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What changed in Axsome Therapeutics, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Axsome Therapeutics, 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.

+665 added−711 removedSource: 10-K (2026-02-23) vs 10-K (2025-02-18)

Top changes in Axsome Therapeutics, Inc.'s 2025 10-K

665 paragraphs added · 711 removed · 450 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

187 edited+88 added−162 removed199 unchanged
Biggest changeIf our operations are found to be in violation of any of the laws or regulations described above or any other laws that apply to us, we may be subject to penalties or other enforcement actions, including criminal and significant civil monetary penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, corporate integrity agreements, debarment from receiving government contracts or refusal of new orders under existing contracts, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Biggest changeIf our operations are found to be in violation of any of such health regulatory laws or regulations described above or any other governmental laws or regulations that apply to us, we may be subject to penalties or other enforcement actions, including, without limitation, civil, administrative, and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs, individual imprisonment, injunctions, private qui tam actions brought by individual whistleblowers in the name of the government, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our financial results. 31 Table of Contents 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, and implementation of corporate compliance programs and reporting of payments or transfers of value to HCPs.
The Physician Payments Sunshine Act, or the Sunshine Act, requires applicable manufacturers of covered drugs for which payment is available under Medicare, Medicaid, or the State Children’s Health Insurance Program, among others, to track and report annually to the federal government (for disclosure to the public) certain payments and other transfers of value they make to physicians, teaching hospitals, physician assistants, nurse practitioners, and other mid-level practitioners.
The Sunshine Act requires applicable manufacturers of covered drugs for which payment is available under Medicare, Medicaid, or the State Children’s Health Insurance Program, among others, to track and report annually to the federal government (for disclosure to the public) certain payments and other transfers of value they make to physicians, teaching hospitals, physician assistants, nurse practitioners, and other mid-level practitioners.
These technologies and capabilities include: (1) chiral chemistry and formulation to identify, isolate and stabilize chirally pure enantiomers, (2) metabolic inhibition as a novel drug delivery method to increase the bioavailability and prolong the half-life of target drug molecules, (3) the MoSEIC™, or Molecular Solubility Enhanced Inclusion Complex, technology which is designed to substantially increase the solubility and speed the absorption of target drug molecules, and (4) proprietary chemical synthesis and analysis to produce target drug molecules. 6 Table of Contents • Develop products with differentiated profiles.
These technologies and capabilities include: (1) chiral chemistry and formulation to identify, isolate and stabilize chirally pure enantiomers, (2) metabolic inhibition as a novel drug delivery method to increase the bioavailability and prolong the half-life of target drug molecules, (3) the MoSEIC™, or Molecular Solubility Enhanced Inclusion Complex, technology which is designed to substantially increase the solubility and speed the absorption of target drug molecules, and (4) proprietary chemical synthesis and analysis to produce target drug molecules. 4 Table of Contents • Develop products with differentiated profiles.
Among the ACA provisions of importance to the pharmaceutical industry, in addition to those otherwise described above, are the following: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain federal programs identified in the ACA; 38 Table of Contents • expansion of beneficiary eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; • expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices; • extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • a separate 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; • expansion of the types of entities eligible for the 340B drug discount program; • establishment of the Medicare Part D coverage gap discount program that, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D, requires manufacturers to provide a now 70% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period; • establishment of the Center for Medicare and Medicaid Innovation within the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; • creation of the Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • reporting of certain financial arrangements between manufacturers of drugs, biologics, devices, and medical supplies and physicians and teaching hospitals under the Sunshine Act; and • annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners.
Among the ACA provisions of importance to the pharmaceutical industry, in addition to those otherwise described above, are the following: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain federal programs identified in the ACA; • expansion of beneficiary eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; • expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices; • extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • a separate 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; • expansion of the types of entities eligible for the 340B drug discount program; • establishment of the Medicare Part D coverage gap discount program that, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D, requires manufacturers to provide a now 70% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period; • establishment of the Center for Medicare and Medicaid Innovation within the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; • creation of the Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • reporting of certain financial arrangements between manufacturers of drugs, biologics, devices, and medical supplies and physicians and teaching hospitals under the Sunshine Act; and • annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners.
