IH, including overall burden of disease, sleep-related impairment, sleep inertia, and cognitive function. Patients who completed the trial are eligible to participate in an open-label extension phase to assess the long-term safety and effectiveness of pitolisant in adult patients with IH.
The primary trial objective is to assess for improvement in EDS as measured by the ESS. Secondary endpoints include assessments of fatigue as well as specific measures of cognitive function using validated computer-based assessments.
The primary trial objective was to assess for improvement in EDS as measured by the Daytime Sleepiness Scale (DSS). Secondary endpoints include assessments of fatigue as well as specific measures of cognitive function using validated computer-based assessments.
The FDCA alternatively provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA, if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application.
The FDCA alternatively provides three years of non-patent data exclusivity for an NDA, or supplement to an existing NDA, if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug.
Human Capital Management As of December 31, 2022, we have 200 full-time employees, 107 of whom are dedicated to commercial functions, which includes sales, marketing, market access, commercial operations, and insights, and 44 of whom are dedicated to research and development. None of our employees are represented by labor unions or covered by collective bargaining agreements.
Human Capital Management As of December 31, 2023, we have 246 full-time employees, 127 who are dedicated to commercial functions, which includes sales, marketing, market access, commercial operations, and insights, and 65 who are dedicated to research and development. None of our employees are represented by labor unions or covered by collective bargaining agreements.
The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Federal government price reporting laws require manufacturers to calculate and report complex pricing metrics to government programs. 28 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Our commercial success depends in part on our ability to obtain and maintain proprietary intellectual property protection for our WAKIX product and potential future pitolisant-based products, as well as for future product candidates and novel discoveries, product development technologies, and know-how.
Intellectual Property Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business. Our commercial success depends in part on our ability to obtain and maintain proprietary intellectual property protection for our WAKIX product and potential future pitolisant-based products, as well as for future product candidates and novel discoveries, product development technologies, and know-how.
An estimated 75 to 80 patients will be enrolled at approximately 20 to 22 sites across the United States and Canada. Patients will be randomized to low-dose pitolisant, high-dose pitolisant, or placebo in a 1:1:1 treatment ratio and titrated over three weeks up to their randomized dose, followed by eight weeks of stable dosing.
Thirty patients were enrolled at 20 sites across the United States and Canada. Patients were randomized to low-dose pitolisant, high-dose pitolisant, or placebo in a 1:1:1 treatment ratio and titrated over three weeks up to their randomized dose, followed by eight weeks of stable dosing.
As of December 31, 2022, we continue to see growth in unique HCPs prescribing WAKIX since it became available in November 2019. The average number of patients on WAKIX in the fourth quarter of 2022 was approximately 4,900.
As of December 31, 2023, we continued to see growth in unique HCPs prescribing WAKIX since it became available in November 2019. The average number of patients on WAKIX in the fourth quarter of 2023 was approximately 6,150.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
Received positive CHMP opinion on January 26, 2023. ​ Develop Pitolisant in New Patient Populations in Pursuit of Additional Indications We believe that pitolisant’s ability to regulate histamine and histaminergic signaling gives it the potential to provide therapeutic benefit in other disorders that are mediated through the H 3 receptor and histamine signaling and offers a portfolio in a product opportunity with pitolisant.
Trial conducted by Bioprojet; received EMA approval on March 15, 2023. ​ Develop Pitolisant in New Patient Populations in Pursuit of Additional Indications We believe that pitolisant’s ability to regulate histamine and histaminergic signaling gives it the potential to provide therapeutic benefit in other disorders that are mediated through the H 3 receptor and histamine signaling and offers a portfolio in a product opportunity with pitolisant.
Additionally, WAKIX is priced lower than Xyrem and Xywav, which we believe is a competitive advantage for WAKIX and may contribute to third-party payor preferences for WAKIX relative to Xyrem and Xywav.
Additionally, WAKIX is priced lower than Xyrem, Xywav, Lumryz and generic sodium oxybate, which we believe is a competitive advantage for WAKIX and may contribute to third-party payor preferences for WAKIX relative to each version of sodium oxybate.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warning or other safety information about the product; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ● mandated modification of promotional materials and labeling and the issuance of corrective information, safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warning or other safety information about the product; ● fines, warning letters, untitled letters, or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
The FDA did not recommend that the DEA schedule WAKIX as a controlled substance, and WAKIX is therefore not scheduled as a controlled substance by the DEA. Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, activity and controlled substance schedule.
The FDA did not recommend that the DEA schedule WAKIX as a controlled substance, and WAKIX is therefore not scheduled as a controlled substance by the DEA. 27 Table of Contents Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance.
In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which may be more stringent, broader in scope or offer greater individual rights with respect to PHI than HIPAA, many of which may differ from each other, thus, complicating compliance efforts.
Individually identifiable health information is considered sensitive data that merits stronger safeguards. 29 Table of Contents In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which may be more stringent, broader in scope or offer greater individual rights with respect to PHI than HIPAA, many of which may differ from each other, thus, complicating compliance efforts.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020. ​ 9 Table of Contents Our Development Pipeline Development Pipeline Chart ​ 1. Includes New Drug Applications and supplemental New Drug Applications. 2.
Within these covered lives, we observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020. ​ 10 Table of Contents Our Development Pipeline Development Pipeline Chart 1.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on their www.clinicaltrials.gov website. 19 Table of Contents Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined: ● Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. ● Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. ● Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: ● Phase 1: The product candidate is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. ● Phase 2: The product candidate is administered to a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage. ● Phase 3: The product candidate is administered to an expanded patient population to further evaluate dosage, to provide substantial evidence of efficacy and to further test for safety, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
Patients determined to be responders at the end of the Stable Dose Period will enter the Double-Blind Randomized Withdrawal Phase of the study for 4 weeks of blinded treatment with pitolisant (at the same dose administered in the Stable Dose Period) or matching placebo. Approximately 200 patients are planned for enrollment in the Open-Label Phase.
Patients determined to be responders at the end of the Stable Dose Period entered the Double-Blind Randomized Withdrawal Phase of the study for 4 weeks of blinded treatment with pitolisant (at the same dose administered in the Stable Dose Period) or matching placebo.
Customers and Suppliers For the year ended December 31, 2022, three customers accounted for 100% of gross product revenues; Caremark LLC accounted for 42% of gross product revenues; PANTHERx Specialty Pharmacy LLC accounted for 29% of gross product revenues; and Accredo Health Group, Inc. accounted for 29% of gross product revenues.
Customers and Suppliers For the year ended December 31, 2023, three customers accounted for 100% of gross product revenue; Caremark LLC accounted for 37% of gross product revenue; PANTHERx Specialty Pharmacy LLC accounted for 31% of gross product revenue; and Accredo Health Group, Inc. accounted for 32% of gross product revenue.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBlackstone and the other Lenders may elect to accelerate the repayment of all unpaid principal of the Loans, accrued interest and other amounts owed under the Blackstone Credit Agreement upon consummation of a specified change of control transaction or the occurrence of certain events of default (as specified in the Blackstone Credit Agreement), including, among other things: ● our default in a payment obligation under the Blackstone Credit Agreement; 43 Table of Contents ● our breach of the restrictive covenants or other terms of the Blackstone Credit Agreement; ● our breach of reporting obligations; ● our failure to properly maintain the collateral; ● the termination or materially adverse amendment of a permit or authorization related to one of our products that is not revoked within 90 days; ● a specified change of control transaction occurring under the License Agreement; ● with respect to WAKIX or another material product, a governmental authority (i) asserting that such product lacks a material authorization, which assertion is not withdrawn or resolved within 90 days or (ii) taking certain regulatory actions resulting in a discontinuance, withdrawal or delay of such product which would reasonably be expected to last for more than 90 days; ● a recall that would reasonably be expected to result in a material adverse effect; ● our entry into a settlement agreement with a government authority resulting in liability greater than $2.0 million; ● our material breach under or the early termination of one of our key intellectual property licensing or supply chain agreements; and ● certain specified insolvency and bankruptcy-related events.
Biggest changeJPMorgan Chase Bank, N.A. and the other Lenders may elect to accelerate the repayment of all unpaid principal of the Loans, accrued interest and other amounts owed under the TLA Credit Agreement upon consummation of a specified 46 Table of Contents change of control transaction or the occurrence of certain events of default (as specified in the TLA Credit Agreement), including, among other things: ● our default in a payment obligation under the TLA Credit Agreement; ● our breach of the covenants or other terms of the TLA Credit Agreement; ● our failure to properly maintain the collateral; ● the occurrence of a specified change of control transaction occurring; ● one or more judgments resulting in liability greater than $20.0 million; and ● certain specified insolvency and bankruptcy-related events.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; ● any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and ● any action asserting a claim against us that is governed by the internal-affairs doctrine.
Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; ● any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and ● any action asserting a claim against us that is governed by the internal-affairs doctrine.
