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What changed in Harmony Biosciences Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Harmony Biosciences Holdings, Inc.'s 2024 and 2025 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 2025 report.

+421 added−374 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in Harmony Biosciences Holdings, Inc.'s 2025 10-K

421 paragraphs added · 374 removed · 290 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+41 added−34 removed189 unchanged
Biggest changeAdditionally, 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, which was replaced by a new manufacturer discount program on January 1, 2025 (as discussed below), under which they were required 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 24 Table of Contents 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.
Biggest changeAmong the provisions of the ACA of importance to us and our business are an increase of the minimum level of Medicaid rebates payable by manufacturers of brand name drugs; expansion of manufacturer Medicaid rebate liability to include drugs paid by Medicaid managed care organizations; a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs; the new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research; and the Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive.
To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, rare epilepsy, and neurobehavioral and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive.
The third patent family comprises pending applications in the United States., Europe, Japan, China, and Hong Kong which have claims directed to therapeutic combinations or formulations of drugs comprising a melanin-concentrating hormone (“MCH-1”) receptor antagonist, and methods of treating or preventing hyperphagia, moderate to severe binge eating disorder, bulimia nervosa, among other disorders, and management of obesity using an MCH-1 receptor agonist, and also has claims to certain MCH-1 receptor antagonists as compositions of matter.
The third patent family comprises pending applications in the United States., Europe, Japan, China, and Hong Kong which have claims directed to therapeutic combinations or formulations of drugs comprising a melanin-concentrating hormone (“MCH-1”) receptor antagonist, and methods of treating or preventing hyperphagia, moderate to severe binge eating disorder, and bulimia nervosa, among other disorders, and management of obesity using an MCH-1 receptor agonist, and also has claims to certain MCH-1 receptor antagonists as compositions of matter.
Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that (i) affects fewer than 200,000 individuals in the United States, or (ii) if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making the product available in the United States for the disease or condition will be recovered from sales of the product.
Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that (i) affects fewer than 200,000 individuals in the United States, or (ii) if it affects more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and making the product available in the United States for the disease or condition will be recovered from sales of the product.
Since its initial FDA approval in 2019 for excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy and subsequent approvals for cataplexy in adult patients in 2020 and EDS in pediatric patients six years and older in 2024, WAKIX has continued to reshape the treatment landscape for narcolepsy and remains the only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance by the U.S.
Since its initial FDA approval in 2019 for excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy and subsequent approvals for cataplexy in adult patients in 2020, EDS in pediatric patients six years and older in 2024 and cataplexy in pediatric patients six years and older in 2026, WAKIX has continued to reshape the treatment landscape for narcolepsy and remains the only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance by the U.S.
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. 16 Table of Contents ● 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.
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.
Under the sublicense agreement we obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights originally licensed from Teijin Pharma, the innovator of BP1.15205.
Under the Sublicense, we obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights originally licensed from Teijin Pharma, the innovator of BP1.15205.
Next Gen Pitolisant Formulations: Pitolisant Gastro-Resistant and Pitolisant High-Dose In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the 8 Table of Contents potential to add additional indications and formulations upon the agreement of both parties (see “Strategic Agreements” below).
Next Gen Pitolisant Formulations: Pitolisant Gastro-Resistant and Pitolisant High-Dose In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop 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 (see “Strategic Agreements” below).
We and/or our licensor also rely on protections under trade secret laws, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
We and/or our licensors also rely on protections under trade secret laws, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
In addition, if an orphan designated product receives marketing approval for a disease or condition broader than what is designated, it may not be entitled to orphan exclusivity. 20 Table of Contents DEA Regulation The Controlled Substances Act of 1970 (“CSA”) establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA.
In addition, if an orphan designated product receives marketing approval for a disease or condition broader than what is designated, it may not be entitled to orphan exclusivity. DEA Regulation The Controlled Substances Act of 1970 (“CSA”) establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA.
Item 1. Business. Overview At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.
Item 1. Business. Overview We are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.
Furthermore, an independent IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.
Furthermore, an independent Institutional Review Board (“IRB”) at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.
The 2022 LCA also requires a fixed trademark royalty and a tiered royalty based on net sales upon 12 Table of Contents commercialization, payable to Bioprojet on a quarterly basis for 10 years from the first commercial sale of each new product, the expiration of all regulatory exclusivity, or the expiration of the last Bioprojet patent covering the products.
The 2022 LCA also requires a fixed trademark royalty and a tiered royalty based on net sales upon commercialization, payable to Bioprojet on a quarterly basis for 10 years from the first commercial sale of each new product, the expiration of all regulatory exclusivity, or the expiration of the last Bioprojet patent covering the products.
In addition, the FDA currently requires as a condition of accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. 18 Table of Contents Fast-track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval but may expedite the development or approval process.
In addition, the FDA currently requires as a condition of accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast-track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval but may expedite the development or approval process.
We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases. EPX-100 has been granted orphan drug designation by the FDA for treatment of both DS and LGS.
We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases. EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of both DS and LGS.
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.
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. 14 Table of Contents U.S.
We have aligned with the FDA on the proposed Phase 3 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.
We have aligned with the FDA on the proposed Phase 3 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 7 Table of Contents approved treatment.
Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in 19 Table of Contents varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.
Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, California recently enacted legislation, the California Consumer Privacy Act (“CCPA”), which went into effect January 1, 2020.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, California recently 22 Table of Contents enacted legislation, the California Consumer Privacy Act (“CCPA”), which went into effect January 1, 2020.
The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United 23 Table of Contents Kingdom without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews or extends that decision.
The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews or extends that decision.
While the length of the patent term extension is related to the length of time the drug is under regulatory review, patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, and only one patent per approved drug may be extended under the Hatch-Waxman Act.
While the length of the patent term extension is related to the length of time the drug is under regulatory review, patent term extension cannot extend the remaining term 13 Table of Contents of a patent beyond a total of 14 years from the date of product approval, and only one patent per approved drug may be extended under the Hatch-Waxman Act.
Our WAKIX patent portfolio comprises of four U.S. patents and a U.S. patent application exclusively licensed to us from Bioprojet under the 2017 LCA. One U.S.
Our WAKIX patent portfolio consists of four U.S. patents and a U.S. patent application exclusively licensed to us from Bioprojet under the 2017 LCA. One U.S.
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 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.
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.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual 21 Table of Contents knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation.
Additionally, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
Additionally, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. 23 Table of Contents In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
The patents have claims directed to certain human MCH-1 receptor-selective 13 Table of Contents 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 2029 (the ‘743 and ‘378 patents, as well as the international patents).
The sponsor of a fast-track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review.
The sponsor of a fast-track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an 17 Table of Contents NDA is submitted, the application may be eligible for priority review.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of certain 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. 15 Table of Contents Preclinical Studies Once a product candidate is identified for development, it enters the preclinical testing stage.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of certain 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.
WAKIX competes with currently FDA-approved products for the treatment of EDS or cataplexy in adult patients with narcolepsy and EDS in children six years and older 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.
WAKIX competes with currently FDA-approved products for the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older 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.
A complete response letter usually describes the specific deficiencies in the 17 Table of Contents NDA identified by the FDA and may require additional clinical data, such as an additional clinical trial or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing.
A complete response letter usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data, such as an additional clinical trial or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing.
Patients have identified a need for treatment options that are easier to take and are dosed less frequently. We believe that once-daily dosing with WAKIX addresses this need and may help improve patient compliance with treatment. The U.S. narcolepsy market had an approximate net sales value of $2.9 billion in 2023.
Patients have identified a need for treatment options that are easier to take and are dosed less frequently. We believe that once-daily dosing with WAKIX addresses this need and may help improve patient compliance with treatment. The U.S. narcolepsy market had an approximate net sales value of $3.1 billion in 2025.
We depend on a single supplier of the active pharmaceutical ingredient (“API”) for our commercial product, WAKIX, and single API suppliers for each of our potential product candidates .
We depend on two suppliers of the active pharmaceutical ingredient (“API”) for our commercial product, WAKIX, and single API suppliers for each of our potential product candidates .
Xyrem is a Schedule III controlled substance available only through a restricted access REMS program. Xywav, a lower sodium formulation of Xyrem, was approved in July 2020, (became commercially available in November 2020), and is also a Schedule III controlled substance subject to the same restricted access REMS program as Xyrem.
Xyrem is a Schedule III controlled substance available only through a restricted access Risk Evaluation and Mitigation Strategy (“REMS”) program. Xywav, a lower sodium formulation of Xyrem, was approved in July 2020, (became commercially available in November 2020), and is also a Schedule III controlled substance subject to the same restricted access REMS program as Xyrem.
We initiated the Phase 3 TEMPO study in the first quarter of 2024. We remain committed to obtaining pediatric exclusivity for WAKIX. The initiation of the PWS Phase 3 registrational trial, the TEMPO study, and the data in pediatric narcolepsy are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.
We remain committed to obtaining pediatric exclusivity for WAKIX. The initiation of the PWS Phase 3 registrational trial, the TEMPO study, and the data in pediatric narcolepsy are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.
The 2022 LCA will expand our opportunity in narcolepsy, and potentially other indications mutually agreed upon by the parties. Pursuant to the 2022 LCA with Bioprojet, we have made progress in the development of two new formulations of pitolisant, pitolisant GR and pitolisant HD. Both formulations entered into clinical studies in the fourth quarter of 2023.
The 2022 LCA expands our opportunity in narcolepsy, and potentially other indications mutually agreed upon by the parties. Pursuant to the 2022 LCA, we have made progress in the development of two new formulations of pitolisant: Pitolisant GR and Pitolisant HD. Both formulations entered clinical studies in the fourth quarter of 2023.
Clinical trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.
Clinical trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated.
In August 2019, WAKIX was approved by the FDA for the treatment of EDS in adult patients with narcolepsy, and its U.S. commercial launch was initiated in November 2019. In October 2020, WAKIX was approved by the FDA for the treatment of cataplexy in adult patients with narcolepsy. WAKIX represents a novel approach to narcolepsy treatment.
In August 2019, WAKIX was approved by the FDA for the treatment of EDS in adult patients with narcolepsy, and its U.S. commercial launch was initiated in November 2019. In October 2020, WAKIX was approved by the FDA for the treatment of cataplexy in adult patients with narcolepsy.
Bioprojet also granted us a co-exclusive (with Bioprojet) license to Bioprojet Assets to clinically develop and register the pitolisant product in the field in the United States.