The cost containment measures that healthcare payors and providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates. We cannot provide any assurances that we will be able to obtain and maintain third‑party coverage or adequate reimbursement for our product candidates in whole or in part.
The cost containment measures that healthcare payors and providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of products and any approved product candidates. We cannot provide any assurances that we will be able to obtain and maintain third‑party coverage or adequate reimbursement for our products and product candidates in whole or in part.
These laws may affect our future sales, marketing, and other promotional activities by imposing administrative and compliance burdens. Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that certain business activities could be subject to challenge under one or more of such laws.
These laws may affect our future sales, marketing, and other promotional activities by imposing administrative and compliance burdens. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that certain business activities could be subject to challenge under one or more of such laws.
Pfizer also received an upfront cash payment of $3 million and will receive up to $323 million in regulatory and sales milestones and tiered mid-single to low double-digit royalties on future sales. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.
Pfizer also received an upfront cash payment of $3.0 million and will receive up to $323 million in regulatory and sales milestones and tiered mid-single to low double-digit royalties on future sales. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.
If third‑party payors do not consider our product candidates to be cost‑effective compared to other available therapies, they may not cover our product candidates, once approved, as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis. 39 Table of Contents The ACA made other changes intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health care industry, and impose additional health policy reforms.
If third‑party payors do not consider our product candidates to be cost‑effective compared to other available therapies, they may not cover our product candidates, once approved, as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis. 35 Table of Contents The ACA made other changes intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health care industry, and impose additional health policy reforms.
We have other patent applications with claims covering the other programs in our pipeline, including those that are not relevant to our current programs in development. As with respect to Sunosi, Orange Book listed patents in the United States extend out to 2042.
We have other patent applications with claims covering the other programs in our pipeline, including those that are not relevant to our current programs in development. With respect to SUNOSI, Orange Book listed patents in the United States extend out to 2042.
Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts. 42 Table of Contents Foreign Regulation We are subject to a variety of foreign regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of our products.
Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts. 37 Table of Contents Foreign Regulation We are subject to a variety of foreign regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of our products.
We intend to commercialize our product candidates, if approved, in the United States through the establishment of our own focused, cost‑effective sales and marketing organization.
We intend to commercialize our products and product candidates, if approved, in the United States through the establishment of our own focused, cost‑effective sales and marketing organization.
The distribution of product samples continues to be regulated under the PDMA, and some states also impose regulations on drug sample distribution. 31 Table of Contents Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in significant regulatory actions.
The distribution of product samples continues to be regulated under the PDMA, and some states also impose regulations on drug sample distribution. 26 Table of Contents Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in significant regulatory actions.
Even for entities that are not deemed “covered entities” or “business associates” under HIPAA, according to the United States Federal Trade Commission, or the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 USC § 45(a).
Even for entities that are not deemed “covered entities” or “business associates” under HIPAA, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 USC § 45(a).
The timeframe for the evaluation of an MAA under the accelerated assessment procedure is 150 days, excluding clock stops. 43 Table of Contents Authorization Procedures There are also other possible routes to authorize medicinal products in several European Union countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure: • Decentralized procedure.
The timeframe for the evaluation of an MAA under the accelerated assessment procedure is 150 days, excluding clock stops. 38 Table of Contents Authorization Procedures There are also other possible routes to authorize medicinal products in several European Union countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure: • Decentralized procedure.
We are dependent on these agreements, and if we breach these agreements, our business, financial condition, results of operations, and prospects will be materially harmed. Pharmanovia In February 2023, we announced a licensing transaction with Pharmanovia to market Sunosi in Europe and certain countries in the Middle East / North Africa. Refer to Note 16.