Relationships we enter into may pose a number of risks, including the following: ● current or future third parties have, and future third-party collaborators may have, significant discretion in determining the efforts and resources that they will apply; ● third parties may not perform their obligations as expected; ● third parties may not pursue development and commercialization of any product candidates that we decide to develop as drugs and that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical study or trial results, changes in the third parties’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities; ● third parties may delay preclinical studies or clinical trials, provide insufficient funding for a preclinical study or clinical trial, stop a preclinical study or clinical trial or abandon one of our product candidates, repeat or conduct clinical studies or new clinical trials or require a new formulation of a product candidate for clinical testing; 35 Table of Contents ● third parties could independently develop, or develop with other third parties, products that compete directly or indirectly with our products and product candidates if the third parties believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ● product candidates discovered in collaboration with us may be viewed by our current or future collaborators as competitive with their own product candidates or products, which may cause such third parties to cease to devote resources to the commercialization of our product candidates; ● third parties may fail to comply with applicable regulatory requirements regarding the development, manufacture, packaging, labeling, holding, distribution and/or marketing of a product candidate or product; ● third parties with marketing and distribution rights to pitolisant or any future product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ● disagreements with third parties, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of pitolisant or any future product candidates, might lead to additional responsibilities for us with respect to pitolisant or any future product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● third parties may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● third parties may infringe the intellectual property rights of other third parties, which may expose us to litigation and potential liability; ● if one of our third parties is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us; and ● relationships may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Relationships we enter into may pose a number of risks, including the following: ● current or future third parties have, and future third-party collaborators may have, significant discretion in determining the efforts and resources that they will apply; ● third parties may not perform their obligations as expected; ● third parties may not pursue development and commercialization of any product candidates that we decide to develop as drugs and that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical study or trial results, changes in the third parties’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities; ● third parties may delay preclinical studies or clinical trials, provide insufficient funding for a preclinical study or clinical trial, stop a preclinical study or clinical trial or abandon one of our product candidates, repeat or conduct clinical studies or new clinical trials or require a new formulation of a product candidate for clinical testing; ● third parties could independently develop, or develop with other third parties, products that compete directly or indirectly with our products and product candidates if the third parties believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ● product candidates discovered in collaboration with us may be viewed by our current or future collaborators as competitive with their own product candidates or products, which may cause such third parties to cease to devote resources to the commercialization of our product candidates; ● third parties may fail to comply with applicable regulatory requirements regarding the development, manufacture, packaging, labeling, holding, distribution and/or marketing of a product candidate or product; ● third parties with marketing and distribution rights to pitolisant or any future product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ● disagreements with third parties, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of pitolisant or any future product candidates, might lead to additional responsibilities for us with respect to pitolisant or any future product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● third parties may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● third parties may infringe the intellectual property rights of other third parties, which may expose us to litigation and potential liability; 37 Table of Contents ● if one of our third parties is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us; and ● relationships may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Among the provisions of the ACA of importance to the pharmaceutical industry and our potential product candidates are the following: ● an annual, non-deductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents (other than those designated as orphan drugs), which is apportioned among these entities according to their market share in certain government healthcare programs; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program for branded and generic drugs; ● a methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● the Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● establishment of a Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; and 60 Table of Contents ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Among the provisions of the ACA of importance to the pharmaceutical industry and our potential product candidates are the following: ● an annual, non-deductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents (other than those designated as orphan drugs), which is apportioned among these entities according to their market share in certain government healthcare programs; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program for branded and generic drugs; ● a methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● the Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; 63 Table of Contents ● extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● establishment of a Center for Medicare and Medicaid Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; and ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
The degree of market acceptance of WAKIX or any other product candidates we develop, if approved for commercial sale, will depend on a number of factors, some of which are beyond our control, including: ● the safety and efficacy of the product as demonstrated in clinical trials; ● the perception of physicians, patients, third-party payors and others in the medical community of the relative safety, efficacy, convenience, effect on quality-of-life and cost-effectiveness of the product, compared to those of other available treatments; ● the product’s approved labeling, including the description of the product’s approved indications, the description of its efficacy, including the endpoints in which it showed an improvement, and the prevalence and severity of any side effects, including any associated limitations or warnings; ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ● our ability to differentiate WAKIX or other approved products from other treatments in the same space; 32 Table of Contents ● the adoption of WAKIX as a first-line therapy for EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy; ● the prevalence and severity of any side effects, including those that may be discovered following approval and commercialization; ● the willingness of the target patient population to try new treatments and of physicians to prescribe these treatments; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the publicity concerning our products or competing products and treatments; ● product liability litigation alleging injuries relating to our products or similar classes of drugs; ● any post-approval study requirements for our products and the results thereof; and ● sufficient third-party insurance coverage and reimbursement.
The degree of market acceptance of WAKIX or any other product candidates we develop, if approved for commercial sale, will depend on a number of factors, some of which are beyond our control, including: ● the safety and efficacy of the product as demonstrated in clinical trials; ● the perception of physicians, patients, third-party payors and others in the medical community of the relative safety, efficacy, convenience, effect on quality-of-life and cost-effectiveness of the product, compared to those of other available treatments; ● the product’s approved labeling, including the description of the product’s approved indications, the description of its efficacy, including the endpoints in which it showed an improvement, and the prevalence and severity of any side effects, including any associated limitations or warnings; ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ● our ability to differentiate WAKIX or other approved products from other treatments in the same space; 34 Table of Contents ● the adoption of WAKIX as a first-line therapy for EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy; ● the prevalence and severity of any side effects, including those that may be discovered following approval and commercialization; ● the willingness of the target patient population to try new treatments and of physicians to prescribe these treatments; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the publicity concerning our products or competing products and treatments; ● product liability litigation alleging injuries relating to our products or similar classes of drugs; ● any post-approval study requirements for our products and the results thereof; and ● sufficient third-party insurance coverage and reimbursement.
We will also be required to report certain adverse events and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for WAKIX. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label.
We are also required to report certain adverse events and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for WAKIX. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label.
In July 2020, the Court of Justice of the European Union (“CJEU”) invalidated the Privacy Shield for purposes of international transfers and imposed further restrictions on the use of standard contractual clauses (“SCCs”). The European Commission issued revised SCCs on June 4, 2021 to account for the decision of the CJEU and recommendations made by the European Data Protection Board.
In July 2020, the Court of Justice of the European Union (“CJEU”) invalidated the Privacy Shield for purposes of international transfers and imposed further restrictions on the use of standard contractual clauses (“SCCs”). The European Commission issued revised SCCs in June 2021 to account for the decision of the CJEU and recommendations made by the European Data Protection Board.
Further, from January 1, 2021, companies have to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
Further, from January 2021, companies have to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
Further, if we are unable to repay, refinance or restructure our obligations under the Loans, the Administrative Agent on behalf of the Lenders could proceed to protect and enforce their rights under the Blackstone Credit Agreement and other loan documents by exercising such remedies (including foreclosure on the assets securing our obligations under the Blackstone Credit Agreement and the other loan documents) as are available to the Administrative Agent and the Lenders and in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in the Blackstone Credit Agreement or other loan documents or in aid of the exercise of any power granted in the Blackstone Credit Agreement or other loan documents.
Further, if we are unable to repay, refinance or restructure our obligations under the Loans, the Administrative Agent on behalf of the Lenders could proceed to protect and enforce their rights under the TLA Credit Agreement and other loan documents by exercising such remedies (including foreclosure on the assets securing our obligations under the TLA Credit Agreement and the other loan documents) as are available to the Administrative Agent and the Lenders and in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in the TLA Credit Agreement or other loan documents or in aid of the exercise of any power granted in the TLA Credit Agreement or other loan documents.
Transferring technology to other sites may require additional processes, technologies and validation studies, which are costly, may take considerable amounts of time, may not be successful and, in most cases, require review and approval by the FDA.
Transferring technology to other sites may require additional processes, technologies and validation studies, which are costly, may take considerable amounts of time, may not be successful and, in most cases, require prior review and approval by the FDA.
Any of our existing suppliers or manufacturers may: ● fail to supply us with product on a timely basis or in the requested amount due to unexpected damage to or destruction of facilities or equipment or otherwise; ● fail to increase manufacturing capacity and produce drug product and components in larger quantities and at higher yields in a timely or cost-effective manner, or at all, to sufficiently meet our commercial needs; ● be unable to meet our production demands due to issues related to their reliance on sole-source suppliers and manufacturers; ● supply us with product that fails to meet regulatory requirements; ● become unavailable through business interruption or financial insolvency; ● lose regulatory status as an approved source; ● be unable or unwilling to (i) honor current supply agreements or (ii) renew current supply agreements when such agreements expire on a timely basis, on acceptable terms or at all; or ● discontinue production or manufacturing of necessary drug substances or products.
Any of our existing suppliers or manufacturers may: ● fail to supply us with product on a timely basis or in the requested amount due to unexpected damage to or destruction of facilities or equipment or otherwise; 39 Table of Contents ● fail to increase manufacturing capacity and produce drug product and components in larger quantities and at higher yields in a timely or cost-effective manner, or at all, to sufficiently meet our commercial needs; ● be unable to meet our production demands due to issues related to their reliance on sole-source suppliers and manufacturers; ● supply us with product that fails to meet regulatory requirements; ● become unavailable through business interruption or financial insolvency; ● lose regulatory status as an approved source; ● be unable or unwilling to (i) honor current supply agreements or (ii) renew current supply agreements when such agreements expire on a timely basis, on acceptable terms or at all; or ● discontinue production or manufacturing of necessary drug substances or products.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 55 Table of Contents ● the U.S. federal civil and criminal false claims laws, such as the False Claims Act (“FCA”), which imposes significant penalties and can be enforced by private citizens through civil qui tam actions, and prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the U.S. federal government, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● the U.S. federal civil and criminal false claims laws, such as the False Claims Act (“FCA”), which imposes significant penalties and can be enforced by private citizens through civil qui tam actions, and prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the U.S. federal government, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
Pursuant to our license and commercialization agreements, we obtained intellectual property rights in connection with the commercialization of pitolisant in the United States and its territories, commonwealths and 33 Table of Contents protectorates, including Puerto Rico, which includes an exclusive license to use certain intellectual property owned by Bioprojet related to clinically developing and commercializing the pitolisant product candidate for narcolepsy, obstructive sleep apnea, idiopathic hypersomnia and Parkinson’s Disease.
Pursuant to our license and commercialization agreements, we obtained intellectual property rights in connection with the commercialization of pitolisant in the United States and its territories, commonwealths and 35 Table of Contents protectorates, including Puerto Rico, which includes an exclusive license to use certain intellectual property owned by Bioprojet related to clinically developing and commercializing the pitolisant product candidate for narcolepsy, obstructive sleep apnea, idiopathic hypersomnia and Parkinson’s Disease.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. 73 Table of Contents In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: ● we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
Our Certificate of Incorporation and Bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. 76 Table of Contents In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: ● we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
For example, if a third party files an ANDA for a generic drug containing pitolisant, and relies in whole or in part on studies conducted by or for us, the third party will be required to certify to the FDA that either: (1) there is no patent information listed in the FDA’s Orange Book with respect to our NDA for the applicable approved product candidate; (2) the patents listed in the Orange Book have expired; (3) the listed patents have not expired, but will expire on a particular date and 66 Table of Contents approval is sought after patent expiration; or (4) the listed patents are invalid or will not be infringed by the manufacture, use or sale of the third party’s generic drug.
For example, if a third party files an ANDA for a generic drug containing pitolisant, and relies in whole or in part on studies conducted by or for us, the third party will be required to certify to the FDA that either: (1) there is no patent information listed in the FDA’s Orange Book with respect to our NDA for the applicable approved product candidate; (2) the patents listed in the Orange Book have expired; (3) the listed patents have not expired, but will expire on a particular date and approval is sought after patent expiration; or (4) the listed patents are invalid or will not be infringed by the manufacture, use or sale of the third party’s generic drug.