Bioprojet also granted us a co-exclusive (with Bioprojet) license to Bioprojet Assets to clinically develop and 11 Table of Contents register the pitolisant product in the field in the United States.
Net product revenue related to the sales of WAKIX was $714.7 million for the year ended December 31, 2024. As of December 31, 2024, we continued to see growth in unique HCPs prescribing WAKIX since it became available in November 2019.
Net product revenue related to the sales of WAKIX was $868.5 million for the year ended December 31, 2025. As of December 31, 2025, we continued to see growth in unique HCPs prescribing WAKIX since it became available in November 2019.
Conversely, WAKIX is priced higher than other competitors such as Provigil (modafinil), Nuvigil, Sunosi (armodafinil) and certain generic competitors, such as methylphenidate and amphetamine, which may contribute to third-party payor preferences for those lower-priced treatment options relative to WAKIX. PWS and DM1. There are currently no FDA approved therapies for PWS.
Conversely, WAKIX is priced higher than other competitors such as Provigil (modafinil), Nuvigil, Sunosi (armodafinil) and certain generic competitors, such as methylphenidate and amphetamine, which may contribute to third-party payor preferences for those lower-priced treatment options relative to WAKIX. PWS and DM1.
Pitolisant was developed by Bioprojet and approved by the EMA in 2016 for the treatment of narcolepsy in adult patients with or without cataplexy and in 2021 for the treatment of EDS in adult patients with obstructive sleep apnea.
Pitolisant was developed by Bioprojet and approved by the European Medicines Agency (the “EMA”) in 2016 for the treatment of narcolepsy in adult patients with or without cataplexy and in 2021 for the treatment of EDS in adult patients with obstructive sleep apnea.
Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold.
The average number of patients on WAKIX in the fourth quarter of 2024 was approximately 7,100. ​ 6 Table of Contents Our Development Pipeline Development Pipeline Chart Sleep/Wake Franchise Pitolisant.
The average number of patients on WAKIX in the fourth quarter of 2025 was approximately 8,500. ​ 6 Table of Contents Our Development Pipeline Development Pipeline Chart Sleep/Wake Franchise Pitolisant.
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.
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.
Additionally, for DM1, there are several companies pursuing clinical development of therapies including, but not limited to, product candidates from Avidity Biosciences, Inc., Vertex Pharmaceuticals, Inc., Entrada Therapeutic, Inc. and PepGen, Inc. ​ FXS and 22q. There are currently no FDA approved therapies for FXS.
Additionally, for DM1, there are several companies pursuing clinical development of therapies including, but not limited to, product candidates from Avidity Biosciences, Inc., Vertex Pharmaceuticals, Inc., Entrada Therapeutic, Inc. and PepGen, Inc. ​ DS and LGS.
We have continued to pursue label expansion of WAKIX in narcolepsy and 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 including: Idiopathic Hypersomnia IH is a central disorder of hypersomnolence resulting in sleep-wake state instability.
We have continued to pursue label expansion of WAKIX in narcolepsy and seek new indications in rare neurological disease patient populations that have EDS as a prominent symptom, along with other symptoms mediated by central nervous system (“CNS”) histamine signaling including: Idiopathic Hypersomnia IH is a rare central disorder of hypersomnolence characterized by EDS, non-refreshing sleep and sleep inertia.
The DEA typically inspects a facility to review its security measures prior to issuing a registration. Security requirements vary by controlled substance schedule, with the most stringent requirements applying to Schedule I and Schedule II substances. Required security measures include background checks on employees and physical control of inventory through measures such as cages, surveillance cameras and inventory reconciliations.
Security requirements vary by controlled substance schedule, with the most stringent requirements applying to Schedule I and Schedule II substances. Required security measures include background checks on employees and physical control of inventory through measures such as cages, surveillance cameras and inventory reconciliations.
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. 11 Table of Contents ● 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.
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. ● Procos, S.p.A. operates as an alternate drug substance manufacturing site for WAKIX API. ● Patheon UK Limited and Patheon Pharmaceuticals, Inc., CDMOs owned by Thermo Fisher Scientific Inc., manufacture our finished product tablets. ● Pharma Packaging Solutions, LLC dba Tjoapack, LLC, fills unlabeled bottles and performs labeling and secondary packaging. ● Cardinal Health, Inc. is our third-party logistics provider and manages reverse distribution, pharmaceutical returns and product recall, if needed.
In October 2023, we received FDA feedback regarding our proposed study protocol for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as a registrational trial and will support our efforts to seek pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.
The Phase 3 TEMPO study in patients with PWS has the potential to serve as a registrational trial and will support our efforts to seek pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS. We initiated the Phase 3 TEMPO study in the first quarter of 2024.
License and Commercialization Agreements with Bioprojet In July 2017, we and Bioprojet entered into the Bioprojet License Agreement (the “2017 LCA”).
License and Commercialization Agreements with Bioprojet In July 2017, we and Bioprojet entered into the 2017 LCA.
Customers For the year ended December 31, 2024, three customers accounted for 100% of gross product revenue; Caremark LLC accounted for 39% of gross product revenue; Accredo Health Group, Inc. accounted for 34% of gross product revenue; and PANTHERx Specialty Pharmacy LLC accounted for 27% of gross product revenue.
Customers For the year ended December 31, 2025, three customers accounted for 100% of gross product revenue; Caremark LLC accounted for 38% of gross product revenue; Accredo Health Group, Inc. accounted for 36% of gross product revenue; and PANTHERx Specialty Pharmacy LLC accounted for 26% of gross product revenue.
We are also aware of several companies pursuing clinical development of therapies including, but not limited to, product candidates from Supernus Pharmaceuticals, Inc. for the treatment of DS and LGS, SK Life Science, Inc. for the treatment of LGS and Stoke Therapeutics, Inc. for the treatment of DS. ​ Manufacturing, Supply and Distribution We sell WAKIX to a limited number of specialty distributors, that, in turn, distribute WAKIX to patients.
We are also aware of several companies pursuing clinical development of therapies including, but not limited to, product candidates from Stoke Therapeutics for the treatment of DS, Encoded for the treatment of DS, Lundbeck for the treatment of DEE (including DS and LGS), Bright Minds for the treatment of DEE (including DS and LGS), and Praxis Precision Medicines for the treatment of DEE (including DS and LGS). ​ Manufacturing, Supply and Distribution We sell WAKIX to a limited number of specialty distributors, that, in turn, distribute WAKIX to patients.
We acquired an exclusive license to develop, manufacture and commercialize pitolisant in the United States pursuant to our license agreement with Bioprojet (as amended, the “2017 LCA”) in July 2017. Pitolisant was granted Orphan Drug designation for the treatment of narcolepsy by the FDA in 2010.
We acquired an exclusive license to develop, manufacture and commercialize pitolisant in the United States pursuant to the 2017 LCA. Pitolisant was granted Orphan Drug designation for the treatment of narcolepsy by the FDA in 2010.
We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.
As such, there is a recognized need for improved treatment options for both conditions. We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.
Additionally, Avadel Pharmaceuticals launched a once nightly formulation version of sodium oxybate in June 2023.
Additionally, Avadel Pharmaceuticals (acquired by Alkermes Plc in February 2026) launched a once nightly formulation version of sodium oxybate in June 2023.
Clinical Trials All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs, which include, among other things, the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
As a result, submission of an IND may not result in the FDA allowing clinical trials to commence. 15 Table of Contents Clinical Trials All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs, which include, among other things, the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
Facilities Our corporate headquarters are located at 630 W. 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, 2024, 77 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. In November 2025, we extended the lease for our corporate headquarters through March 31, 2031. As of December 31, 2025, 101 of our employees are located at our corporate headquarters.
There are multiple FDA approved therapies for the treatment of DS, LGS or both DS and LGS including, but not limited to, products from GW Pharmaceuticals, Ltd. and Lunbeck, Inc. for the treatment of DS and LGS, Biocodex for the treatment of DS and Eisai Co., Ltd. for the treatment of LGS.
There are multiple FDA approved therapies for the treatment of DS, LGS or both DS and LGS including, but not limited to, products from Jazz Pharmaceuticals for the treatment of DS and LGS, UCB for the treatment 10 Table of Contents of DS and LGS, Biocodex for the treatment of DS, Eisai Co., Ltd. for the treatment of LGS, Janssen for the treatment of LGS, GlaxoSmithKline for the treatment of LGS, and Assertio Holdings for the treatment of LGS.
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.
However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. 19 Table of Contents 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.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. 21 Table of Contents The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, implementation of corporate compliance programs, and reporting of payments or transfers of value to healthcare professionals. 22 Table of Contents Data Privacy and Security Laws Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, implementation of corporate compliance programs, and reporting of payments or transfers of value to healthcare professionals.
An IND is a request for authorization from the FDA to administer an investigational drug product to humans. An IND will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the trial includes an efficacy evaluation.
An IND will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the trial includes an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted.
Marketing Approval Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. 16 Table of Contents Marketing Approval Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.
We consider our relationship with our employees to be good. 25 Table of Contents We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.
Rare Epilepsy Franchise EPX-100 (clemizole hydrochloride). EPX-100 is a serotonin (5HT-2) receptor agonist evaluated for DEEs, initially in DS and LGS, because of the established serotonergic mechanism of action in DEEs and based on the positive results from the zebra fish model.
EPX-100 is a serotonin (5HT-2) receptor agonist evaluated for DEEs, initially in DS and LGS, because of the established serotonergic mechanism of action in DEEs and based on the positive results from the zebra fish model. Patients with DS and LGS often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy.
In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and believe we reached alignment on a path to sNDA resubmission, which is planned for the second quarter of 2025.
In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which was submitted in the third quarter of 2025 . In February 2026, the FDA approved WAKIX for the treatment of cataplexy in pediatric patients six years and older with narcolepsy.
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. For example, separate registrations are needed for import and manufacturing, and each registration will specify which schedules of controlled substances are authorized.
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.
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.
The ACA was signed into law in 2010, which substantially changed the way healthcare is financed by both governmental and private insurers in the United States and significantly affected the pharmaceutical industry.
In April 2024, we expanded into orexin science through a sublicense agreement with Bioprojet for an orexin 2 receptor agonist (“BP1.15205”) in preclinical development for narcolepsy and other potential indications.