We are dependent on these agreements, and if we breach these agreements, our business, financial condition, results of operations, and prospects will be materially harmed. Pharmanovia In February 2023, we announced a licensing transaction with Pharmanovia to market SUNOSI in Europe and certain countries in the Middle East / North Africa. Refer to Note 15.
The CCPA and CPRA, among other things, create new data privacy obligations for covered companies and provided new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
The CCPA and CPRA, among other things, create new data privacy obligations for covered companies and provide new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
Corporate Information We were incorporated in Delaware in January 2012. Our offices are located at One World Trade Center 22nd Floor, New York, New York 10007, and our telephone number is (212) 332-3241. Available Information We file reports and other information with the SEC, as required by the Exchange Act.
Corporate Information We were incorporated in Delaware in January 2012. Our offices are located at One World Trade Center 29th Floor, New York, New York 10007, and our telephone number is (212) 332-3241. Available Information We file reports and other information with the SEC, as required by the Exchange Act.
The statute also permits the exclusion of those that have been convicted of any form of fraud, the Anti-Kickback Statute, for obstructing an investigation or audit, misdemeanor-controlled substance charges, those whose health care license has been revoked or suspended, and those who have filed claims for excessive charges or unnecessary services.
The statute also permits the exclusion of those that have been convicted of fraud, the Anti-Kickback Statute, for obstructing an investigation or audit, misdemeanor-controlled substance charges, those whose health care license has been revoked or suspended, and those who have filed claims for excessive charges or unnecessary services.
Under the terms of the agreement, we received from Pfizer an exclusive U.S. license to Pfizer data for reboxetine and esreboxetine encompassing a full range of nonclinical studies, and short-term and long-term clinical trials involving more than five thousand patients.
Under the terms of the agreement, we received from Pfizer an exclusive U.S. license to Pfizer data for reboxetine and esreboxetine encompassing a full range of non-clinical studies, and short-term and long-term clinical trials involving more than five thousand patients.
We also have patents in various other countries pertaining to Sunosi. 19 Table of Contents Many pharmaceutical companies, biotechnology companies, and academic institutions are competing with us in the field of CNS disorders and filing patent applications potentially relevant to our business.
We also have patents in various other countries pertaining to SUNOSI. 13 Table of Contents Many pharmaceutical companies, biotechnology companies, and academic institutions are competing with us in the field of CNS disorders and filing patent applications potentially relevant to our business.
In order to implement this infrastructure, we will have to allocate management resources and make significant financial investments including some prior to product approval. 20 Table of Contents Competition Overview Our industry is highly competitive and subject to rapid and significant technological change.
In order to implement this infrastructure, we will have to allocate management resources and make significant financial investments including some prior to product approval. 14 Table of Contents Competition Overview Our industry is highly competitive and subject to rapid and significant technological change.
NDA Submission, Review by the FDA, and Marketing Approval Assuming successful completion of the required clinical and preclinical testing, the results of product development, including CMC information, non-clinical studies, and clinical trial results, including negative or ambiguous results as well as positive findings, are all submitted to the FDA, along with the proposed labeling, as part of an NDA requesting approval to market the product for one or more indications.
NDA Submission, Review by the FDA, and Marketing Approval Assuming successful completion of the required clinical and preclinical testing, the results of product development, including chemistry, manufacturing, and controls, or CMC, information, non-clinical studies, and clinical trial results, including negative or ambiguous results as well as positive findings, are all submitted to the FDA, along with the proposed labeling, as part of an NDA requesting approval to market the product for one or more indications.
Our intellectual property portfolio includes issued U.S. and foreign patents with claims extending to 2034, 2040, 2041, and 2043 for AXS-05 and to 2039 for AXS-12, as well as U.S. and foreign patent applications for AXS-05, AXS-12, and AXS-14. Our issued U.S. and foreign patents for Symbravo include claims extending out to 2040.