These provisions include: ● providing for a classified board of directors with staggered, three-year terms; ● authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; ● prohibiting cumulative voting in the election of directors; ● providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; ● prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of 72 Table of Contents directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; ● prohibiting stockholder action by written consent; ● limiting the persons who may call special meetings of stockholders; and ● requiring advance notification of stockholder nominations and proposals.
These provisions include: ● providing for a classified board of directors with staggered, three-year terms; ● authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; ● prohibiting cumulative voting in the election of directors; ● providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; 75 Table of Contents ● prohibiting the adoption, amendment or repeal of our Bylaws or Certificate of Incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; ● prohibiting stockholder action by written consent; ● limiting the persons who may call special meetings of stockholders; and ● requiring advance notification of stockholder nominations and proposals.
Even with the requisite approvals from the FDA and other regulatory authorities, the continued commercial adoption of WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, and any other indications and product candidates we may develop, will depend on the degree of their acceptance by physicians, patients, third-party payors and others in the medical community.
Even with the requisite approvals from the FDA and other regulatory authorities, the continued commercial success of WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, and any other indications and product candidates we may develop, will depend on the degree of their acceptance by physicians, patients, third-party payors and others in the medical community.
Our net income and other operating results will be affected by numerous factors, including: ● variations in the level of expenses related to our development programs; ● addition or termination of clinical trials; ● any intellectual property infringement lawsuit in which we may become involved; ● regulatory developments affecting pitolisant; ● our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements; ● the achievement and timing of milestone payments under our existing collaboration and license agreements; and ● the level of underlying demand for WAKIX and customers’ buying patterns.
Our net income and other operating results are affected by numerous factors, including: ● variations in the level of expenses related to our development programs; ● addition or termination of clinical trials; ● any intellectual property infringement lawsuit in which we may become involved; ● regulatory developments affecting pitolisant; ● execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements; ● the achievement and timing of milestone payments under our existing collaboration and license agreements; and ● the level of underlying demand for WAKIX and customers’ buying patterns.
If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Failure to submit required information may result in civil monetary penalties; ● state laws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other health care providers and other potential referral sources, state laws that require drug manufacturers to file reports relating to pricing information and marketing expenditures, state and local laws requiring the registration of pharmaceutical sales representatives; 56 Table of Contents ● the U.S.
Failure to submit required information may result in civil monetary penalties; ● state laws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other health care providers and other potential referral sources, state laws that require drug manufacturers to file reports relating to pricing information and marketing expenditures, state and local laws requiring the registration of pharmaceutical sales representatives; ● the U.S.
In the event of a liquidation, the lenders under the facility would be repaid all outstanding principal and interest prior to distribution of assets to unsecured creditors, and the holders of our common stock would receive a portion of any liquidation proceeds only if all of our creditors then existing, including the lenders under the Blackstone Credit Agreement, were first repaid in full.
In the event of a liquidation, the lenders under the facility would be repaid all outstanding principal and interest prior to distribution of assets to unsecured creditors, and the holders of our common stock would receive a portion of any liquidation proceeds only if all of our creditors then existing, including the lenders under the TLA Credit Agreement, were first repaid in full.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenues from WAKIX or future product candidates.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from WAKIX or future product candidates.
Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.
Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between “topline,” preliminary or interim data and final data could significantly harm our business prospects.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenue of the noncompliant company, whichever is greater.
In order to be eligible to have our products that we successfully commercialize paid for with federal funds under the Medicaid program and purchased by certain federal agencies and grantees, we also have to participate in the U.S. Department of Veterans Affairs (“VA”), Federal Supply Schedule (“FSS”) pricing program.
To be eligible to have our products that we successfully commercialize paid for with federal funds under the Medicaid program and purchased by certain federal agencies and grantees, we have to participate in the U.S. Department of Veterans Affairs (“VA”), Federal Supply Schedule (“FSS”) pricing program.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
For example, as a part of the regulatory approval for WAKIX for the treatment of EDS in adult patients with narcolepsy, we are required to conduct post-marketing studies in women exposed to pitolisant in pregnancy, including a registry-based observational cohort study to assess maternal, fetal, and infant outcomes of women exposed to pitolisant during pregnancy, and another study of a different design such as a case control study or a retrospective cohort study using electronic medical record data, and a lactation study.
For example, as a part of the regulatory approval for WAKIX for the treatment of EDS in adult 57 Table of Contents patients with narcolepsy, we are required to conduct post-marketing studies in women exposed to pitolisant in pregnancy, including a registry-based observational cohort study to assess maternal, fetal, and infant outcomes of women exposed to pitolisant during pregnancy, and another study of a different design such as a case control study or a retrospective cohort study using electronic medical record data, and a lactation study.
We may not be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under the Blackstone Credit Agreement. Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under the Blackstone Credit Agreement.
We may not be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under the TLA Credit Agreement. Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under the TLA Credit Agreement.
Accordingly, in markets outside the United States, the reimbursement for WAKIX may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. 48 Table of Contents WAKIX has been approved by the FDA for the treatment of EDS in adult patients with narcolepsy, and cataplexy in adult patients with narcolepsy.
Accordingly, in markets outside the United States, the reimbursement for WAKIX may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. ​ ​ ​ 51 Table of Contents WAKIX has been approved by the FDA for the treatment of EDS in adult patients with narcolepsy, and cataplexy in adult patients with narcolepsy.
If a natural disaster, power outage or other event occurred that prevented us from using all or a 40 Table of Contents significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities, the manufacturing facilities of our third-party contract manufacturers or our or their distribution networks, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.
If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities, the manufacturing facilities of our third-party contract manufacturers or our or their distribution networks, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.
Furthermore, if we are forced to raise additional funds to make such payments, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts. Our Blackstone Credit Agreement contains restrictive and financial covenants that may limit our operating flexibility.
Furthermore, if we are forced to raise additional funds to make such payments, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts. Our TLA Credit Agreement contains restrictive and financial covenants that may limit our operating flexibility.
A second U.S. patent, No. 8,486,497, has claims directed to methods of treating excessive daytime sleepiness by administering pitolisant, which is expected to expire in September 2029 without taking into consideration any possible patent term extension.
A second U.S. patent, No. 8,486,947, has claims directed to methods of treating excessive daytime sleepiness by administering pitolisant, which is expected to expire in September 2029 without taking into consideration any possible patent term extension.
Future growth will impose significant added responsibilities on members of management, including: ● identifying, recruiting, integrating, retaining and motivating additional employees; ● effectively managing our development efforts, including the clinical development and FDA or other regulatory authority review processes for pitolisant or any future product candidates; ● effectively managing any third-party service providers involved in the development and manufacture of pitolisant or any future product candidates; and 39 Table of Contents ● improving our operational, financial and management controls, reporting systems and procedures.
Future growth will impose significant added responsibilities on members of management, including: ● identifying, recruiting, integrating, retaining and motivating additional employees; ● effectively managing our development efforts, including the clinical development and FDA or other regulatory authority review processes for pitolisant or any future product candidates; ● effectively managing any third-party service providers involved in the development and manufacture of pitolisant or any future product candidates; and ● improving our operational, financial and management controls, reporting systems and procedures.
These cost-control initiatives could decrease the price we have established for WAKIX, which could result in product revenues being lower than anticipated. The pricing, coverage and reimbursement of WAKIX must be adequate to support a commercial infrastructure.
These cost-control initiatives could decrease the price we have established for WAKIX, which could result in product revenue being lower than anticipated. The pricing, coverage and reimbursement of WAKIX must be adequate to support a commercial infrastructure.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties 60 Table of Contents and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
Given the amount of time 65 Table of Contents required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Our failure to comply with the covenants or other terms of the Blackstone Credit Agreement, including as a result of events beyond our control, could result in a default under the Blackstone Credit Agreement that could materially and adversely affect the ongoing viability of our business.
Our failure to comply with the covenants or other terms of the TLA Credit Agreement, including as a result of events beyond our control, could result in a default under the TLA Credit Agreement that could materially and adversely affect the ongoing viability of our business.
If we fail to enter into relationships or do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates, bring them to market and 36 Table of Contents generate revenue from sales of drugs or continue to develop our technology, and our business may be materially and adversely affected.
If we fail to enter into relationships or do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates, bring them to market and generate revenue from sales of drugs or continue to develop our technology, and our business may be materially and adversely affected.
As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure our investors that the amounts of insurance will be sufficient to satisfy any damages and losses.
As part of our risk management 42 Table of Contents policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure our investors that the amounts of insurance will be sufficient to satisfy any damages and losses.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies may also slow the time necessary for new [drugs, and biologics] or modifications to approved [drugs and biologics] to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our 69 Table of Contents confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.
Certain U.S. state laws allow for, and in some instances in the absence of specific instructions from the prescribing physician mandate, the dispensing of generic products rather than branded products when a generic version is available. Generic competition often results in decreases in the prices at which branded products can be sold.
Certain U.S. state laws allow for, and in some instances in the absence of specific instructions from the prescribing physician mandate, the dispensing of generic products rather than branded products when a generic version is available. 40 Table of Contents Generic competition often results in decreases in the prices at which branded products can be sold.
Moreover, if a real or perceived security breach affects our systems (or those of our third-party providers or suppliers) or results in the loss of or accidental, unlawful or unauthorized access to, use of, release of or other processing of personally identifiable information or clinical 41 Table of Contents trial data, our reputation could be materially damaged.
Moreover, if a real or perceived security breach affects our systems (or those of our third-party providers or suppliers) or results in the loss of or accidental, unlawful or unauthorized access to, use of, release of or other processing of personally identifiable information or clinical trial data, our reputation could be materially damaged.
Our Blackstone Credit Agreement contains certain restrictive covenants that either limit our ability to, or require a mandatory prepayment in the event that, we or our subsidiaries engage in new lines of business, incur additional indebtedness or liens, make certain investments, make certain payments, pay cash dividends, merge with other companies or consummate certain changes of control, make certain acquisitions, transfer or dispose of certain assets, liquidate or dissolve, amend certain material agreements, enter into sale and leaseback transactions, enter into various other specified transactions, or change our name, location, or executive office without notice.