Two of the next generation formulations, pitolisant Gastro-Resistant (“Pitolisant GR”) and pitolisant High-Dose (“Pitolisant HD”) are currently in clinical development. In April 2024, we expanded into orexin science through a sublicense agreement with Bioprojet for an orexin 2 receptor agonist (“BP1.15205”) in preclinical development for narcolepsy and other potential indications (the “Sublicense”).
Non-provisional patents have been filed for both of these formulations, with the potential for patent protection to the mid-2040’s. BP1.15205. In April 2024, we entered into a sublicense agreement with Bioprojet for BP1.15205, an orexin 2 receptor agonist for the treatment of narcolepsy and other potential indications (the “Sublicense”).
In April 2024, we entered into the Sublicense with Bioprojet for BP1.15205, an orexin 2 receptor agonist for the treatment of narcolepsy and other potential indications.
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.
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.
In addition, unlike stimulants, WAKIX does not increase dopamine levels in the brain’s reward center, which contributes to its lack of abuse potential. ​ ● WAKIX can be used as monotherapy or administered concomitantly with other narcolepsy treatments. Narcolepsy is a difficult disorder to manage, and the majority of narcolepsy patients often require multiple medications to treat their symptoms.
Unlike stimulants, in clinical trials, WAKIX showed no evidence for the development of drug tolerance or withdrawal symptoms. In addition, unlike stimulants, WAKIX does not increase dopamine levels in the brain’s reward center, which contributes to its lack of abuse potential. ​ ● WAKIX can be used as monotherapy or administered concomitantly with other narcolepsy treatments.
In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more next generation pitolisant based products in the United States and Latin America. Two of the next generation formulations, pitolisant Gastro-Resistant (“pitolisant GR”) and pitolisant High-Dose (“pitolisant HD”) are currently in clinical development.
In July 2022, we entered into a License and Commercialization Agreement with Bioprojet (the “2022 LCA”) whereby we obtained exclusive rights to manufacture, develop and commercialize one or more next generation pitolisant based products in the United States and Latin America.
The final report was received during the third quarter of 2024 and the results are consistent with the expected results. In addition, a 13-week toxicology study has been completed, and we believe the preliminary results are encouraging . Neurobehavioral Franchise ZYN-002.
The final report was received during the third quarter of 2024 and the results are consistent with the expected results. In addition, a 13-week toxicology study has been completed, and we believe the results are encouraging . We are evaluating HBS-102 in other pre-clinical experiments for additional potential indications. Rare Epilepsy Franchise EPX-100 (clemizole hydrochloride).
We received data from the pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward Phase 3 registrational trials in narcolepsy and IH. The formulation optimization and technical operations work is ongoing, with a goal to initiate a Phase 3 registrational study in the fourth quarter of 2025.
We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials. In addition, we submitted an Investigational New Drug (“IND”) application for pitolisant HD with the FDA to initiate Phase 3 registrational trials in narcolepsy and idiopathic hypersomnia (“IH”) in the fourth quarter of 2025.
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. ​ ● WAKIX is not a stimulant.
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 are also advancing late-stage clinical programs exploring pitolisant in Prader-Willi syndrome (“PWS”) and myotonic dystrophy type 1 (“DM1”) and continue to grow our impact in other rare neurological diseases.
Drug Enforcement Administration (“DEA”). Beyond narcolepsy, we have taken a mechanistic-based approach to expanding the reach of pitolisant, advancing late-stage clinical programs exploring pitolisant in idiopathic hypersomnia (“IH”), Prader-Willi syndrome (“PWS”) and myotonic dystrophy type 1 (“DM1”) and continue to grow our impact in other rare neurological diseases.
Preclinical tests include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, among other things, to the FDA as part of an IND.
An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, among other things, to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans.
Under the Sublicense, we paid Bioprojet an upfront license fee of $25.5 million, which we recognized as an IPR&D charge recorded in research and development within the consolidated statements of operations and comprehensive income for the year ended December 31, 2024, and will also be obligated to pay up to $127.5 million upon achievement of development and regulatory milestones and up to $240.0 million upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using BP1.15205 in the Licensed Territories.
Under the Sublicense, we paid Bioprojet an upfront license fee of $25.5 million, which we recognized as an IPR&D charge recorded in research and development within the consolidated statements of operations and comprehensive income for the year ended December 31, 2024.
Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing.
Even regulatory proposals or executive actions that are ultimately deemed unlawful could negatively impact the U.S. pharmaceutical sector and our business. ​ Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure, drug price reporting and other transparency measures.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong 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; 56 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.
Biggest changeAmong the provisions of the ACA of importance to the pharmaceutical industry and our business 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; ● extension of manufacturers’ Medicaid rebate liability to covered outpatient drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; ● 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 57 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.
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 30 Table of Contents 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; 30 Table of Contents ● 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.
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 52 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.
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 53 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.
Additionally, if we or others later identify undesirable side effects caused by WAKIX, either in the post-marketing setting or in clinical trials in other potential indications for which we develop pitolisant, or in clinical trials for other product candidates, a number of potentially significant negative consequences could result, including but not limited to: ● the delay, prevention or withdrawal of approvals by regulatory authorities; 45 Table of Contents ● the requirement to suspend marketing of a product or withdraw it from the marketplace; ● the requirement of additional warnings on the prescribing label or limitations on product access; ● requirements to conduct costly post-marketing studies; ● requirements to change the manner in which a product is administered; ● the requirement of a REMS plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use; ● designation as a controlled substance by the DEA; ● a product may become less competitive; ● fines, injunctions or civil and criminal penalties; ● litigation and the potential to be held liable for harm caused to patients; and ● an adverse effect on our reputation.
Additionally, if we or others later identify undesirable side effects caused by WAKIX, either in the post-marketing setting or in clinical trials in other potential indications for which we develop pitolisant, or in clinical trials for other product candidates, a number of potentially significant negative consequences could result, including but not limited to: ● the delay, prevention or withdrawal of approvals by regulatory authorities; 46 Table of Contents ● the requirement to suspend marketing of a product or withdraw it from the marketplace; ● the requirement of additional warnings on the prescribing label or limitations on product access; ● requirements to conduct costly post-marketing studies; ● requirements to change the manner in which a product is administered; ● the requirement of a REMS plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use; ● designation as a controlled substance by the DEA; ● a product may become less competitive; ● fines, injunctions or civil and criminal penalties; ● litigation and the potential to be held liable for harm caused to patients; and ● an adverse effect on our reputation.
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; 69 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.
These provisions include: ● providing for a classified board of directors with staggered, three-year terms; 71 Table of Contents ● 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 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.
Regulators, IRBs of the institutions in which clinical trials are being conducted or data monitoring committees may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, 47 Table of Contents failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Regulators, IRBs of the institutions in which clinical trials are being conducted or data monitoring committees may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, 48 Table of Contents failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 40 Table of Contents Raising additional funds by issuing securities may cause dilution to existing shareholders, raising additional funds through debt financings may involve restrictive covenants, and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights to our technologies or product candidates.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 41 Table of Contents Raising additional funds by issuing securities may cause dilution to existing shareholders, raising additional funds through debt financings may involve restrictive covenants, and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights to our technologies or product candidates.
In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials, and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. 49 Table of Contents Even if we receive orphan drug designation for our product candidates, we may not be able to maintain the benefits associated with orphan drug designation, including marketing exclusivity, which may cause our product revenue to be reduced.
In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials, and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. 50 Table of Contents Even if we receive orphan drug designation for our product candidates, we may not be able to maintain the benefits associated with orphan drug designation, including marketing exclusivity, which may cause our product revenue to be reduced.
Competition that our products may face from generic versions of our products could materially and adversely affect our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates. 46 Table of Contents We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
Competition that our products may face from generic versions of our products could materially and adversely affect our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates. 47 Table of Contents We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
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 53 Table of Contents 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 54 Table of Contents and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
If we or third-party CMOs, CROs or other contractors or consultants fail to comply with applicable federal, state or local regulatory requirements, we could be subject to a range of regulatory actions that could affect our or our contractors’ ability to develop and commercialize our product candidates and could harm or prevent sales of any affected products that we are able to commercialize, or could substantially increase the costs and expenses of developing, commercializing and marketing our products.
If we or third-party CDMOs, CROs or other contractors or consultants fail to comply with applicable federal, state or local regulatory requirements, we could be subject to a range of regulatory actions that could affect our or our contractors’ ability to develop and commercialize our product candidates and could harm or prevent sales of any affected products that we are able to commercialize, or could substantially increase the costs and expenses of developing, commercializing and marketing our products.
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 39 Table of Contents 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.
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 55 Table of Contents 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 56 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 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; ● 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; ● the adoption of WAKIX as a first-line therapy for EDS and/or cataplexy in adults and pediatric patients six years and older 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.
Coast Guard). We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and antimony laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic markets. We can face criminal liability and other serious consequences for violations, which can harm our business.
We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and antimony laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic markets. We can face criminal liability and other serious consequences for violations, which can harm our business.
Furthermore, such 48 Table of Contents a designation does not increase the likelihood that any product candidate that may be granted Fast Track designation will receive regulatory approval in the United States. Many product candidates that have received Fast Track designation have ultimately failed to obtain approval.
Furthermore, such 49 Table of Contents a designation does not increase the likelihood that any product candidate that may be granted Fast Track designation will receive regulatory approval in the United States. Many product candidates that have received Fast Track designation have ultimately failed to obtain approval.
See “Part I—Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. 26 Table of Contents Risks Related to Our Business We are substantially dependent on the commercial success of our only approved product, WAKIX.
See “Part I—Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. Risks Related to Our Business We are substantially dependent on the commercial success of our only approved product, WAKIX.
Unfavorable press about or ratings or assessments of our ESG strategies or practices, regardless of whether or not we comply with applicable legal requirements, may lead to negative investor sentiment toward us, which may hinder the Company’s access to capital.
Unfavorable press about or ratings or assessments of our ESG strategies or practices, regardless of whether or not we comply with applicable legal requirements, may lead to negative investor sentiment toward us, which may hinder our access to capital.
If the patent applications we may own or in-license in the future with respect to our current and future product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for any of our current or future product candidates, it could dissuade other companies from collaborating with us to develop future product candidates, and threaten our ability to commercialize our current and future product candidates.
If the patent applications we may own or in-license in the future with respect to our current and future product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for any of our current or future product candidates, it could dissuade other companies from collaborating with us to develop 63 Table of Contents future product candidates, and threaten our ability to commercialize our current and future product candidates.