Our intellectual property portfolio includes issued U.S. and foreign patents with claims extending to 2034, 2040, 2041, and 2043 for AXS-05 and to 2039 for AXS-12, as well as U.S. and foreign patent applications for AXS-05, AXS-12, and AXS-14. Our issued U.S. and foreign patents for SYMBRAVO include claims extending out to 2045 and 2040, respectively.
Thus, approval of an ANDA or 505(b)(2) application could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation. Regulatory Exclusivity Regulatory exclusivity provisions under the FDCA can also delay the submission or the approval effective date of certain applications.
Thus, approval of an ANDA or 505(b)(2) application could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation. 23 Table of Contents Regulatory Exclusivity Regulatory exclusivity provisions under the FDCA can also delay the submission or the approval effective date of certain applications.
Federal and state enforcement bodies have recently increased their scrutiny of interactions among pharmaceutical companies, providers and patients, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
Federal and state enforcement bodies have recently increased their scrutiny of interactions among pharmaceutical companies, HCPs, and patients, which has led to a number of investigations, prosecutions, convictions, and settlements in the healthcare industry.
The foregoing references to our website are not intended to, nor shall they be deemed to, incorporate information on our website into this Annual Report on Form 10-K by reference. 45 Table of Contents
The foregoing references to our website are not intended to, nor shall they be deemed to, incorporate information on our website into this Annual Report on Form 10-K by reference. 40 Table of Contents
In addition, for BLA and NDA drugs, the Veterans Health Care Act, or VHCA, requires manufacturers to calculate and report to the Veterans Administration, or VA, a different price called the Non Federal Average Manufacturing Price, which is used to determine the maximum price that can be charged to certain federal agencies, referred to as the Federal Ceiling Price, or FCP.
In addition, for BLA and NDA drugs, the VHCA requires manufacturers to calculate and report to the Veterans Administration, or VA, a different price called the Non‑Federal Average Manufacturing Price, which is used to determine the maximum price that can be charged to certain federal agencies, referred to as the Federal Ceiling Price, or FCP.
The federal civil FCA prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, 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 avoiding, decreasing, or concealing an obligation to pay money to the federal government.
The FCA prohibits any person or entity from, among other things, knowingly presenting or causing to be presented false or fraudulent claims for payment to, or approval by the government, knowingly making, using, or causing to be made or used a false statement or record material to a claim to the government, or avoiding, decreasing, or concealing an obligation to pay money to the government.
Some of these treatments include: generic and/or branded forms of Prozac, the branded form of which is marketed by Eli Lilly and Company; Zoloft, which is marketed by Pfizer; Trintellix, which is marketed by Takeda Pharmaceuticals America, Inc. and H.
Some of these treatments include: generic and/or branded forms of Prozac, the branded form of which is marketed by Eli Lilly and Company; Zoloft, which is marketed by Pfizer; Trintellix, which is marketed by Takeda Pharmaceuticals Company and H.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s Good Laboratory Practice, or GLP, regulations; 22 Table of Contents • submission to the FDA of an IND which must become effective before human clinical trials may begin; • approval by an independent Institutional Review Board, or IRB, for each clinical site or centrally, before each trial may be initiated; • adequate and well‑controlled human clinical trials to establish the safety and efficacy of the proposed drug candidates for its intended use, performed in accordance with current Good Clinical Practices, or GCP; • development of manufacturing processes in compliance with cGMPs to ensure the drug’s identity, strength, quality, and purity; • compilation of required information and submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMPs, and to assure that the facilities, methods, and controls are adequate to preserve the drug’s identity, strength, quality, and purity, as well as satisfactory completion of an FDA inspection of selected clinical sites and selected clinical investigators to determine GCP compliance; and • FDA review and approval of the NDA to permit commercial marketing for particular indications for use.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s Good Laboratory Practice, or GLP, regulations; • submission to the FDA of an IND which must become effective before human clinical trials may begin; • approval by an independent Institutional Review Board, or IRB, for each clinical site or centrally, before each trial may be initiated; • adequate and well‑controlled human clinical trials to establish the safety and efficacy of the proposed drug candidates for its intended use, performed in accordance with current Good Clinical Practices, or GCP; • development of manufacturing processes in compliance with cGMPs to ensure the drug’s identity, strength, quality, and purity; • compilation of required information and submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMPs, and to assure that the facilities, methods, and controls are adequate to preserve the drug’s identity, strength, quality, and purity, as well as satisfactory completion of an FDA inspection of selected clinical sites and selected clinical investigators to determine GCP compliance; and • FDA review and approval of the NDA to permit commercial marketing for particular indications for use. 17 Table of Contents Preclinical Studies and IND Submission The testing and approval process of product candidates requires substantial time, effort, and financial resources.