Our TLA Credit Agreement (as defined below) contains certain restrictive covenants that either limit our ability to, or require a mandatory prepayment in the event that, we or our subsidiaries engage in new lines of business, incur additional indebtedness or liens, make certain investments, make certain payments, pay cash dividends, merge with other companies or consummate certain changes of control, make certain acquisitions, transfer or dispose of certain assets, liquidate or dissolve, amend certain material agreements, enter into sale and leaseback transactions, enter into various other specified transactions, or change our name, location, or executive office without notice.
Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.
Actual or perceived failure to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in 73 Table of Contents executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, 68 Table of Contents which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
Although we have obtained regulatory approval for WAKIX in the United States for the treatment of EDS or cataplexy in adult patients with narcolepsy, it is possible that we may not obtain regulatory approval for pitolisant for other indications, or for any other product candidates we may 45 Table of Contents seek to develop in the future.
Although we have obtained regulatory approval for WAKIX in the United States for the treatment of EDS or cataplexy in adult patients with narcolepsy, it is possible that we may not obtain regulatory approval for pitolisant for other indications, or for any other product candidates we may seek to develop in the future.
Our license and commercialization agreements also imposes on us obligations relating to exclusivity, territorial rights, development, commercialization, funding, payment, diligence, sublicensing, insurance, intellectual property protection and other matters.
Our license and commercialization agreements also impose on us obligations relating to exclusivity, territorial rights, development, commercialization, funding, payment, diligence, sublicensing, insurance, intellectual property protection and other matters.
National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of 61 Table of Contents products in that context. In general, however, the healthcare budgetary constraints in most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers.
National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers.
If WAKIX or any other product candidates we develop do not achieve an adequate level of market acceptance, we may not generate significant product revenues or any profits from operations.
If WAKIX or any other product candidates we develop do not achieve an adequate level of market acceptance, we may not generate significant product revenue or any profits from operations.
We would also be exposed to a risk of loss, negative publicity, harm to our reputation, governmental investigation and/or enforcement actions, claims or litigation and potential liability, which could materially adversely affect our business, results of operations and financial condition.
We would also be exposed to a risk of loss, negative publicity, harm to our reputation, governmental investigation and/or enforcement actions, claims or litigation and potential 43 Table of Contents liability, which could materially adversely affect our business, results of operations and financial condition.
As of December 31, 2022, our directors, officers, five percent or greater stockholders, and their respective affiliates beneficially owned in the aggregate approximately 72% of our outstanding voting stock. As a result, these stockholders have the ability to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval.
As of December 31, 2023, our directors, officers, five percent or greater stockholders, and their respective affiliates beneficially owned in the aggregate approximately 64% of our outstanding voting stock. As a result, these stockholders have the ability to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval.
The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is 58 Table of Contents unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term.
The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term.
Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. Our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could delay or prevent a change in control of our company.
Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. Our amended and restated certificate of incorporation (the “Certificate of Incorporation”) and our amended and restated bylaws (the “Bylaws”) contain provisions that could delay or prevent a change in control of the Company.
In our efforts to market WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, our revenue will be dependent, in part, on the size of the markets in the United States, or in other territories where we may seek and obtain regulatory approval, the number of competitors in such markets, the acceptance of the price of the product in those markets and the ability to obtain reimbursement at any price.
In our efforts to market WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, our revenue is dependent, in part, on the size of the markets in the United States, or in other territories where we may seek and obtain regulatory approval, the number of competitors in such markets, the acceptance of the price of WAKIX in those markets and the ability to obtain reimbursement at any price.
Any of our employees could leave our employment at any time, with or without notice. Recruiting and retaining qualified operations, finance and accounting, quality and compliance, scientific, clinical, manufacturing and sales and marketing personnel or consultants will also be critical to our success.
Any of our employees could leave our employment at any time, with or without notice. Recruiting and retaining qualified operations, finance and accounting, quality and compliance, scientific, clinical, manufacturing and sales and marketing personnel or consultants is also critical to our success.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA or 46 Table of Contents comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
Various states also independently regulate controlled substances. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule drugs as well. While some states automatically schedule a drug when the DEA does so, in other states there must be rulemaking or a legislative action.
Various states also independently regulate controlled substances. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule drugs as well. While some 62 Table of Contents states automatically schedule a drug when the DEA does so, in other states there must be rulemaking or a legislative action.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes, and other events that may otherwise affect the FDA’s ability to perform routine functions.
The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions.
While we currently maintain a robust supply of raw material inventory and an 18 month supply of finished goods inventory 38 Table of Contents to ensure product availability, any interruption in the supply of a drug substance or other material or in the manufacture of WAKIX could have a material adverse effect on our business, financial condition, operating results and prospects.
While we currently maintain a robust supply of raw material inventory and an 18 month supply of finished goods inventory to ensure product availability, any interruption in the supply of a drug substance or other material or in the manufacture of WAKIX or our product candidates could have a material adverse effect on our business, financial condition, operating results and prospects.
Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average manufacture price and best 47 Table of Contents price.
Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average manufacture price and best price.
Our and their assignment agreements may not be self- executing or may be breached, and we may be forced to bring claims against 70 Table of Contents third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
Our and their assignment agreements may not be self- executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
Any need to find and qualify new suppliers or manufacturers could significantly delay production of WAKIX, adversely impact our ability to market WAKIX and adversely affect our business. There can be no assurance that replacements would be available to us on a timely basis, on acceptable terms or at all.
Any need to find and qualify new suppliers or manufacturers could significantly delay production of WAKIX, adversely impact our ability to market WAKIX, adversely impact the conduct of our clinical trials and adversely affect our business. There can be no assurance that replacements would be available to us on a timely basis, on acceptable terms or at all.
If the interim, “topline” or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain 52 Table of Contents approval for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.
If the interim, “topline” or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.
These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients.
These 340B covered entities include a 65 Table of Contents variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business.
Additionally, any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely affect our ability to conduct our business.
Additionally, any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as incurring 47 Table of Contents additional debt, making capital expenditures or declaring dividends, which could adversely affect our ability to conduct our business.
Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.
Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers are subject to applicable healthcare regulatory laws, which could expose us to penalties.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; ● the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; ● federal price reporting laws, which require manufacturers to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products; ● state law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and may be broader in scope than their federal equivalents; ● federal transparency requirements detailing interactions with and payments to healthcare providers, such as the federal reporting requirements under the Physician Payments Sunshine Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the HHS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals starting January 1, 2022, and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; ● the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; ● federal price reporting laws, which require manufacturers to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products; ● state law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and may be broader in scope than their federal equivalents; ● federal transparency requirements detailing interactions with and payments to healthcare providers, such as the federal reporting requirements under the Physician Payments Sunshine Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the HHS 59 Table of Contents information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members.
It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The 57 Table of Contents majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions went into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
Risks Related to Ownership of our Common Stock Our directors, officers and principal stockholders beneficially own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
Risks Related to Ownership of our Common Stock Our directors, officers and principal stockholders beneficially own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.
We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including: ● regulators, IRBs or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; ● we may not reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● the number of subjects or patients required for clinical trials of pitolisant in additional indications or any other product candidate may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors, including those manufacturing our product candidates or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we may have to amend clinical trial protocols submitted to regulatory authorities or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to resubmit to an IRB and regulatory authorities for re-examination; ● regulators, IRBs or other reviewing bodies may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, or the supply or quality of pitolisant or any other product candidate or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and ● the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval.
We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including: ● we may be unable to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials; ● regulators, IRBs or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; ● the FDA or comparable foreign regulatory authorities may not agree as to the design or implementation of our clinical trials; ● we may not reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● we may be unable to identify, recruit and train suitable clinical investigators; ● the number of subjects or patients required for clinical trials of pitolisant in additional indications or any other product candidate may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors, including those manufacturing our product candidates or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we may have to amend clinical trial protocols submitted to regulatory authorities or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to resubmit to an IRB and regulatory authorities for re-examination; ● regulators, IRBs or other reviewing bodies may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies; ● the supply or quality of pitolisant or any other product candidate or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and ● the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval.
These and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
These and other provisions in our Certificate of Incorporation, Bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors are willing to pay for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
We, therefore, may not be able to engage in any of the foregoing transactions unless we obtain the consent of the lenders, or in certain cases Blackstone on their behalf, or prepay the outstanding amount under the Blackstone Credit Agreement.
We, therefore, may not be able to engage in any of the foregoing transactions unless we obtain the consent of the lenders, or in certain cases JP Morgan on their behalf, or prepay the outstanding amount under the TLA Credit Agreement.
Facilities used by our contract suppliers and manufacturers to produce the drug substances and materials or finished products for commercial sale must pass inspection and be approved by the FDA and other relevant regulatory authorities.
Facilities used by our contract suppliers and manufacturers to produce the drug substances and materials or finished products for commercial sale must undergo inspection and be approved by the FDA and other relevant regulatory authorities for the manufacture of our products.
These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our product candidates, if approved.
These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, 58 Table of Contents sell and distribute our product candidates, if approved.
Any of the events or developments described above could result in reputational harm and reduced market acceptance and demand for our products, could harm our ability to market our products in the future, could cause us to incur significant expense, could cause our senior management to be distracted from execution of our business strategy, and could have a material adverse effect on our business, reputation, financial condition, results of operations, liquidity, cash flows and/or share price.
Any of the events or developments described above could result in reputational harm and reduced market acceptance and demand for our products, could harm our ability to market our products in the future, could cause us to incur significant expense, could cause our senior management to be distracted from execution of our business strategy, and could have a material adverse effect on our business, reputation, financial condition, results of operations, liquidity, cash flows and/or share price. 36 Table of Contents Third-party relationships are important to our business.
For example, in August 2011, the Budget Control Act of 2011, among other things, led to aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through December 31, 2022, unless additional Congressional action is taken.
For example, in August 2011, the Budget Control Act of 2011, among other things, led to aggregate reductions to Medicare payments to providers, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline. 71 Table of Contents Our quarterly operating results may fluctuate significantly. We expect our operating results to be subject to quarterly fluctuations.
Moreover, if our operating results do not meet the expectations of the investor community, one 74 Table of Contents or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline. Our quarterly operating results may fluctuate significantly. Our operating results are subject to quarterly fluctuations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We do not own any real property. Our corporate headquarters are located in Plymouth Meeting, Pennsylvania. In December 2020, we leased additional office space at this same location, which increased our footprint to approximately 28,638 square feet of space pursuant to a lease that expires in 2024.