These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, 51 Table of Contents 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, 52 Table of Contents sell and distribute our product candidates, if approved.
If we adopt an alternative name, we would lose the benefit of our existing trademark applications for such product candidate, and may be required to expend significant additional resources in an effort to identify a suitable product 60 Table of Contents name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.
If we adopt an alternative name, we would lose the benefit of our existing trademark applications for such product candidate, and may be required to expend significant additional resources in an effort to identify a suitable product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.
Moreover, any such litigation or the threat thereof may adversely affect our reputation, our ability to form strategic alliances or sublicense our rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on our business, results of operations and financial condition.
Moreover, any such litigation or the threat thereof may adversely affect our reputation, our ability to form strategic alliances 69 Table of Contents or sublicense our rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on our business, results of operations and financial condition.
We could also be asked to conduct post marketing clinical studies to verify the 50 Table of Contents safety and efficacy of future product candidates in general or in specific patient subsets.
We could also be asked to conduct post marketing clinical studies to verify the 51 Table of Contents safety and efficacy of future product candidates in general or in specific patient subsets.
The revised SCCs must be used for relevant new data transfers from September 27, 2021; existing 54 Table of Contents standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022.
The revised SCCs must be used for relevant new data transfers from September 27, 2021; existing 55 Table of Contents standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our 66 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.
Because we expect the sales of WAKIX to generate substantially all of our revenue for the foreseeable future, the failure of WAKIX to find market acceptance would substantially harm our business and could require us to seek additional financing. The market opportunity for WAKIX or any future product candidate we develop may be smaller than we estimate.
Because we expect the sales of WAKIX to generate substantially all of our revenue for the foreseeable future, the failure of WAKIX to find market acceptance would substantially harm our business and could require us to seek additional financing. 28 Table of Contents The market opportunity for WAKIX or any future product candidate we develop may be smaller than we estimate.
Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors, and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.
Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors, and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United 44 Table of Contents States.
We have obtained a rare pediatric disease designation for EPX100 for the treatment of Dravet Syndrome, however, there is no guarantee that FDA approval of will result in issuance of a priority review voucher. In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications.
We have obtained a rare pediatric disease designation for EPX100 for the treatment of Dravet Syndrome and Lennox-Gastaut Syndrome, however, there is no guarantee that FDA approval of will result in issuance of a priority review voucher. In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications.
The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself 42 Table of Contents may be jeopardized.
The FDA or comparable foreign regulatory authority may 43 Table of Contents therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.
Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after the filing of the earliest non-provisional application to which the patent claims priority. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited.
Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after the filing of the earliest non- 64 Table of Contents provisional application to which the patent claims priority. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited.
In that event, we would be unable to further develop and commercialize our current and future product candidates, which could harm our business significantly. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
In that event, we would be unable to further develop and commercialize our current and future product candidates, which 67 Table of Contents could harm our business significantly. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government 61 Table of Contents funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
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. 68 Table of Contents Our quarterly operating results may fluctuate significantly. Our operating results are subject to quarterly fluctuations.
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. Our quarterly operating results may fluctuate significantly. Our operating results are subject to quarterly fluctuations.
In our efforts to market WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, and for EDS in children six years and older 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.
In our efforts to market WAKIX for the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older 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 delays or interruptions in the manufacture and supply of WAKIX could result in delays for our planned clinical trials, impair our ability to meet demand for new WAKIX prescriptions and impede our clinical trial recruitment, testing, monitoring, data collection and analysis and other related activities.
Any delays or interruptions in the manufacture and supply of WAKIX could result in delays for our planned clinical trials, impair our ability to meet demand for new WAKIX 35 Table of Contents prescriptions and impede our clinical trial recruitment, testing, monitoring, data collection and analysis and other related activities.
Historically, our business has been substantially dependent on WAKIX and our financial results have been significantly influenced by sales of WAKIX, which was approved for the treatment of EDS in adult patients with narcolepsy in August 2019 and for the treatment of cataplexy in adult patients with narcolepsy in October 2020.
Historically, our business has been substantially dependent on WAKIX and our financial results have been significantly influenced by sales of WAKIX, which was approved for the treatment of EDS in adult patients with narcolepsy 26 Table of Contents in August 2019 and for the treatment of cataplexy in adult patients with narcolepsy in October 2020.
Our future financial performance and our ability to successfully develop and commercialize WAKIX or any future product candidates will depend, in part, on our ability to effectively manage any future growth. Our management will have 34 Table of Contents to dedicate a significant amount of its attention to managing these growth activities.
Our future financial performance and our ability to successfully develop and commercialize WAKIX or any future product candidates will depend, in part, on our ability to effectively manage any future growth. Our management will have to dedicate a significant amount of its attention to managing these growth activities.
If the third party submits a paragraph IV certification to the FDA, a notice of the paragraph IV certification must also be sent to us 63 Table of Contents once the third party’s ANDA is accepted for filing by the FDA. We may then initiate a lawsuit to defend the patents identified in the notice.
If the third party submits a paragraph IV certification to the FDA, a notice of the paragraph IV certification must also be sent to us once the third party’s ANDA is accepted for filing by the FDA. We may then initiate a lawsuit to defend the patents identified in the notice.
As of December 31, 2024, our directors, officers, five percent or greater stockholders, and their respective affiliates beneficially owned in the aggregate approximately 55% 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, 2025, our directors, officers, five percent or greater stockholders, and their respective affiliates beneficially owned in the aggregate approximately 44% 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.
In addition, we expect to incur additional costs in hiring, training and retaining such additional personnel. If we are not able to effectively expand our organization, we may not be able to successfully execute the tasks necessary to further develop and commercialize pitolisant or any future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
In addition, we expect to incur additional costs in hiring, training and retaining such additional personnel. 34 Table of Contents If we are not able to effectively expand our organization, we may not be able to successfully execute the tasks necessary to further develop and commercialize pitolisant or any future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
For example, in recent years, the U.S. government has 59 Table of Contents shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections at domestic and foreign manufacturing facilities at various points.
For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections at domestic and foreign manufacturing facilities at various points.
Under the current statutory sunset provisions, after December 20, 2024, FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the product candidate, and that designation was granted by December 20, 2024.
Under the statutory sunset provisions, after December 20, 2024, FDA could only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the product candidate, and that designation was granted by December 20, 2024.
Our and their assignment agreements may not be self- executing or may be breached, and we may be forced to bring claims against 67 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.
We also cannot assure you that our efforts to develop and commercialize pitolisant for other indications beyond the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy will be successful.
We also cannot assure you that our efforts to develop and commercialize pitolisant for other 29 Table of Contents indications beyond the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy will be successful.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our 37 Table of Contents business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other U.S. federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other U.S. federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. 38 Table of Contents A variety of risks associated with operating internationally could materially adversely affect our business.
If we are unable to acquire such intellectual property outright, or obtain licenses to such intellectual property from such third parties when needed or on commercially reasonable terms, our ability to commercialize our current and future product candidates, if approved, would likely be delayed.
If we are unable to acquire such intellectual property outright, or obtain licenses to such intellectual property from such third parties when 66 Table of Contents needed or on commercially reasonable terms, our ability to commercialize our current and future product candidates, if approved, would likely be delayed.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. 38 Table of Contents Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.
We cannot guarantee that WAKIX or any other product candidates we may seek to develop will ever be commercially successful, and to the extent they are not commercially successful, such product candidates would incur 28 Table of Contents significant expense with no corresponding revenue.
We cannot guarantee that WAKIX or any other product candidates we may seek to develop will ever be commercially successful, and to the extent they are not commercially successful, such product candidates would incur significant expense with no corresponding revenue.
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.
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 27 Table of Contents profits from operations.
One or more third parties may challenge the current patents, or future patents within our portfolio, which could result in the invalidation of, or render unenforceable, some or all of the relevant patent claims or a finding of non-infringement.
One or more third parties have challenged, and additional third parties in the future may challenge the current patents, or future patents within our portfolio, which could result in the invalidation of, or render unenforceable, some or all of the relevant patent claims or a finding of non-infringement.
While we received approval for the indications of the treatment of EDS and cataplexy in adult patients with narcolepsy and for EDS in children six years and older with narcolepsy, WAKIX is not indicated to treat any other conditions. We are prohibited from promoting WAKIX for any other indication unless we are granted FDA approval for such indication.
While we received approval for the indications of the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older with narcolepsy, WAKIX is not indicated to treat any other conditions. We are prohibited from promoting WAKIX for any other indication unless we are granted FDA approval for such indication.
In June 2024, the FDA approved WAKIX for the treatment of excessive daytime sleepiness in pediatric patients, six years and older, with narcolepsy.
In June 2024, the FDA approved WAKIX for the treatment of excessive daytime sleepiness in pediatric patients six years and older with narcolepsy. In February 2026, the FDA approved WAKIX for the treatment of cataplexy in pediatric patients six years and older with narcolepsy.
We may need to increase the size and capabilities of our organization based on business need, and we may experience difficulties in managing our growth. We commenced operations in 2017 and, as of December 31, 2024, had 268 employees.
We may need to increase the size and capabilities of our organization based on business need, and we may experience difficulties in managing our growth. We commenced operations in 2017 and, as of December 31, 2025, had 293 employees.
The 340B ceiling price is calculated using a statutory formula based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate Program, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
The 340B ceiling price is calculated using a statutory formula based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several types of providers, including hospitals and cancer treatment centers, and increased the statute of limitations period in which the government may recover overpayments to providers from three to five years.
Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several types of providers, including hospitals and cancer treatment centers, and increased the statute of limitations period in which the government may recover overpayments to providers from three to five years.
These data include, among other things, the average manufacturer price (“AMP”) and, in the case of innovator products, the best price (“BP”) for each drug which, in general, represents the lowest price available from the manufacturer to any entity in the United States in any pricing structure, calculated to include all sales and associated rebates, discounts and other price concessions.
These data include the average manufacturer price (“AMP”) for each drug and, in the case of innovator products, the best price, which in general represents the lowest price available from the manufacturer to certain entities in the United States in any pricing structure, calculated to include all sales and associated rebates, discounts and other price concessions.
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.
Even with the requisite approvals from the FDA and other regulatory authorities, the continued commercial success of WAKIX for the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older 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 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. 70 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.
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.