Further, should new safety information arise, additional testing, product labeling, or FDA notification may be required. 27 Table of Contents 505(b)(2) Approval Process Section 505(b)(2) of the FDCA provides an alternate regulatory pathway to FDA approval for new or improved formulations or new uses of previously approved drug products.
Further, should new safety information arise, additional testing, product labeling, or FDA notification may be required. 505(b)(2) Approval Process Section 505(b)(2) of the FDCA provides an alternate regulatory pathway to FDA approval for new or improved formulations or new uses of previously approved drug products.
For drugs paid under Medicare Part B, manufacturers must also calculate and report their Average Sales Price, which is used to determine the Medicare Part B payment rate for the drug.
For drugs paid under Medicare Part B, manufacturers must also calculate and report their Average Sales Price, or ASP, which is used to determine the Medicare Part B payment rate for the drug.
The ACA also imposed an affirmative obligation to report and repay any overpayments, including those payments that resulted from violations of the Anti-Kickback Statute, FCA, or Civil Monetary Penalties Law, within sixty (60) days after such overpayment has been identified. Corresponding case law imposes an obligation on entities to exercise reasonable diligence in identifying such overpayments.
The ACA also imposed an affirmative obligation to report and repay any overpayments, including those payments that resulted from violations of the Anti-Kickback Statute, FCA, or CMP Law, within sixty (60) days after such overpayment has been identified. Corresponding case law imposes an obligation on entities to exercise reasonable diligence in identifying such overpayments.
If a company were to be excluded, its products would be ineligible for reimbursement from any federal programs, including Medicare and Medicaid, and no other entity participating in those programs would be permitted to enter into contracts with the company.
If a company were to be excluded, its products would be ineligible for reimbursement from any federal health care programs, including Medicare and Medicaid, and no other entity participating in those programs would be permitted to enter into contracts with the company with respect to federal health care programs.
Pfizer received 82,019 shares of our common stock having a value of $8 million, based on the average closing price of our common stock for the 10 prior trading days of $97.538, in consideration for the license and rights.
Pfizer received 82,019 shares of our common stock having a value of $8.0 million, based on the average closing price of our common stock for the 10 prior trading days of $97.54, in consideration for the license and rights.
Pharmacy benefit managers, or PBMs, rebates and pricing transparency are key areas of legislative and regulatory focus and there may be changes in the regulatory landscape that could have a significant impact on the pharmaceutical supply chain and drug pricing more generally, which could affect our business operations and prospects in unknown and material ways.
PBMs, rebates and pricing transparency are key areas of legislative and regulatory focus and there may be changes in the regulatory landscape that could have a significant impact on the pharmaceutical supply chain and drug pricing more generally, which could affect our business operations and prospects in unknown and material ways.
The federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, furnishing, or order of any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs, in whole or in part.
The federal AKS prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, furnishing, ordering, or arranging for or recommending the purchase, lease, furnish, or order of any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs, in whole or in part.
Shift Work Disorder SWD is a combination of excessive sleepiness, or ES, during wakefulness and persistent insomnia during daytime sleep when working outside a 7 a.m. to 6 p.m. workday. An estimated 15 million working Americans may suffer from SWD, of whom 10-43% are diagnosed with SWD.