Biggest changeItem 2. Properties. We do not own any real property. Our corporate headquarters, located in Plymouth Meeting, Pennsylvania, has a footprint of approximately 35,781 square feet of space pursuant to leases that expire in 2024. We believe that our facilities are suitable to meet our current needs.
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We believe that our facilities are suitable to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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We do not believe that we have any pending litigation that, individually or in the aggregate, would have a material adverse effect on our results of operations, financial condition or cash flows.
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ANDA Litigation ​ On September 27, 2023, we and our licensor, Bioprojet, received notice from Lupin Limited (“Lupin”) pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq.
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(the “Lupin Notice Letter”) that Lupin has submitted ANDA No. 218846 (the “Lupin ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of U.S. Patent Nos. 8,486,947 (“’947 patent”) and 8,207,197 (“’197 patent”). On September 27, 2023, we and Bioprojet received notice from Novugen Pharma Sdn. Bhd.
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(“Novugen”) pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Novugen Notice Letter”) that Novugen has submitted ANDA No. 218834 (the “Novugen ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ’947 patent and ’197 patent.
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The ’947 patent and ‘197 patent are listed with respect to WAKIX ® in the FDA’s Orange Book and will expire in September 2029 and March 2030, respectively.
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The Lupin Notice Letter and the Novugen Notice Letter assert that their generic product will not infringe the ’947 patent and ‘197 patent and/or that the ’947 patent and ‘197 patent are invalid or unenforceable.
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On November 9, 2023, we, Bioprojet and Bioprojet’s wholly owned subsidiary, Bioprojet Pharma SAS (“Bioprojet Pharma”), filed a complaint for patent infringement of the ’947 patent and ‘197 patent against Lupin, Novugen and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA.
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On October 12, 2023, we and Bioprojet received notice from Novitium Pharma LLC (“Novitium”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq.
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(the “Novitium Notice Letter”), that Novitium has submitted ANDA No. 218495 (the “Novitium ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of U.S.
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Patent No. 8,354,430 (the “’430 patent”), which is also listed with respect to WAKIX ® in the FDA’s Orange Book and will expire in February 2026, ’947 patent, and ’197 patent. On October 12, 2023, we and Bioprojet received notice from Zenara Pharma Pvt. Ltd.
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(“Zenara”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq.
Added
(the “Zenara Notice Letter”), that Zenara has submitted ANDA No. 218796 (the “Zenara ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ’430 patent, ’947 patent and 80 Table of Contents ’197 patent. On October 14, 2023, we and Bioprojet received notice from AET Pharma US, Inc.
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(“AET”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “AET Notice Letter”), that AET has submitted ANDA No. 218892 (the “AET ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ’947 patent and ’197 patent.
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On October 16, 2023, we and Bioprojet received notice from Annora Pharma Private Limited (“Annora”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq.
Added
(the “Annora Notice Letter”), that Annora has submitted ANDA No. 218832 (the “Annora ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ’430 patent, the ’947 patent and ’197 patent.
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AET’s Notice Letter asserts that AET’s generic product will not infringe the ’947 patent and ‘197 patent and/or that ’947 patent and ‘197 patent are invalid or unenforceable.
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The Annora Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and ‘197 patent and/or that the ‘430 patent, ’947 patent and ‘197 patent are invalid or unenforceable.
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The Novitium Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and ‘197 patent and/or that the ‘430 patent, ’947 patent and ‘197 patent are invalid or unenforceable.
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The Zenara Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and ‘197 patent and/or that the ‘430 patent, ’947 patent and ‘197 patent are invalid or unenforceable.
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On November 21, 2023, we, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and ‘197 patent against AET, Annora, Novitium and Zenara and certain of their affiliates and agents and for patent infringement of the ’430 patent against Annora, Novitium and Zenara and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA.
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On or around October 13, 2023, MSN Pharmaceuticals Inc. (“MSN Pharma”) sent correspondence to us and Bioprojet stating that that MSN Pharma has submitted ANDA No. 218873 (the “MSN ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® .
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On December 8, 2023, MSN Laboratories Private Limited (“MSN”) filed a declaratory judgment action in the United States District Court for the Eastern District of Virginia against Bioprojet claiming that the ‘430 patent, ’947 patent and ‘197 patent will not be infringed by MSN’s generic version of WAKIX ® and that the ‘947 patent is invalid.
Added
On December 11, 2023, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ‘430 patent, ’947 patent and ‘197 patent against MSN and MSN Pharma.
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On January 12, 2024, the declaratory judgment action was transferred from the United States District Court for the Eastern District of Virginia to the United States District Court for the District of Delaware. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+5 added−2 removed6 unchanged
Biggest changeWe raised approximately $135.4 million, after deducting underwriting discounts and commissions and offering expenses of approximately $12.2 million. None of these expenses consisted of direct or indirect payments made by us to (i) our directors, officers or their associates, (ii) persons owning 10% or more of our common stock or (iii) to our affiliates.
Biggest changeNone of these expenses consisted of direct or indirect payments made by us to (i) our directors, officers or their associates, (ii) persons owning 10% or more of our common stock or (iii) to our affiliates. 83 Table of Contents As of December 31, 2023, we have applied all of the proceeds from our IPO.
Performance Graph The following graph shows a comparison of the total cumulative shareholder returns of an investment of $100 in cash from August 19, 2020, the day we began trading, through December 31, 2022 in (i) our common stock, (ii) the Nasdaq Biotechnology Index, and (iii) the Nasdaq Composite Index.
Performance Graph The following graph shows a comparison of the total cumulative shareholder returns of an investment of $100 in cash from August 19, 2020, the day we began trading, through December 31, 2023, in (i) our common stock, (ii) the Nasdaq Biotechnology Index, and (iii) the Nasdaq Composite Index.
Holders As of February 17, 2023, we had 34 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these holders.
Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these holders.
The offer and sale of the shares in our IPO was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-240122), which was declared effective by the SEC on 75 Table of Contents August 18, 2020 (the “Registration Statement”).
The offer and sale of the shares in our IPO was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-240122), which was declared effective by the SEC on August 18, 2020 (the “Registration Statement”). We raised approximately $135.4 million, after deducting underwriting discounts and commissions and offering expenses of approximately $12.2 million.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the Nasdaq Global Market under the symbol “HRMY” on August 19, 2020. Prior to that date, there was no public trading market for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed and traded on the Nasdaq Global Market under the symbol “HRMY.” Holders As of February 16, 2024, we had 35 holders of record of our common stock.
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The shareholder returns in the graph below is not necessarily indicative of future performance.
Added
The shareholder returns in the graph below are based on historical data and are not indicative of, nor intended to forecast, future performance. ​ ​ ​ ​ ​ ​ ​ ​ 82 Table of Contents Purchases of Equity Securities The following table summarizes information about our purchases of shares of our common stock for each of the months during the fourth quarter ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Approximate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Value ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ ​ of Shares of ​ ​ ​ ​ ​ Weighted Average ​ Shares of Common ​ ​ Common Stock that May ​ ​ Total Number of ​ ​ Price Paid ​ Stock Purchases ​ ​ Yet to be Purchased ​ ​ Shares of Common ​ ​ per Share of ​ as Part of Publicly ​ ​ under the Program Period Stock Purchased ​ Common Stock (1) Announced Program (2) ​ (in thousands) (3) October 1, 2023, through October 31, 2023 — ​ $ — ​ — ​ $ 200,000 November 1, 2023, through November 31, 2023 1,436,666 ​ $ 26.57 ​ 1,436,666 ​ $ 161,821 December 1, 2023, through December 31, 2023 377,987 ​ $ 31.27 ​ 377,987 ​ $ 150,000 Total ​ 1,814,653 ​ $ 27.55 ​ 1,814,653 ​ $ 150,000 ​ (1) The weighted average price paid per share of common stock excludes commissions and transaction fees.
Removed
There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus.
Added
(2) On October 27, 2023, the Company’s Board of Directors approved a program providing for the repurchase of shares of common stock in an aggregate amount of up to $200.0 million, excluding commissions and transaction fees. The repurchase program may be suspended, terminated or modified at any time for any reason.
Added
Such repurchases may be pursuant to Rule 10b-18 or Rule 10b5-1 agreements as determined by our management and in accordance with the requirements of the SEC. All repurchased shares of common stock shown in the table above were retired.
Added
(3) The dollar amount shown (in thousands), represents, as of the end of each period, the approximate dollar value of shares of common stock that may yet be purchased under our publicly announced share repurchase program, exclusive of any commissions and transaction fees.
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The share repurchase program does not obligate us to repurchase any minimum dollar amount or number of shares of common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+41 added−21 removed47 unchanged
Biggest changeInterest Expense, Net Interest expense, net consists primarily of interest expense on debt facilities, amortization of debt issuance costs and amortization of premiums on our debt securities, partially offset by interest income earned on our cash and investments balances and accretion of discount on our debt securities. 80 Table of Contents Results of Operations The following table sets forth selected items in our consolidated statements of operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 ​ ​ (In thousands) Net product revenue ​ $ 437,855 ​ $ 305,440 Cost of product sales ​ 83,481 ​ 55,518 Gross profit ​ 354,374 ​ 249,922 Operating expenses: ​ ​ Research and development ​ 70,886 ​ 30,367 Sales and marketing ​ 79,285 ​ 68,118 General and administrative ​ 84,017 ​ 63,909 Total operating expenses ​ 234,188 ​ 162,394 Operating income ​ 120,186 ​ 87,528 ​ ​ ​ ​ ​ ​ ​ Loss on debt extinguishment ​ — ​ (26,146) Other expense (income), net ​ 169 ​ 16 Interest expense, net ​ (15,669) ​ (23,970) Net income before provision for income taxes ​ 104,686 ​ 37,428 Income tax benefit (expense) ​ 76,782 ​ (2,831) Net income ​ $ 181,468 ​ $ 34,597 ​ Net Product Revenue Net product revenue increased by $132.4 million, or 43.4%, for the year ended December 31, 2022 compared to the same period in 2021.