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. 44 Table of Contents WAKIX has been approved by the FDA for the treatment of EDS and cataplexy in adult patients with narcolepsy, and for the treatment of EDS in children six years and older 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. 45 Table of Contents WAKIX has been approved by the FDA for the treatment of EDS and/or cataplexy in adults and pediatric patients six years or older with narcolepsy.
Although a substantial amount of our effort is focused on the commercialization of WAKIX for the treatment of EDS in adult patients with narcolepsy and cataplexy in adult patients with narcolepsy, we also may seek to identify, in-license or acquire, discover, develop and commercialize additional product candidates in the rare neurological disorders field, such as our recent Epygenix acquisition, and to identify other indications for pitolisant beyond the treatment of EDS in adult patients 29 Table of Contents with narcolepsy and cataplexy in adult patients with narcolepsy.
Although a substantial amount of our effort is focused on the commercialization of WAKIX for the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older with narcolepsy, we also may seek to identify, in-license or acquire, discover, develop and commercialize additional product candidates in the rare neurological disorders field, such as our recent Epygenix acquisition, and to identify other indications for pitolisant beyond the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older with narcolepsy.
Failure to make necessary disclosures and/or to identify overpayments could result in allegations against us under the Federal False Claims Act and other laws and regulations.
Failure to make necessary disclosures and/or to identify contract overcharges could result in allegations against us under the False Claims Act and other laws and regulations.
The ACA expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, but exempts “orphan drugs” from the ceiling price requirements for these covered entities.
The ACA expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, but exempts “orphan drugs,” such as WAKIX, from the ceiling price requirements for these covered entities.
If the number of our addressable patients is not as large as we estimate or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of WAKIX.
If the number of our addressable patients is not as large as we estimate or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of WAKIX. If we are not able to generate substantial revenue from the sale of WAKIX, we may not remain profitable.
Moreover, a third party may challenge the current patents, or future patents within our portfolio, which could result in the invalidation of some or all of the patents that might otherwise be eligible for listing in the Orange Book for one of our products.
Moreover, third parties have challenged, and additional third parties in the future may challenge the current patents, or future patents within our portfolio, which could result in the invalidation of some or all of the patents that might otherwise be eligible for listing in the Orange Book for one of our 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 41 Table of Contents 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.
Although we have obtained regulatory 42 Table of Contents approval for WAKIX in the United States for the treatment of EDS and/or cataplexy in adults and pediatric patients six years and older 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.
For example, we may face supply chain and 35 Table of Contents manufacturing limitations or difficulties as resources are allocated elsewhere.
For example, we may face supply chain and manufacturing limitations or difficulties as resources are allocated elsewhere.
Any required refunds to the U.S. government or responding to a government investigation or enforcement action would be expensive and time consuming and could have a material adverse effect on our business, results of operations and financial condition.
Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
As part of this program, we are obligated to make our products available for procurement on an FSS contract under which we must comply with standard government terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price (“FCP”) to four federal agencies (VA, U.S. Department of Defense (“DOD”), Public Health Service, and U.S.
As part of this program, we are required to make our products available for procurement on an FSS contract under which we must comply with standard government terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price, or FCP, to four federal agencies (VA, U.S.
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.
For example, 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, unless additional Congressional action is taken.
As of December 31, 2024, we had U.S. federal net operating loss carryforwards of $220.2 million and we had state net operating loss carryforwards of approximately $111.1 million. Utilization of the federal and state net operating loss carryforwards may be subject to a substantial limitation due to federal and state provisions.
As of December 31, 2025, we had U.S. federal net operating loss carryforwards of $203.8 million and we had state net operating loss carryforwards of approximately $110.6 million. Utilization of the federal and state net operating loss carryforwards may be subject to a substantial limitation due to federal and state provisions.
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.
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.
In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.
In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, the Affordable Care Act, or ACA, was enacted in 2010.
In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs.
In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs.
Our internal information technology systems and infrastructure, and those of our current and any future collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to damage or unauthorized access or use resulting from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, denial-of-service attacks, cyber- attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering 36 Table of Contents attacks, attachments to emails, persons inside our organization (including employees or contractors), lost or stolen devices, or persons with access to systems inside our organization.
Our internal information technology systems and infrastructure, and those of our current and any future collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to damage or unauthorized access or use resulting from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, denial-of-service attacks, cyber- attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks, attachments to emails, persons inside our organization (including employees or contractors), lost or stolen devices, or persons with access to systems inside our organization. 36 Table of Contents The risk of a security breach or disruption or data loss, particularly through social engineering attacks, cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
If we or our licensor are unable to extend the expiration date of our or their existing patents or obtain new patents with longer expiry dates, as applicable, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data to obtain approval of competing products following our patent expiration and launch their product earlier than might otherwise be the case.
If we or our licensor are unable to extend the expiration date of our or their existing patents or obtain new patents with longer expiry dates, as applicable, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data to obtain approval of competing products following our patent expiration and launch their product earlier than might otherwise be the case. 65 Table of Contents The validity, scope and enforceability of any patents listed in the Orange Book that cover our current and future product candidates have been challenged by third parties and may be challenged by third parties in the future.
Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under the ACA or other legislation or regulation could affect our 340B ceiling price calculations and negatively impact our results of operations commercializing pitolisant.
Our failure to comply 340B program requirements could negatively impact our financial results. Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under legislation or regulation could affect our 340B ceiling price calculations and also negatively impact our financial results.
Federal law requires that any company that participates in the Medicaid Drug Rebate Program also participate in the 340B program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare 58 Table of Contents Part B.
Federal law requires that any company that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and, if applicable, Medicare Part B.
We may not be successful in our efforts to identify, in-license or acquire, discover, develop or commercialize additional product candidates, or identify other indications for pitolisant beyond EDS or cataplexy in adult patients with narcolepsy.
We may not be successful in our efforts to identify other indications for pitolisant beyond EDS and/or cataplexy in adults and pediatric patients six years and older or, in-license, acquire, discover, develop or commercialize additional product candidates or on-market products.
We cannot provide any assurances that third-party patents do not exist which might be enforced against our current and future product candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation to third parties. 65 Table of Contents We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products.
We cannot provide any assurances that third-party patents do not exist which might be enforced against our current and future product candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation to third parties.
We also rely on third parties to package the finished product. These third-party manufacturers have limited experience manufacturing the raw materials and API for WAKIX and our product candidates to be supplied to patients in the United States.
We also rely on third parties to package the finished product. These third-party manufacturers have limited experience manufacturing the raw materials and API for WAKIX and our product candidates to be supplied to patients in the United States. We cannot guarantee that even minor changes in the process will result in products that are safe and, where applicable, effective.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have also outsourced elements of our information technology infrastructure, and as a result, a number of third-party vendors may or could have access to our confidential information. 71 Table of Contents The cost to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data and information technology systems, our efforts to address these potential risks may not be successful, and could result in unexpected interruptions, delays, cessation of service and other harm to our business and competitive position.
Biggest changeThe cost to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data and information technology systems, our efforts to address these potential risks may not be successful, and could result in unexpected interruptions, delays, cessation of service and other harm to our business and competitive position.
The methodology is as follows: ● Maintaining an up-to-date and accurate inventory of all assets (e.g., data, systems, hardware, software, and vendors). ● Categorization of all assets based on the criticality of the data processed and the assets criticality to the continuity of business operations. ● A profile is maintained of the most likely threats, their intent, and the impact the threat may have on the confidentiality, integrity, and availability of Company assets. 72 Table of Contents ● Evaluation of relevant risk-based scenarios or vulnerability of an asset and how a threat may exploit the asset. ● Implemented security controls or “mitigating factors” are considered for each scenario. ● Considering the asset, threat, risk-based scenario or vulnerability, and the mitigating factors, a likelihood and impact determination is made to calculate the final risk level. ● Risk reduction plans are determined and used to prioritize security program initiatives. ● Risk mitigations are tracked and monitored in a risk register.
The methodology is as follows: ● Maintaining an up-to-date and accurate inventory of all assets (e.g., data, systems, hardware, software, and vendors). ● Categorization of all assets based on the criticality of the data processed and the assets criticality to the continuity of business operations. 74 Table of Contents ● A profile is maintained of the most likely threats, their intent, and the impact the threat may have on the confidentiality, integrity, and availability of Company assets. ● Evaluation of relevant risk-based scenarios or vulnerability of an asset and how a threat may exploit the asset. ● Implemented security controls or “mitigating factors” are considered for each scenario. ● Considering the asset, threat, risk-based scenario or vulnerability, and the mitigating factors, a likelihood and impact determination is made to calculate the final risk level. ● Risk reduction plans are determined and used to prioritize security program initiatives. ● Risk mitigations are tracked and monitored in a risk register.
In February 2024, we chartered the Information Systems, Data and Cybersecurity Governance Committee (the “Cybersecurity Committee”), which is comprised of the Company’s business unit leaders and is responsible for the management of our cyber risk exposure and monitoring the effectiveness of the cybersecurity program.
In February 2024, we chartered the Information Systems, Data and Cybersecurity Governance Committee (the “Cybersecurity Committee”), which is comprised of our business unit leaders and is responsible for the management of our cyber risk exposure and monitoring the effectiveness of the cybersecurity program.
Third Party Support of the Cyber Risk Management Program We employ third parties to support our cyber risk management program in the following ways: ● Use of internal and external auditors to maintain compliance with regulatory requirements. 73 Table of Contents ● Use of cybersecurity consultants and managed security services providers to supplement the security program practices and evaluate the program’s effectiveness, specifically: o Governance, risk, and compliance services. o Penetration testing and vulnerability management. o Continuous security event monitoring. o Data loss prevention.
Third Party Support of the Cyber Risk Management Program We employ third parties to support our cyber risk management program in the following ways: ● Use of internal and external auditors to maintain compliance with regulatory requirements. 75 Table of Contents ● Use of cybersecurity consultants and managed security services providers to supplement the security program practices and evaluate the program’s effectiveness, specifically: o Governance, risk, and compliance services. o Penetration testing and vulnerability management. o Continuous security event monitoring.
In the fourth quarter of 2024, we performed a risk analysis of all critical assets, determining the following are our current top cyber risks, none of which are material: ● Compromise to the confidentiality of intellectual property. ● Compromise to the confidentiality and integrity of financial records. ● Compromise to the confidentiality of employee records. ● Compromise to the confidentiality, integrity, and availability of core business systems. ● Compromise to the confidentiality, integrity, and availability of critical third-party vendors supporting the continuity of business operations.