SWD is a combination of excessive sleepiness (ES) during wakefulness and persistent insomnia during daytime sleep when working outside a 7 a.m. to 6 p.m. workday. An estimated 15 million working Americans may suffer from SWD, of whom 10-43% are diagnosed with SWD.
Additionally, the intent standard under the Anti-Kickback Statute provides that a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Additionally, the intent standard under the AKS provides that a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Narcolepsy afflicts an estimated 185,000 individuals in the U.S. Cataplexy is seen in an estimated 70% of narcolepsy patients and is characterized by a sudden reduction or loss of muscle tone while a patient is awake, typically triggered by strong emotions such as laughter, fear, anger, stress, or excitement.
Narcolepsy affects an estimated 185,000 individuals in the U.S. Cataplexy is seen in up to approximately 70% of narcolepsy patients and is characterized by a sudden reduction or loss of muscle tone while a patient is awake, typically triggered by strong emotions such as laughter, fear, anger, stress, or excitement.
A claim includes “any request or demand” for money or property presented directly or indirectly to the U.S. government.
A claim includes “any request or demand” for money or property presented directly or indirectly to the government.
The exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
The exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing, or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it. Further, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
A person or entity does not need to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation. We may also be subject to data privacy and security laws and regulation by both the federal government and the states in which we conduct our business.
The assumed commitments to SK and Aerial include single-digit tiered royalties based on the Company’s sales of Sunosi, and additionally, the Company is committed to pay up to $165 million based on revenue milestones and $1 million based on development milestones.
The assumed commitments to SK and Aerial include single-digit tiered royalties based on the Company’s sales of SUNOSI, and additionally, the Company is committed to pay up to $162.5 million based on revenue milestones and $1.0 million based on development milestones.
In order to preserve access to beneficial drugs, the government may elect to exclude officers and key employees of manufacturers, rather than excluding the organization. Such enforcement actions would prohibit the Company from engaging those individuals, which could adversely affect operations, and could result in significant reputational harm.
The government may elect to exclude officers and key employees of manufacturers, rather than excluding the organization. Such enforcement actions would prohibit the Company from engaging those individuals, which could adversely affect operations, and could result in significant reputational harm.
An estimated 22 million people in the U.S. are affected by ADHD, including approximately 7 million children aged 3-17 years old. Approximately two-thirds or more children with ADHD continue to have symptoms and challenges into adulthood. ADHD is associated with significant impairment in social, academic, and occupational functioning and development.
Over 22 million people in the U.S. are estimated to be affected by ADHD, including approximately 7 million children aged 3-17 years old. Approximately two-thirds or more children with ADHD continue to experience symptoms into adulthood. ADHD is associated with significant impairment in social, academic, and occupational functioning and development.
Eight issued United States patents and two issued foreign patents covering our AXS-12 product candidate with protection extending through 2039. We have pending PCT applications, as well as pending applications in Australia, Brazil, Canada, Chile, China, Europe, Hong Kong, Israel, Japan, Mexico, Panama, Singapore, South Korea, and New Zealand.
Nine issued United States patents and five issued foreign patents cover our AXS-12 product candidate with protection extending through 2039. We have pending PCT applications, as well as pending applications in Australia, Brazil, Canada, Chile, China, Europe, Hong Kong, Israel, Japan, Mexico, Panama, Singapore, South Korea, and New Zealand.
Shift work has long been associated with multiple serious health complaints and a 23% greater risk of sustaining a work-related injury. Treatment options are limited, with only two products currently approved for the treatment of ES associated with SWD.
Shift work has long been associated with multiple serious health complaints and a 23% greater risk of sustaining a work-related injury. Treatment options are limited, with only two products currently approved for the treatment of ES associated with SWD, and no new treatments approved since 2007.
Drugs that are approved under a Biologic License Application, or BLA, or an NDA, including 505(b)(2) drugs, are subject to an additional inflation penalty, which can substantially increase rebate payments.