Biggest changeResults of Operations The following table sets forth selected items in our consolidated statements of operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ (In thousands) Net product revenue ​ $ 582,022 ​ $ 437,855 Cost of product sales ​ 121,236 ​ 83,481 Gross profit ​ 460,786 ​ 354,374 Operating expenses: ​ ​ Research and development ​ 76,063 ​ 70,886 Sales and marketing ​ 97,404 ​ 79,285 General and administrative ​ 95,289 ​ 84,017 Total operating expenses ​ 268,756 ​ 234,188 Operating income ​ 192,030 ​ 120,186 ​ ​ ​ ​ ​ ​ ​ Loss on debt extinguishment ​ (9,766) ​ — Other (expense) income, net ​ 159 ​ 169 Interest expense ​ ​ (23,757) ​ ​ (18,795) Interest income ​ 14,730 ​ 3,126 Net income before provision for income taxes ​ 173,396 ​ 104,686 Income tax (expense) benefit ​ (44,543) ​ 76,782 Net income ​ $ 128,853 ​ $ 181,468 ​ Net Product Revenue Net product revenue increased by $144.2 million, or 32.9%, for the year ended December 31, 2023, compared to the same period in 2022.
Overview We are a commercial-stage pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
Company Overview We are a commercial-stage, pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
Sales and marketing expenses include: ● employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our sales and marketing personnel; ● healthcare professional-related expenses, including marketing programs, healthcare professional promotional medical education, disease education, conference exhibits and market research; ● patient-related expenses, including patient awareness and education programs, disease awareness education, patient reimbursement programs, patient support services and market research; ● market access expenses, including payor education, specialty pharmacy programs and services to support the continued commercialization of WAKIX; and ● secondary data purchases (i.e., patient claims and prescription data), data warehouse development and data management.
Sales and marketing expenses include: ● employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our sales, marketing and market access personnel; ● healthcare professional-related expenses, including marketing programs, healthcare professional promotional medical education, disease education, conference exhibits and market research; ● patient-related expenses, including patient awareness and education programs, disease awareness education, patient reimbursement programs, patient support services and market research; ● market access expenses, including payor education, specialty pharmacy programs and services to support the continued commercialization of WAKIX; and ● secondary data purchases (i.e., patient claims and prescription data), data warehouse development and data management.
Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $141.8 million, which was primarily attributable to $110.7 million in purchases of debt securities and a final $40.0 million initial payment associated with the 2017 LCA, partially offset by $9.1 million in proceeds from sales and maturities of investments.
Net cash used in investing activities for the year ended December 31, 2022, was $141.8 million, which was primarily attributable to $110.7 million in purchases of debt securities and a final $40.0 million initial payment associated with the 2017 LCA, partially offset by $9.1 million in proceeds from sales and maturities of investments.
In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of the amount of revenue recognized on sales of WAKIX, our costs incurred under services type agreements related to the performance of research and development activities, and the measurement of compensation expense pursuant to stock-based awards.
In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of the amount of revenue recognized on sales of WAKIX, costs incurred under services type agreements related to the performance of research and development activities, and the measurement of compensation expense pursuant to stock-based awards.
Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, use and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.
Consistent with this objective, on July 31, 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, use and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.
In connection with the acquisition, we made an upfront payment of $3.5 million and will be required to make additional payments upon the achievement of certain development milestones, regulatory milestones, and sales milestones and pay ongoing royalties upon commercialization.
In connection with the acquisition, we made an upfront payment of $3.5 million and will be required to make certain payments upon the achievement of certain development milestones, regulatory milestones, and sales milestones and pay ongoing royalties upon commercialization.
In addition, we made a final $40.0 million milestone payment to Bioprojet in March 2022 upon WAKIX attaining $500.0 million in life-to-date aggregate net sales in the United States.
In March 2022, we made a final $40.0 million milestone payment to Bioprojet upon WAKIX attaining $500.0 million in life-to-date aggregate net sales in the United States.
Additionally, there are payments due upon the achievement of certain milestones including $1.8 million for preclinical milestones, $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.
Additionally, there are payments due upon the achievement of certain milestones including $1.0 million for preclinical milestones, $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.
ASC 718 requires all stock-based payments to employees to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. The vesting periods have a time-based provision consisting of three to five years and expire no more than 10 years after the date of grant.
ASC 718 requires all stock-based payments to employees to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. The vesting periods have a time-based provision consisting of one to five years and expire no more than 10 years after the date of grant.
We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX. The shelf life of WAKIX is three years from date of manufacture, with the earliest expiration of current inventory expected to be May 2023.
We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX. The shelf life of WAKIX is three years from date of manufacture, with the earliest expiration of current inventory expected to be May 2025.
Research and development expenses also include: ● employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our research and development personnel; ● direct third-party costs such as expenses incurred under agreements with CROs, and contract manufacturing organizations (“CMOs”); ● manufacturing costs in connection with producing materials for use in conducting clinical trials; ● costs related to packaging and labeling of clinical supplies; ● other third-party expenses (e.g., consultants, advisors) directly attributable to the development of our product candidates; and ● amortization expense for assets used in research and development activities.
Research and development expenses also include: ● employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our research and development personnel; ● direct third-party costs such as expenses incurred under agreements with CROs, and contract manufacturing organizations (“CMOs”); ● manufacturing costs in connection with producing materials for use in conducting clinical trials; ● costs related to packaging and labeling of clinical supplies; ● other third-party expenses (e.g., consultants, advisors) directly attributable to the development of our product candidates; and 86 Table of Contents ● amortization expense for assets used in research and development activities.
Changes in recognition and measurement estimates are recorded in the statement of income and balance sheet in the period in which such changes occur. As of December 31, 2022, we did not have any liabilities for unrecognized tax positions.
Changes in recognition and measurement estimates are recorded in the statement of income and balance sheet in the period in which such changes occur. As of December 31, 2023, we did not have any liabilities for unrecognized tax positions.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, 84 Table of Contents the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The liability for government rebates is included in accrued expenses in our consolidated balance sheet. We estimate rebates due pursuant to government contracts based upon our historical payment and payor mix trends, information obtained from third parties estimating current payor mix, the government-mandated discounts applicable to government-funded programs, as well as information obtained from our customers.
The liability for government rebates is included in accrued expenses in our consolidated balance sheet. We estimate rebates due pursuant to government contracts based upon our historical payment trends, information obtained from third parties estimating current payment trends, the government-mandated discounts applicable to government-funded programs, as well as information obtained from our customers.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts 85 Table of Contents that are too high or too low in any particular period.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. Stock-Based Compensation The Company recognizes compensation expense relating to stock-based payment transactions in operating results using a fair value measurement method, in accordance with FASB ASC 718, Compensation-Stock Compensation.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. Stock-Based Compensation The Company recognizes stock-based compensation expense in operating results using a fair value measurement method, in accordance with FASB ASC 718, Compensation-Stock Compensation.
While our accounting policies are more fully described in Note 3 to our consolidated financial statements included herein under “Part II—Item 8. Financial Statements and Supplementary Data.”, we believe the following are the critical accounting policies used in the preparation of our consolidated financial statements that require significant estimates and judgments.
While our accounting policies are more fully described in Note 3 to our consolidated financial statements included herein under “Part II—Item 8. Financial Statements and Supplementary Data”, we believe the following are the critical accounting policies used in the preparation of our consolidated financial statements that require significant estimates and judgments.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, milestone 78 Table of Contents payments, and the cost of submitting an NDA to the FDA (and/or other regulatory authorities).
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, milestone payments, and the cost of submitting an NDA to the FDA (and/or other regulatory authorities).
For further discussion of the components of Revenue, see “—Critical Accounting Policies and Significant Judgments and Estimates.” Cost of Product Sales Cost of product sales includes manufacturing and distribution costs, the cost of the drug substance, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs and salaries of employees involved with production.
For further discussion of the components of Revenue, see “—Critical Accounting Policies and Significant Judgments and Estimates.” Cost of Product Sales Cost of product sales includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs and salaries of employees involved with oversight of production.
In addition, in August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.
On August 4, 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.
There are numerous risks and uncertainties associated with developing product candidates, including uncertainty related to: ● the duration, costs and timing of clinical trials of our current development programs and any further clinical trials related to new product candidates; ● the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; ● the impact of the COVID-19 pandemic, including any future resurgence or new variants, on the ability to initiate new clinical trials and/or maintain the continuity of ongoing clinical trials, including our ability to access sleep labs in order to conduct objective sleep testing, that could be impacted by future shelter-in-place orders and needs of the health care system to focus on managing patients affected by COVID-19; ● receiving Bioprojet’s consent to pursue additional indications for pitolisant; ● the acceptance of INDs for our planned clinical trials or future clinical trials; ● the successful and timely enrollment and completion of clinical trials; ● the successful completion of preclinical studies and clinical trials; ● successful data from our clinical programs that support an acceptable risk-benefit profile of our product candidates in the intended populations; ● the receipt and maintenance of regulatory and marketing approvals from applicable regulatory authorities; ● establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved; ● the entry into collaborations to further the development of our product candidates; ● obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates; and ● successfully launching our product candidates and achieving commercial sales, if and when approved.
There are numerous risks and uncertainties associated with developing product candidates, including uncertainty related to: ● the duration, costs and timing of clinical trials of our current development programs and any further clinical trials related to new product candidates; ● the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; ● the impact of the COVID-19 pandemic, including any future resurgence or new variants, on the ability to initiate new clinical trials and/or maintain the continuity of ongoing clinical trials, including our ability to access sleep labs in order to conduct objective sleep testing, that could be impacted by future shelter-in-place orders and needs of the health care system to focus on managing patients affected by COVID-19; ● receiving Bioprojet’s consent to pursue additional indications for pitolisant; ● the acceptance of INDs for our planned clinical trials or future clinical trials; ● the successful and timely enrollment and completion of clinical trials; ● the successful completion of preclinical studies and clinical trials; ● successful data from our clinical programs that support an acceptable risk-benefit profile of our product candidates in the intended populations; ● the receipt and maintenance of regulatory and marketing approvals from applicable regulatory authorities; ● establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved; ● the entry into collaborations to further the development of our product candidates; ● obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates; and ● successfully launching our product candidates and achieving commercial sales, if and when approved. 87 Table of Contents A change in the outcome of any of these variables with respect to the development of any of our programs or any product candidate we develop would significantly change the costs, timing and viability associated with the development and/or regulatory approval of such programs or product candidates.
Product revenues are recorded at the product’s list price, net of reserves for variable consideration that are offered within contracts between us and our customers, payors, and other indirect customers relating to the sale of WAKIX. Components of variable consideration include government (as detailed below) and commercial rebates, commercial co-payment assistance program transactions and distribution service fees.