In the second quarter of 2025, we performed a risk assessment of all critical assets, determining the following are our current top cyber risks, none of which are material: ● Compromise to the confidentiality of intellectual property. ● Compromise to the confidentiality and integrity of financial records. ● Compromise to the confidentiality of employee records. ● Compromise to the confidentiality, integrity, and availability of core business systems. ● Compromise to the confidentiality, integrity, and availability of critical third-party vendors supporting the continuity of business operations.
Cyber Risk Governance The Audit Committee is a sub-committee of our Board of Directors and is delegated to the role of cyber risk oversight for the Company. Our management team, including the CIO, is responsible for assessing and managing our material risks from cybersecurity threats.
Cyber Risk Governance The Audit Committee is a sub-committee of our Board of Directors and is delegated to the role of cyber risk oversight for the Company. Our management team, including the Chief Information Officer (“CIO”), is responsible for assessing and managing our material risks from cybersecurity threats.
We rely on commercially available systems, software, tools and monitoring to provide security for our information technology systems and the processing, transmission, and storage of digital information.
We rely on commercially available systems, software, tools and monitoring to provide security for our information technology systems and the processing, transmission, and storage of digital 73 Table of Contents information. We have also outsourced elements of our information technology infrastructure, and as a result, a number of third-party vendors may or could have access to our confidential information.

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, located in Plymouth Meeting, Pennsylvania, has a footprint of approximately 35,781 square feet of space pursuant to a lease that expires in 2025. We believe that our facilities are suitable to meet our current needs.
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 a lease that expires in 2031. We believe that our facilities are suitable to meet our current needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance 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, 2024, in (i) our common stock, (ii) the Nasdaq Biotechnology Index, and (iii) the Nasdaq Composite Index.
Biggest changePerformance Graph The following graph shows a comparison of the total cumulative shareholder returns of an investment of $100 in cash from December 31, 2020, through December 31, 2025, in (i) our common stock, (ii) the Nasdaq Biotechnology Index, and (iii) the Nasdaq Composite Index.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, industry trends and other factors that our board of directors may deem relevant. 75 Table of Contents Item 6. [Reserved].
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, industry trends and other factors that our board of directors may deem relevant. 77 Table of Contents Item 6. [Reserved]. ​
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 21, 2025, we had 43 holders of record of 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 20, 2026, we had - holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe increase was primarily driven by $43.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement, the acquisition of Epygenix and a preclinical milestone achieved for HBS-102, a combined $22.3 million increase in research and development expenses for the recently acquired product candidates, ZYN002 and EPX100, a $5.3 million increase in personnel costs associated with higher headcount, a $2.7 million increase in stock compensation associated with new awards, and a $1.7 million increase in other research and development, primarily due to preclinical work related to BP1.1520, partially offset by a $2.8 million decrease in clinical development associated with pitolisant, driven by a decrease for the IH indication, a $2.3 million IPR&D charge related to the acquisition of Zynerba for the year ended December 31, 2023, and a $0.8 million IPR&D charge related to preclinical milestones achieved for HBS-102 during the year ended December 31, 2023.
Biggest changeThe increase was primarily driven by a combined $47.2 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we progressed clinical trials and manufacturing, an $8.0 million increase in personnel costs associated with higher headcount, a $2.3 million increase in stock compensation associated with new equity awards and a $3.4 million increase in other research and development expenses primarily associated with the development of BP1.15205 offset by a $7.7 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for IH, and a $9.3 million decrease in IPR&D charges.
Investing Activities Net cash used in investing activities for the year ended December 31, 2024, was $67.5 million, which was primarily attributable to $105.3 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, a $1.0 million milestone payment related to HBS-102, $33.1 million net cash consideration paid for the acquisition of Epygenix and $1.2 million in purchases of property and equipment, partially offset by $98.5 million from maturities of investments .
Net cash used in investing activities for the year ended December 31, 2024, was $67.5 million, which was primarily attributable to $105.3 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, a $1.0 million milestone payment related to HBS-102, $33.1 million net cash consideration paid for the acquisition of Epygenix and $1.2 million in purchases of property and equipment, partially offset by $98.5 million from maturities of investments .
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.
For further discussion of the components of Revenue, see “—Critical Accounting Policies and Significant Judgments and Estimates.” Cost of Product Sold Cost of product sold 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 October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as a the registrational trial and support our efforts to seek pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.
In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as the registrational trial and support our efforts to seek pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.
Commercial Performance Metrics As of December 31, 2024, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies.
Commercial Performance Metrics As of December 31, 2025, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies.
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; 80 Table of Contents ● 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.
Epygenix Acquisition In April 2024, we acquired all of the outstanding capital stock of Epygenix, pursuant to the terms of a stock purchase agreement. In connection with the closing of the transaction, we paid the former stockholders of Epygenix up front consideration of $35.0 million less a working capital adjustment.
Epygenix Acquisition In April 2024, we acquired Epygenix, pursuant to the terms of a stock purchase agreement. In connection with the closing of the transaction, we paid the former stockholders of Epygenix up front consideration of $35.0 million less a working capital adjustment.
We currently have adequate supply of WAKIX to cover demand into the first quarter of 2027, with additional API on-hand inventory to support at least 24 months beyond this time frame.
We currently have adequate supply of WAKIX to cover demand into the third quarter of 2027, with additional API on-hand inventory to support at least 24 months beyond this time frame.
Non-provisional patents have been filed for both of these formulations, with the potential for patent protection to the mid-2040’s . In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP1.15205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).
Utility patents have been filed for both of these formulations, with the potential for patent protection to the mid-2040’s . In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP1.15205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).
We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases. EPX-100 has been granted orphan drug designation by the FDA for treatment of both DS and LGS.
We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases. EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of both DS and LGS.
The TLA Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. We were in compliance with all covenants as of December 31, 2024.
The TLA Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. We were in compliance with all covenants as of December 31, 2025.
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, the treatment of EDS in pediatric patients 6 years of age and older 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, the treatment of EDS 82 Table of Contents in pediatric patients 6 years of age and older with narcolepsy and to expand our portfolio with the anticipated growth from potential additional indications .
The increase in cost of product sales and cost of sales as a percentage of net revenue was due to triggering a higher royalty tier under the 2017 LCA earlier in 2024 compared to 2023.
The increase in cost of product sales and cost of sales as a percentage of net revenue was due to triggering a higher royalty tier under the 2017 LCA earlier in 2025 compared to 2024.
In January 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 with or without cataplexy in children six and older.
In January 2023, 78 Table of Contents 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 with or without cataplexy in children six and older.
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.
The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.
We believe the initiation of the PWS Phase 3 registrational trial, the TEMPO study, and our current data in pediatric narcolepsy, which resulted in the FDA’s approval of WAKIX in its current pediatric indication, are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.
We remain committed to obtaining pediatric exclusivity for WAKIX. We believe the initiation of the PWS Phase 3 registrational trial, the TEMPO study, and our current data in pediatric narcolepsy, which resulted in the FDA’s approval of WAKIX in its current pediatric indication, are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.
We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX. The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be October 2025.
We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX. The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be January 2027.
Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to 78 Table of Contents different customer segments and/or changes in our estimates.
Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different customer segments and/or changes in our estimates.
A discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, 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, 2023, filed with the SEC on February 22, 2024.
A discussion of the year ended December 31, 2024, compared to the year ended December 31, 2023, 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, 2024, filed with the SEC on February 25, 2025.
We are expanding our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.
We have expanded 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.
As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of DS and LGS. 85 Table of Contents ConSynance Agreement In August 2021, we entered into an asset purchase agreement with ConSynance Therapeutics, Inc. (the “APA”) to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action.
As a result, we now have an exclusive license relating to the use of clemizole, initially for the treatment of DS and LGS. 86 Table of Contents ConSynance Agreement In August 2021, we entered into an asset purchase agreement with ConSynance Therapeutics, Inc. (the “APA”) to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action.
Research and Development Expenses Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS, and DM1 and the development of our product candidates ZYN002, EPX100, Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102.
Research and Development Expenses Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS, and DM1 and the development of our product candidates ZYN002, EPX-100, EPX-200 Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102.
During the year covered by this report, there were no material changes to the accounting policies and assumptions previously disclosed, except as disclosed in Note 3 to the consolidated financial statements contained herein. Recent Accounting Pronouncements See Note 3 to our consolidated financial statements included herein under “Part II—Item 8. Financial Statements and Supplementary Data.” for more information. ​
During the year covered by this report, there were no material changes to the accounting policies and assumptions previously disclosed, except as disclosed in Note 3 to the consolidated financial statements contained herein. Recent Accounting Pronouncements See Note 3 to our consolidated financial statements included herein under “Part II—Item 8.
Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound.
Under the Sublicense, we obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of BP1.15205.
Bioprojet Agreements In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).
Bioprojet Agreements In April 2024, we entered into the Sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R), BP1.15205, to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).
Financing Activities Net cash used in financing activities for the year ended December 31, 2024, was $11.0 million, which primarily consisted of $15.0 million in principal payments associated with the TLA Credit Agreement, partially offset by $6.5 million in proceeds from the exercise of stock options, and $2.5 million of employee withholding tax payments related to stock-based awards.
Financing Activities Net cash used in financing activities for the year ended December 31, 2025, was $9.0 million, which primarily consisted of $16.3 million in principal payments associated with the TLA Credit Agreement and $3.0 million of employee withholding tax payments related to stock-based awards, partially offset by $10.2 million in proceeds from the exercise of stock options. 88 Table of Contents Net cash used in financing activities for the year ended December 31, 2024, was $11.0 million, which primarily consisted of $15.0 million in principal payments associated with the TLA Credit Agreement, partially offset by $6.5 million in proceeds from the exercise of stock options, and $2.5 million of employee withholding tax payments related to stock-based awards .
We base our estimates on contractual terms, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
We base our estimates on contractual terms, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Phase 3 registrational trial, the 76 Table of Contents TEMPO study, was initiated in the first quarter of 2024.
The Phase 3 registrational trial, the TEMPO study, was initiated in the first quarter of 2024.
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 repayment schedule for the TLA Term Loan consists of $3.8 million quarterly principal payments, which commenced 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.
Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million and will also be obligated to pay up to $127.5 million upon achievement of development and regulatory milestones and up to $240.0 million upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories. ​ In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop 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.
We will also be obligated to pay up to $123.3 million upon achievement of other development and regulatory milestones and up to $240.0 million upon achievement of certain sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories. ​ In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop 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.
General and Administrative Expenses General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments. General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting and consulting fees.
General and Administrative Expenses General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments.
Actual results may differ from these estimates under different assumptions or conditions. 87 Table of Contents We define our critical accounting policies as those under GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.
We define our critical accounting policies as those under GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.
The final report was received during the third quarter of 2024 and 77 Table of Contents the results are consistent with the expected results. In addition, a 13-week toxicology study has been completed, and we believe the preliminary results are encouraging. Neurobehavioral Franchise In October 2023, we completed the acquisition of Zynerba Pharmaceuticals, Inc.
The final report was received during the third quarter of 2024 and 79 Table of Contents the results are consistent with the expected results. In addition, a 13-week toxicology study has been completed, and we believe the preliminary results are encouraging.
The increase was primarily due to a 17.4% increase in units shipped, and the impact of a 7% price increase partially offset by higher rebates of approximately 3%. The price increase occurred in January 2024 .
The increase was primarily due to an 18.3% increase in units shipped, and the impact of a 7.0% price increase partially offset by higher rebates of approximately 3.6%. The price increase occurred in January 2025 .
We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.
As such, there is a recognized need for improved treatment options for both conditions. We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.
To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive .
To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive . Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc.
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 clinical research organizations (“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; ● acquired in-process research and development; 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 clinical research organizations (“CROs”), and contract development and manufacturing organizations (“CDMOs”); ● 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; ● payments associated with the achievement of development and regulatory milestones; ● acquired in-process research and development; and ● amortization expense for assets used in research and development activities. 81 Table of Contents A significant portion of our research and development costs are external costs, such as fees paid to CROs and CDMOs, central laboratories, contractors, and consultants in connection with our clinical development programs.
Cost of Product Sales Cost of product sales increased by $35.6 million, or 29.3%, for the year ended December 31, 2024, compared to the same period in 2023. Cost of product sales as a percentage of net product revenue was 21.9% for the year ended December 31, 2024, compared to 20.8% for the year ended December 31, 2023.
Cost of Product Sales Cost of product sales increased by $41.5 million, or 26.5%, for the year ended December 31, 2025, compared to the same period in 2024. Cost of product sales as a percentage of net product revenue was 22.8% for the year ended December 31, 2025, compared to 21.9% for the year ended December 31, 2024.
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, 2024, we paid fees of $0.3 million pursuant to this agreement.
Paragon Agreement We are 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, 2025, we paid fees of $0.5 million related to rent and consulting services.
The increase in patient engagement and marketing activities was driven by our continued growth of WAKIX and the increase in personnel costs was related to increased headcount. General and Administrative Expenses General and administrative expenses increased by $15.1 million, or 15.8%, for the year ended December 31, 2024, compared to the same period in 2023.
The increase in patient engagement and marketing activities for both comparable periods was driven by our continued growth of WAKIX and the increase in personnel costs was driven primarily by higher headcount. General and Administrative Expenses General and administrative expenses increased by $42.2 million, or 38.2%, for the year ended December 31, 2025, compared to the same period in 2024.
Income Taxes Income tax expense was $46.3 million, representing a 24.1% effective tax rate, for the year ended December 31, 2024, compared to income tax expense of $44.5 million for the year ended December 31, 2023, representing a 25.7% effective tax rate.
Income Taxes Income tax expense was $56.4 million, representing a 26.2% effective tax rate, for the year ended December 31, 2025, compared to income tax expense of $46.3 million for the year ended December 31, 2024, representing a 24.1% effective tax rate.
The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the year ended December 31, 2024, no shares of common stock were repurchased and cancelled by the Company under the October 2023 Repurchase Program. As of December 31, 2024, the remaining amount of common stock authorized for repurchases was $150.0 million.
The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the year ended December 31, 2025, we did not repurchase any shares of common stock pursuant to the October 2023 Repurchase Program. As of December 31, 2025, the remaining amount of common stock authorized for repurchases was $150.0 million.
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2024, and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Selected cash flow data ​ (In thousands) Cash provided by (used in): ​ ​ Operating activities ​ $ 219,821 ​ $ 219,387 Investing activities ​ (67,484) ​ (46,439) Financing activities ​ (10,996) ​ (105,552) ​ 86 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2024, primarily consisted of net income of $143.8 million adjusted for non-cash items of $43.6 million related to acquired IPR&D, $42.7 million related to stock-based compensation expense, and $24.1 million related to intangible amortization and depreciation, offset by $29.3 million related to deferred tax assets.
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2025, and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Selected cash flow data ​ (In thousands) Cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ 348,199 ​ $ 219,821 Investing activities ​ (39,649) ​ (67,484) Financing activities ​ (9,049) ​ (10,996) ​ Operating Activities Net cash provided by operating activities for the year ended December 31, 2025, consisted of net income of $158.7 million adjusted for non-cash items of $45.0 million related to stock-based compensation expense, $34.3 million related to acquired IPR&D, $25.3 million related to intangible amortization and depreciation, offset by $7.3 million related to deferred tax assets.
In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which is planned for the second quarter of 2025. We remain committed to obtaining pediatric exclusivity for WAKIX.
In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which was submitted in the third quarter of 2025. In February 2026, the FDA approved WAKIX for the treatment of cataplexy in pediatric patients six years and older with narcolepsy .
Interest Income Interest income consists primarily of cash interest earned on our cash and investment balances and accretion of the discount on our investments in debt securities. 81 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, ​ 2024 2023 ​ (In thousands) Net product revenue $ 714,734 ​ $ 582,022 Cost of product sales 156,815 ​ 121,236 Gross profit 557,919 ​ 460,786 Operating expenses: ​ Research and development 145,825 ​ 76,063 Sales and marketing 110,916 ​ 97,404 General and administrative 110,352 ​ 95,289 Total operating expenses 367,093 ​ 268,756 Operating income 190,826 ​ 192,030 ​ ​ ​ ​ ​ ​ Loss on debt extinguishment — ​ (9,766) Other (expense) income, net (68) ​ 159 Interest expense ​ (17,496) ​ ​ (23,757) Interest income 18,542 ​ 14,730 Net income before provision for income taxes 191,804 ​ 173,396 Income tax expense (46,311) ​ (44,543) Net income $ 145,493 ​ $ 128,853 ​ Net Product Revenue Net product revenue increased by $132.7 million, or 22.8%, for the year ended December 31, 2024, compared to the same period in 2023.
Interest Income Interest income consists primarily of cash interest earned on our cash and investment balances and accretion of the discount on our investments in debt securities. 83 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, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ (In thousands) Net product revenue ​ $ 868,453 ​ $ 714,734 Cost of product sales ​ 198,342 ​ 156,815 Gross profit ​ 670,111 ​ 557,919 Operating expenses: ​ ​ ​ ​ Research and development ​ 189,594 ​ 145,825 Sales and marketing ​ 119,512 ​ 110,916 General and administrative ​ 152,536 ​ 110,352 Total operating expenses ​ 461,642 ​ 367,093 Operating income ​ 208,469 ​ 190,826 Other (expense) income, net ​ (680) ​ (68) Interest expense ​ ​ (14,649) ​ ​ (17,496) Interest income ​ 21,924 ​ 18,542 Net income before provision for income taxes ​ 215,064 ​ 191,804 Income tax expense ​ (56,377) ​ (46,311) Net income ​ $ 158,687 ​ $ 145,493 ​ Net Product Revenue Net product revenue increased by $153.7 million, or 21.5% for the year ended December 31, 2025, compared to the same period in 2024.
Loss on Debt Extinguishment Loss on debt extinguishment consists primarily of costs of extinguishment of debt during the applicable period related to the prepayment of our credit agreements. Interest Expense Interest expense consists primarily of interest expense on debt facilities, amortization of debt issuance costs and amortization of premiums on our debt securities.
Interest Expense Interest expense consists primarily of interest expense on debt facilities, amortization of debt issuance costs and amortization of premiums on our debt securities.
We expect our research and development expenses to be significant as we advance our current clinical development programs and prepare to seek regulatory approval for additional indications for pitolisant, complete the Phase 3 clinical trials for ZYN002 and EPX100 and advance the development of Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102 toward new indications. 79 Table of Contents At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any additional indications for pitolisant or other product candidates that we move forward for regulatory approval.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any additional indications for pitolisant or other product candidates that we move forward for regulatory approval.
EPX-100 is currently in a Phase 3 registrational clinical trial for DS and we initiated a Phase 3 registrational clinical trial in patients with LGS in the fourth quarter of 2024. Additionally, we are currently developing EPX-200, a selective 5HT-2C agonist for DEEs (“EPX-200”), another asset acquired pursuant to the terms of the Epygenix Agreement.
Additionally, we are currently developing EPX-200, a selective 5HT-2C agonist for DEEs (“EPX-200”), another asset acquired pursuant to the terms of the Epygenix Agreement. EPX-200 is currently in the pre-IND phase. Neurobehavioral Franchise In October 2023, we acquired Zynerba Pharmaceuticals, Inc.
Sales and Marketing Expenses S ales and marketing expenses increased by $13.5 million, or 13.9%, for the year ended December 31, 2024, compared to the same period in 2023.
Sales and Marketing Expenses S ales and marketing expenses increased by $8.6 million, or 7.8%, for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily due to a $5.6 million increase in patient engagement and marketing activities and a $3.0 million increase in personnel costs.
We are on-track to initiate a pivotal bioequivalence study in the first quarter of 2025, with an anticipated data readout in the third quarter of 2025. Our anticipated PDUFA date for pitolisant GR is in 2026. We received data from the pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials.
We received data from the pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials. We submitted an IND application for pitolisant HD with the FDA to initiate Phase 3 registrational trials in narcolepsy and IH in the fourth quarter of 2025.
(“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”). As a result, we now have an exclusive license relating to the use of clemizole (“EPX-100”) for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”).
As a result, we now have an exclusive license relating to the use of clemizole (“EPX-100”) for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”). Patients with both conditions often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy.
We believe that our existing cash, cash equivalents and investments on hand as of December 31, 2024, will enable us to meet our operational liquidity needs and fund our potential investing activities for the next 12 months.
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. 85 Table of Contents We believe that our existing cash, cash equivalents and investments on hand as of December 31, 2025, will enable us to meet our operational liquidity needs and fund our potential investing activities for at least the next 12 months.