Product revenue is recorded at the product’s list price, net of reserves for variable consideration that is offered within contracts between us and our customers, payors, and other indirect customers relating to the sale of WAKIX. Components of variable consideration include government (as detailed below) and commercial rebates, commercial co-payment assistance and distribution service fees.
We expect our sales and marketing expenses to increase in the near- and mid-term to support WAKIX indications for the treatment of EDS or 79 Table of Contents cataplexy in adult patients with narcolepsy and to expand our portfolio with the anticipated growth from potential additional indications.
We expect our sales and marketing expenses to increase in the near- and mid-term to support WAKIX’s indications for the treatment of EDS or cataplexy in adult patients with narcolepsy and to expand our portfolio with the anticipated growth from potential additional indications.
In addition, certain payments will become due upon the achievement of development milestones for new indications and formulations as agreed upon by both parties. The 2022 LCA also includes a fixed trademark royalty and a tiered royalty payable on net sales of any new products commercialized.
In addition, certain payments will become due upon the achievement of development milestones for new indications and formulations as agreed upon by both parties. The 2022 LCA also includes a fixed trademark royalty and a tiered royalty payable on net sales of any new products commercialized, which will be payable to Bioprojet on a quarterly basis .
There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and level of effort to be expended in each period.
There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the total costs of the services to be performed.
Research and Development Expenses We base our expenses for research and development services rendered on estimates of the services received and efforts expended pursuant to quotes, contracts and communicating with our vendors. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payments.
Research and Development Expenses We base our expenses for research and development services rendered on estimates of the timing of services received and the total cost of those services pursuant to quotes, contracts and communicating with our vendors. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payments.
We currently expect to have adequate supply of WAKIX into the first quarter of 2024, with additional API on-hand inventory to support at least 36 months beyond this time frame. Research and Development Expenses Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS and DM.
We currently have adequate supply of WAKIX to cover demand into the second quarter of 2025, with additional API on-hand inventory to support at least 36 months beyond this time frame. Research and Development Expenses Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS and DM.
These deductions are based on the amounts earned, or to be claimed on the related sales, and are classified as a current liability or reduction of receivables. Government Contracts We have entered into contracts (i) to participate in the Medicaid Drug Rebate Program and the Medicare Part D program, and (ii) to sell to the U.S.
These deductions are based on the amounts earned, or to be claimed on the related sales, and are classified as a current liability or reduction of receivables in our consolidated balance sheet. 94 Table of Contents Government Contracts We have entered into contracts (i) to participate in the Medicaid Drug Rebate Program and the Medicare Part D program, and (ii) to sell to the U.S.
We are also party to a right-of-use agreement with Paragon whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. For the year ended December 31, 2022, we paid fees of $0.3 million pursuant to this agreement.
Paragon Agreement We are party to a right-of-use agreement with Paragon Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. For the year ended December 31, 2023, we paid fees of $0.3 million pursuant to this agreement.
We also seek to expand our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
We remain committed to obtaining pediatric exclusivity for WAKIX. We also seek to expand our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
If the actual timing of the performance of services or the level of effort is materially different from our estimates, we adjust the accrual or amount of prepaid or accrued expenses accordingly.
If the actual timing of the performance of services, or the total cost of those services is materially different from our estimates, we adjust the accrual or amount of prepaid or accrued expenses accordingly.
Income Taxes Income tax benefit was $76.8 million for the year ended December 31, 2022, and included $96.4 million related to the release of the valuation allowance on our deferred tax assets, partially offset by current period state and federal income tax expense.
The income tax benefit related to the year ended December 31, 2022 was due to the release of the valuation allowance on our deferred tax assets, partially offset by current period provision for state and federal income taxes.
The consolidated financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
As of December 31, 2023, we had outstanding debt of $196.3 million. The consolidated financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
We are required to consider all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income among other items, in determining whether a full or partial release of its valuation allowance is required.
We are required to consider all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income among other items, in determining whether a full or partial release of its valuation allowance is required. Our accounting for deferred tax consequences represents the best estimate of those future events.
We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy, otherwise known as dystrophia myotonica (“DM”).
We anticipate meeting with the FDA towards the end of the first quarter of 2024. We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy, otherwise known as dystrophia myotonica (“DM”).
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 Selected cash flow data ​ (In thousands) Cash provided by (used in): ​ ​ Operating activities ​ $ 144,466 ​ $ 98,557 Investing activities ​ (141,832) ​ (100,298) Financing activities ​ 6,841 ​ 7,419 ​ Operating Activities Net cash provided by operating activities for the year ended December 31, 2022 consisted of our net income of $181.5 million adjusted for non-cash items of $23.4 million related to intangible amortization and depreciation and $26.9 million related to stock-based compensation expense.
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Selected cash flow data ​ (In thousands) Cash provided by (used in): ​ ​ Operating activities ​ $ 219,387 ​ $ 144,466 Investing activities ​ (46,439) ​ (141,832) Financing activities ​ (105,552) ​ 6,841 ​ Operating Activities Net cash provided by operating activities for the year ended December 31, 2023, consisted of our net income of $128.9 million adjusted for non-cash items of $24.4 million related to intangible amortization and depreciation and $31.2 million related to stock-based compensation expense.
Our accounting for deferred tax consequences represents the best estimate of those future events. We present deferred income taxes on the Consolidated Balance Sheet on a jurisdictional basis as either a net noncurrent asset or liability. We record liabilities for uncertain tax positions based on a two-step approach.
We present deferred income taxes on the consolidated balance sheet on a jurisdictional basis as either a net noncurrent asset or liability. 95 Table of Contents We record liabilities for uncertain tax positions based on a two-step approach.
Agreement Related to Intellectual Property In August 2021, we entered into an asset purchase agreement with ConSynance Therapeutics, Inc. to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action.
Asset Purchase Agreement In August 2021, we entered into the APA to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action.
We are taking a mechanism-based approach to managing the life cycle of pitolisant and have identified idiopathic hypersomnia (“IH”), another central disorder of hypersomnolence like narcolepsy, as our next potential new indication for WAKIX.
We are taking a mechanism-based approach to managing the life cycle of pitolisant and identified idiopathic hypersomnia (“IH”), another central disorder of hypersomnolence like narcolepsy, as our next potential new indication for WAKIX, which received orphan drug designation by the FDA in September 2023 and Fast Track Designation in November 2023.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this Annual Report.
This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this Annual Report on Form 10-K.
General and Administrative Expenses General and administrative expenses increased by $20.1 million, or 31.5%, for the year ended December 31, 2022 as compared to the same period in 2021.
General and Administrative Expenses General and administrative expenses increased by $11.3 million, or 13.4%, for the year ended December 31, 2023 compared to the same period in 2022.
Additionally, as of December 31, 2022, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.
The average number of patients on WAKIX at the end of 2023 was approximately 6,150. Additionally, as of December 31, 2023, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.
Net working capital excluding cash decreased by $4.1 million. 83 Table of Contents Net cash provided by operating activities for the year ended December 31, 2021 consisted of our net income of $34.6 million adjusted for non-cash items of $26.1 million related to loss on extinguishment of debt, $18.8 million related to intangible amortization and depreciation and $16.1 million related to stock-based compensation expense.
Net working capital excluding cash decreased by $35.0 million. Net cash provided by operating activities for the year ended December 31, 2022, consisted of our net income of $181.5 million adjusted for non-cash items of $23.4 million related to intangible amortization and depreciation and $26.9 million related to stock-based compensation expense. Net working capital excluding cash decreased by $4.1 million.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
This increase was primarily due to an increase in stock compensation associated with new awards, an increase in intangible asset amortization as a result of the capitalized $40.0 million milestone payment 81 Table of Contents made upon attaining $500.0 million in life-to-date aggregate net sales of WAKIX in the United States, an increase in personnel costs and increased travel costs.
The increase was primarily due to a $4.1 million severance charge associated with the acquisition of Zynerba, a $2.9 million increase in personnel costs, a $1.9 million increase in legal and professional fees due to patent lawsuits, a $1.7 million increase to stock compensation associated with new awards and a $0.9 million increase in intangible asset amortization as a result of the $40.0 million milestone payment in March 2022 upon attaining $500.0 million in life-to-date aggregate net sales of WAKIX in the United States .
In June 2021, we initiated a Phase 2 proof-of-concept clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and anticipate topline results from this trial in the fourth quarter of 2023. ​ 76 Table of Contents Our partner, Bioprojet, completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medical Agency (“EMA”) seeking approval for a pediatric narcolepsy indication.
In 84 Table of Contents June 2021, we initiated a Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and announced topline results from this trial in the fourth quarter of 2023, in which clinically meaningful improvements were demonstrated in EDS and fatigue.
In April 2022, we initiated a Phase 3 registrational trial, the INTUNE Study, to evaluate the efficacy and safety of pitolisant in adult patients with IH and have seen continued strong momentum in patient enrollment, with approximately 85% of the targeted clinical trial sites activated.
In April 2022, we initiated a Phase 3 registrational trial, the INTUNE Study, to evaluate the efficacy and safety of pitolisant in adult patients with IH. We completed enrollment in the INTUNE study in May 2023 and we announced topline data in October 2023.
We recently received the initial topline data from our Phase 2 proof-of-concept clinical trial to evaluate pitolisant for the treatment of EDS and other key symptoms in patients with PWS, which showed a positive signal on the primary outcome related to EDS.
Based on the positive signals from the data from our Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS and other key symptoms in patients with PWS, an end-of-phase 2 meeting with the FDA was held in June 2023.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $6.8 million, which primarily consisted of $8.8 million in proceeds from exercised options and stock issuances offset by $2.0 million in principal payments associated with the Blackstone Credit Agreement.
Financing Activities Net cash used in financing activities for the year ended December 31, 2023, was $105.6 million, which primarily consisted of $202.3 million in payments of principal and exit fees associated with the extinguishment of the Blackstone Credit Agreement, $100 million in share repurchases, $1.0 million in principal payments associated with the Blackstone Credit Agreement, and $3.8 million principal payments related to the TLA Credit Agreement, partially offset by $197.0 million in proceeds associated with the TLA Credit Agreement, net of issuance costs, and $5.1 million in proceeds from the exercise of employee stock options.