The TLA Credit Agreement provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $185.0 million. In September 2023, we entered into the First Incremental Amendment (the “First Incremental Amendment”) with the Administrative Agent and Bank of America, N.A., as incremental lender.
The TLA Credit Agreement, as amended, provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $200.0 million.
In February 2025, we received a Refusal to File letter from the FDA for pitolisant in IH. ​ We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy type 1, otherwise known as dystrophia myotonica (“DM1”).
We believe that pitolisant’s ability to regulate histamine mediated through histamine-3 receptor antagonist and inverse agonist activity gives it the potential to provide therapeutic benefit in other rare neurological diseases. ​ We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy type 1, otherwise known as dystrophia myotonica (“DM1”).
Recent Milestone Payments In September 2024, we achieved a preclinical milestone, which triggered a $1.0 million payment under the provisions of the APA, which was paid in October 2024. In March 2023, 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.
In September 2024, we achieved a preclinical milestone that triggered a $1.0 million payment under the provisions of the APA, which was paid in October 2024.
We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect. Term Loan A Credit Agreement In July 2023, we entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders.
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.
Research and Development Expenses The following table is a summary of our research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Change ​ ​ ​ (in thousands) ​ ​ ​ Pitolisant ​ ​ $ 32,139 ​ $ 34,982 ​ $ (2,843) ZYN002 ​ ​ ​ 19,594 ​ ​ 2,927 ​ ​ 16,667 EPX100 ​ ​ ​ 5,613 ​ ​ - ​ ​ 5,613 IPR&D ​ ​ ​ 43,595 ​ ​ 3,010 ​ ​ 40,585 Personnel expenses ​ ​ ​ 25,068 ​ ​ 19,789 ​ ​ 5,279 Stock-based compensation ​ ​ ​ 6,682 ​ ​ 3,962 ​ ​ 2,720 Other research and development ​ ​ ​ 13,134 ​ ​ 11,393 ​ ​ 1,741 Total ​ ​ $ 145,825 ​ $ 76,063 ​ $ 69,762 ​ 82 Table of Contents Research and development expenses increased by $69.8 million, or 91.7%, for the year ended December 31, 2024, compared to the same period in 2023.
Research and Development Expenses The following table is a summary of our research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Change ​ ​ ​ (in thousands) ​ ​ ​ Pitolisant ​ ​ $ 24,450 ​ $ 32,139 ​ $ (7,689) ZYN002 ​ ​ ​ 27,627 ​ ​ 19,594 ​ ​ 8,033 EPX-100 ​ ​ ​ 32,845 ​ ​ 5,613 ​ ​ 27,232 Pitolisant GR and Pitolisant HD ​ ​ ​ 15,901 ​ ​ 3,971 ​ ​ 11,930 IPR&D ​ ​ ​ 34,250 ​ ​ 43,595 ​ ​ (9,345) Personnel expenses ​ ​ ​ 33,037 ​ ​ 25,068 ​ ​ 7,969 Stock-based compensation ​ ​ ​ 8,958 ​ ​ 6,682 ​ ​ 2,276 Other research and development ​ ​ ​ 12,526 ​ ​ 9,163 ​ ​ 3,363 Total ​ ​ $ 189,594 ​ $ 145,825 ​ $ 43,769 ​ 84 Table of Contents Research and development expenses increased by $43.8 million, or 30.0%, for the year ended December 31, 2025, compared to the same period in 2024.
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. Net working capital excluding cash decreased by $35.0 million.
Net cash provided by operating activities for the year ended December 31, 2024, primarily consisted of net income of $143.8 million adjusted for non-cash items of $43.6 million related to acquired IPR&D, $42.7 million related to stock-based compensation expense, and $24.1 million related to intangible amortization and depreciation, offset by $29.3 million related to deferred tax assets.
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.
Investing Activities Net cash used in investing activities for the year ended December 31, 2025, was $39.6 million, which was primarily attributable to $86.2 million in purchases of debt securities, a $15.0 million upfront fee paid to CiRC, a $15.0 million payment associated with the achievement of a clinical milestone for ZYN002, $4.3 million associated with the achievement of a clinical milestone for BP1.15205 and $0.3 million in purchases of property and equipment, partially offset by $81.1 million from maturities of investments .
Financial Operations Overview Net Product Revenue Net product revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts.
Additionally, as of December 31, 2025, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States . 80 Table of Contents Financial Operations Overview Net Product Revenue Net product revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts.
Loss on Debt Extinguishment There was no loss on debt extinguishment for the year ended December 31, 2024. Loss on debt extinguishment was $9.8 million for the year ended December 31, 2023. Interest Expense Interest expense decreased by $6.3 million, or 26.4%, for the year ended December 31, 2024, compared to the same period in 2023.
Interest Expense Interest expense decreased by $2.8 million, or 16.3%, for the year ended December 31, 2025, compared to the same period in 2024. The decrease was primarily due t o lower average outstanding debt balances compared to the prior year.
The decrease was primarily due t o lower interest rates as a result of refinancing into the TLA Credit Agreement (defined below). Interest Income Interest income increased by $3.8 million, or 25.9%, for the year ended December 31, 2024, compared to the same period in 2023.
Interest Income Interest income increased by $3.4 million, or 18.2%, for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily a result of having higher invested balances compared to the prior year.
The increase was primarily due to a $10.0 million increase in patient engagement and marketing activities, a $2.3 million increase in stock compensation associated with new awards, and a $1.2 million increase in personnel costs.
The increase was primarily due to a $39.0 million increase in legal and professional fees, primarily associated with patent lawsuits and settlements, a $1.1 million increase in personnel costs associated with a higher headcount and a $2.1 million increase associated with travel and conference attendance.
The effective tax rate of 24.1% for the year ended December 31, 2024, included 21.0% for the provision of federal income taxes and 6.4% for the provision of state income taxes, partially offset by a 4.7% benefit from research and development and orphan drug credits , partially offset by 1.8% related to nondeductible IPR&D expenses. 83 Table of Contents Liquidity, Sources of Funding and Capital Resources Overview As of December 31, 2024, we had cash, cash equivalents, and investments of $576.1 million and retained earnings of $2.2 million.
The effective tax rate of 26.2% for the year ended December 31, 2025, included 3.5% from the remeasurement of state deferred tax assets, 2.8% in state income taxes, and 1.5% in non-deductible IPR&D, offset by a 4.0% benefit from credits.
(“Zynerba”), a clinical-stage pharmaceutical company focused on innovative pharmaceutically manufactured transdermal cannabidiol therapies for orphan neurobehavioral disorders. Zynerba’s drug candidate is ZYN-002, a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery.
(“Zynerba”), adding global rights to develop, manufacture and commercialize ZYN002, which is a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery.
Based on the positive proof-of-concept (“PoC”) study data obtained by Zynerba in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025 in 22q deletion syndrome . Rare Epilepsy Franchise In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc.
Rare Epilepsy Franchise In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc. (“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”).
The average number of patients on WAKIX for the year ended December 31, 2024, was approximately 7,100. Additionally, as of December 31, 2024, 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 for the year ended December 31, 2025, was approximately 8,500.
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We believe that pitolisant’s ability to regulate histamine gives it the potential to provide therapeutic benefit in other rare neurological diseases that are mediated through H 3 receptors and histamine signaling.
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In addition, we completed a dosing optimization study that supports initiating Pitolisant GR at the therapeutic dose of 17.8mg without titration. We initiated the pivotal bioequivalence study in the first quarter of 2025 and announced positive topline data readout in the fourth quarter of 2025. We anticipate a PDUFA date for Pitolisant GR in the first quarter of 2027.
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We have taken 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.
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After receiving “Study May Proceed” letters from the FDA, the Phase 3 registrational study in narcolepsy, ONSTRIDE1, and the Phase 3 registrational study in IH, ONSTRIDE2, were initiated. We anticipate topline data from both studies in 2027 and a potential PDUFA date in 2028.
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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.
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In June 2025, we announced positive pre-clinical data demonstrating significant wake-promoting and cataplexy-suppressing effects in a standard transgenic mouse model of narcolepsy type 1and presented safety data from the three-month GLP toxicity studies in two different species.
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While the primary endpoint did not meet statistical significance, we believe the totality of the data showed favorable numerical trends for pitolisant in the treatment of adult patients with IH and we met with the FDA in March 2024 to discuss the path forward for IH.
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We filed an investigational medicinal product dossier (“IMPD”) with the EMA and began first-in-human studies in the fourth quarter of 2025 with topline data anticipated in 2026. In June 2025, we entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with a related party, CiRC Biosciences, Inc. (“CiRC”).
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Following our meeting with the FDA, submitted a supplemental NDA (“sNDA”) for IH in the fourth quarter of 2024 based on the totality of the data obtained from the INTUNE study and from other sources .
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Under this agreement, Harmony and CiRC will collaborate on the research and development of two discovery-stage candidates, CBS105 for treatment-resistant narcolepsy and CBS104 for refractory epilepsy (together the “Candidates”), using cell replacement therapy for the treatment of refractory epilepsies and treatment-resistant narcolepsy.
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The formulation optimization and technical operations work is ongoing, with a goal to initiate a Phase 3 registrational study in narcolepsy and IH in the fourth quarter of 2025.
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We are exploring an opportunity to evaluate a new formulation of pitolisant for the treatment of fatigue in larger CNS indications. The histaminergic mechanism of action is uniquely positioned to address all three different dimensions of fatigue – physical, emotional and cognition.
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A Phase 1b study was conducted to evaluate the safety and tolerability of pitolisant at repeat doses of up to 180mg and the initial results are consistent with the known safety profile of pitolisant and support advancement of the pitolisant HD development program. Our anticipated PDUFA date for the pitolisant HD narcolepsy and IH programs is in 2028.

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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 changeInflation 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, 2024, and 2023. ​
Biggest changeInflation 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, 2025, and 2024. ​
Based on our $426.6 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of December 31, 2024, 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 $355.6 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of December 31, 2025, 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 the $181.3 million of principal outstanding as of December 31, 2024, an immediate 10% change in the SOFR would not have a material impact on our debt-related obligations, financial position or results of operations.
Based on the $165.0 million of principal outstanding as of December 31, 2025, an immediate 10% change in the SOFR would not have a material impact on our debt-related obligations, financial position or results of operations.
As of December 31, 2024, we had $181.3 million in borrowings outstanding.
As of December 31, 2025, we had $165.0 million in borrowings outstanding.

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