Cost of product sales is primarily comprised of the royalty to Bioprojet. Research and Development Expenses Research and development expenses increased by $40.5 million, or 133.4%, for the year ended December 31, 2022 as compared to the same period in 2021.
Research and Development Expenses Research and development expenses increased by $5.2 million, or 7.3%, for the year ended December 31, 2023 compared to the same period in 2022.
We acquired full development and commercialization rights globally, but we have provided a grant-back license to ConSynance for the development and commercialization of the Compound in Greater China. We have recently initiated a preclinical proof-of-concept study to assess the effect of HBS-102 on hyperphagia, weight gain, and other metabolic parameters in a mouse model of PWS.
We acquired full development and commercialization rights for HBS-102 globally, but we have provided an indication-limited grant-back license to ConSynance for the development and commercialization of the Compound in Greater China.
Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020. 77 Table of Contents Financial Operations Overview Revenue Net product sales includes gross sales of WAKIX less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and discounts.
Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020.
On January 26, 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) with an approval for a pediatric narcolepsy indication expected by the EMA within 60 days of the positive CHMP opinion.
On January 26, 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) and in March 2023, the EMA granted approval for the marketing authorization of WAKIX for the treatment of narcolepsy in children 6 and older.
The increase was primarily related to the $30 million licensing fee incurred upon entering the 2022 LCA with Bioprojet, as well as increased clinical development work associated with IH, PWS and DM, and increased personnel costs. This increase was partially offset by $3.5 million asset acquisition of HBS-102 that was incurred during the year ended December 31, 2021.
The increase was primarily driven by a $22.9 million increase in clinical development work associated with PWS, ZYN002, IH, NG1/NG2 and DM1, a $4.0 million increase in personnel costs, a $1.3 million increase in stock compensation associated with new awards, a $3.8 million severance charge, and a $2.3 million IPR&D charge, both related to the acquisition of Zynerba, and a $0.8 million IPR&D charge related to preclinical milestones achieved for HBS-102 , partially offset by a $30 million licensing fee incurred upon entering the 2022 LCA with Bioprojet during the year ended December 31, 2022.
We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.
We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect. Term Loan A Credit Agreement On July 26, 2023, we entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders.
We believe that our anticipated cash from operating and financing activities, existing cash, cash equivalents and investments, as well as our ability to borrow additional funds under the Blackstone Credit agreement, will enable us to meet our operational liquidity needs and fund our planned investing activities for the next 12 months.
We believe that our existing cash, cash equivalents and investments on hand as of December 31, 2023, will enable us to meet our operational liquidity needs for the next 12 months.
Upon closing of the 2022 LCA on September 28, 2022, the $30.0 million licensing fee was recorded in research and development expenses within the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2022.
The $30.0 million licensing fee was recorded in research and development expenses within the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2022. 92 Table of Contents Recent Milestone Payments In March 2023, we achieved a preclinical milestone, which triggered a $0.8 million payment under the provisions of the APA, which was paid in April 2023.
Commercial Performance Metrics As of December 31, 2022, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. The average number of patients on WAKIX at the end of 2022 was approximately 4,900.
Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC, which was formed in May 2017, and Zynerba. 85 Table of Contents Commercial Performance Metrics As of December 31, 2023, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019.
The repayment schedule for the Initial Term Loan consists of quarterly $0.5 million principal payments commencing on December 31, 2021 and increasing to quarterly $5.0 million payments beginning on March 31, 2024, with a $145.5 million 82 Table of Contents payment due on the maturity date of August 9, 2026 (“Maturity Date”).
The repayment schedule for both the TLA Term Loan and the Incremental Term Loan (together, the “Term Loans”) consists of $3.8 million quarterly principal payments, which commence on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028.
The increase was due to the growth in the average number of patients on WAKIX and price increases. Cost of Product Sales Cost of product sales increased by $28.0 million, or 50.4%, for the year ended December 31, 2022 compared to the same period in 2021. The increase was due to higher sales of WAKIX.
The increase was primarily due to a 33.5% increase in units shipped, and the net impact of a 7.0% price increase which occurred in January 2023 . Cost of Product Sales Cost of product sales increased by $37.8 million, or 45.2%, for the year ended December 31, 2023, compared to the same period in 2022.
Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.
Net cash provided by financing activities for the year ended December 31, 2022 was $6.8 million, which primarily consisted of $8.8 million in proceeds from the exercise of employee stock options and stock issuances offset by $2.0 million in principal payments associated with the Blackstone Credit Agreement. 93 Table of Contents Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.
As it relates to any interest and penalties associated with any uncertain tax positions, our position is to include those interest and penalties as a component of income tax expense. Recent Accounting Pronouncements See Note 3 to our consolidated financial statements included herein under “Part II—Item 8.
As it relates to any interest and penalties associated with any uncertain tax positions, our position is to include those interest and penalties as a component of income tax expense. Business Combinations We account for business combinations and asset acquisitions in accordance with FASB ASC 805 Business Combinations.
Sales and Marketing Expenses Sales and marketing expenses increased by $11.2 million, or 16.4%, for the year ended December 31, 2022 as compared to the same period in 2021. The increase was primarily due to increased personnel costs related to sales force expansion, marketing activities driven by our commercialization of WAKIX, and increased patient assistance.
Sales and Marketing Expenses S ales and marketing expenses increased by $18.1 million, or 22.9%, for the year ended December 31, 2023 compared to the same period in 2022.
Net cash used in investing activities for the year ended December 31, 2021 was $100.3 million, which was primarily attributable to the $100.0 million milestone payment associated with the Bioprojet License Agreement.
Investing Activities Net cash used in investing activities for the year ended December 31, 2023, was $46.4 million, which was primarily attributable to $127.5 million in purchases of debt securities, $37.0 million related to the acquisition of Zynerba, net of cash received, and $0.3 million in purchases of property and equipment, partially offset by $118.3 million in proceeds from sales and maturities of investments.
Loss on Debt Extinguishment There were no extinguishments of debt for the year ended December 31, 2022. Loss on debt extinguishment was $26.1 million for the year ended December 31, 2021, due to the prepayment of the Credit Agreement with OrbiMed.
Loss on Debt Extinguishment Loss on debt extinguishment was $9.8 million for the year ended December 31, 2023. There was no comparable amount in the prior year periods. Interest Expense Interest expense increased by $5.0 million, or 26.4%, for the year ended December 31, 2023 compared to the same period in 2022.
Removed
We received the full data set at the end of 2022, which our team has been analyzing in preparation for an end-of-phase 2 meeting with the FDA to discuss the data. We intend to advance our development program in patients with PWS into a Phase 3 trial.
Added
A discussion of the year ended December 31, 2022, compared to the year ended December 31, 2021, has been reported previously under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 21, 2023.
Removed
We are working with Bioprojet on a path forward towards the submission to the FDA of a supplemental NDA for pediatric narcolepsy and, in addition, we remain committed to obtaining pediatric exclusivity for WAKIX.
Added
While the primary endpoint did not meet statistical significance, we believe the totality of the data showed favorable numerical trends for pitolisant in the treatment of adult patients with IH and we have scheduled a meeting with the FDA for March 2024 to discuss the path forward for IH.
Removed
We were founded in July 2017 as Harmony Biosciences II, LLC, a Delaware limited liability company. We converted to a Delaware corporation named Harmony Biosciences II, Inc. in September 2017 and, in February 2020, we changed our name to Harmony Biosciences Holdings, Inc.
Added
We believe we aligned with the FDA on the proposed Phase 3 registration study design to support further investigation of pitolisant as a potential treatment to address the unmet medical need for children, adolescents and adults with PWS experiencing EDS, for which there is currently no approved treatment.
Removed
Our operations are conducted by our wholly owned subsidiary, Harmony Biosciences, LLC (“Harmony”), which was formed in May 2017.
Added
In October 2023, we received FDA alignment regarding the protocol for the Phase 3 TEMPO study in patients with PWS, which we believe will satisfy the requirements for both the registrational trial and one of the two requirements for pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.
Removed
Our operations to date have consisted of building and staffing our organization, acquiring the rights to pitolisant, raising capital, opening an investigational new drug application (“IND”) for pitolisant in narcolepsy, conducting an Expanded Access Program (“EAP”) for pitolisant for appropriate patients with narcolepsy in the United States, preparing and submitting our NDA for pitolisant, gaining NDA approval for WAKIX for the treatment of EDS or cataplexy in adult patients with narcolepsy, and launching and commercializing WAKIX in the United States.
Added
We expect to initiate the Phase 3 study in the first quarter of 2024.
Removed
In addition, we have opened INDs for the development of pitolisant in PWS, DM and IH and have initiated clinical trials in pursuit of potential new indications in those rare disease patient populations.
Added
The safety profile was consistent with the established safety profile of pitolisant. Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication.
Removed
A change in the outcome of any of these variables with respect to the development of any of our programs or any product candidate we develop would significantly change the costs, timing and viability associated with the development and/or regulatory approval of such programs or product candidates.
Added
Based on the data from the positive Phase 3 trial conducted by Bioprojet, we submitted an sNDA for pediatric narcolepsy in December 2023. On February 21, 2024, we announced that the FDA has granted priority review of our pediatric narcolepsy sNDA and has set a Prescription Drug User Fee Act, or target action date, of June 21, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on the $197.5 million of principal outstanding as of December 31, 2022, an immediate 10% change in the LIBOR would not have a material impact on our debt-related obligations, financial position or results of operations.
Biggest changeBased on the 96 Table of Contents $196.3 million of principal outstanding as of December 31, 2023, an immediate 10% change in the SOFR would not have a material impact on our debt-related obligations, financial position or results of operations.
Foreign Currency Fluctuation Risk We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.
Foreign Currency Fluctuation Risk We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe and Australia. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.
Inflation Fluctuation Risk Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations for the years ended December 31, 2022 and 2021. ​
Inflation Fluctuation Risk Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations for the years ended December 31, 2023, and 2022. ​
Based on our $286.9 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of December 31, 2022, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.
Based on our $358.5 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of December 31, 2023, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.
Removed
As of December 31, 2022, we had $197.5 million in borrowings outstanding. The Initial Term Loan bears interest at an interest rate equal to LIBOR (subject to a 1.00% floor) plus 6.50%.
Added
As of December 31, 2023, we had $196.3 million in borrowings outstanding.
Added
The Term Loans bear interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.

Other HRMY 10-K year-over-year comparisons