Drugs that are approved under a BLA or a New Drug Application, or NDA, including 505(b)(2) drugs, are subject to an additional inflation penalty which can substantially increase rebate payments.
In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in‑depth substantive review of the NDA.
The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in‑depth substantive review of the NDA.
We intend to selectively partner commercial rights outside of the United States with third parties to maximize the value of our product candidates without the substantial investment required to develop independent sales forces in those geographies. We continue to evaluate strategic options for the commercialization of our other product candidates.
For commercialization outside of the United States, we intend to selectively partner with third parties outside of the United States to maximize the value of our products and product candidates, if approved, without the substantial investment required to develop independent sales forces in those geographies. We continue to evaluate strategic options for the commercialization of our other product candidates.
HITECH also strengthened the civil and criminal penalties that may be imposed against covered entities, business associates, and individuals, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
The HITECH Act also increased the civil and criminal penalties that may be imposed against covered entities, business associates, and possibly other persons and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
These pressures can arise from rules and practices of managed care groups and health technology assessment bodies, competition within therapeutic classes, availability of generic equivalents, judicial decisions and governmental laws and regulations related to Medicare, Medicaid, and healthcare reform, pharmaceutical coverage and reimbursement policies, and pricing in general.
These pressures can arise from rules and practices of managed care entities, competition within therapeutic classes, availability of generic equivalents, judicial decisions and governmental laws and regulations related to Medicare, Medicaid, and healthcare reform, pharmaceutical coverage and reimbursement policies, and pricing in general.
AXS-14 Competition Products approved to treat fibromyalgia include generic and/or branded forms of Cymbalta, the branded form of which is marketed by Eli Lilly and Company; Lyrica, which is marketed by Pfizer; and Savella, which is marketed by AbbVie.
AXS-14 Competition Products approved to treat fibromyalgia include generic and/or branded forms of Cymbalta, the branded form of which is marketed by Eli Lilly and Company; Lyrica, which is marketed by Pfizer; Savella, which is marketed by AbbVie; and Tonmya, which is marketed by Tonix Pharmaceuticals Holding Corp.
U.S. patents generally have a term of 20 years from the earliest effective date of the application. As of February 11, 2025, our intellectual property portfolio contains more than 600 issued patents and more than 400 pending applications in the United States and worldwide.
U.S. patents generally have a term of 20 years from the earliest effective date of the application. As of February 16, 2026, our intellectual property portfolio contains more than 600 issued patents and more than 450 pending applications in the United States and worldwide.
Additionally, the reimbursement process is complex and can involve lengthy delays. Third-party payors may disallow, in whole or in part, providers’ requests for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, that the drugs provided were not medically necessary, or that additional supporting documentation is necessary. Retroactive adjustments may change amounts realized from third-party payors.
Third-party payors may disallow, in whole or in part, providers’ requests for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, that the drugs provided were not medically necessary, or that additional supporting documentation is necessary. Retroactive adjustments may change amounts realized from third-party payors.
Patients with EDS have available to them a variety of medications, such as generic and/or branded forms of Xyrem and Xywav, which are marketed by Jazz; Wakix, which is marketed by Harmony Biosciences LLC; Lumryz, which is marketed by Avadel Pharmaceuticals plc; Provigil and Nuvigil, which are manufactured by Teva Pharmaceutical Industries Limited, or Teva.
Patients with EDS associated with narcolepsy have available to them a variety of medications, such as generic and/or branded forms of Xyrem and Xywav, which are marketed by Jazz; Wakix, which is marketed by Harmony Biosciences LLC; Lumryz, which is marketed by Alkermes plc; Provigil and Nuvigil, which are manufactured by Teva.
Overall, this period of regulatory data protection, or RDP, is commonly referred to as the “8+2+1” approach. This period of RDP equally applies to medicinal products that are authorized through the national procedure (or decentralized or mutual recognition procedures) under national law or through the centralized procedure. Research and Development Conducting research and development is central to our business model.
Overall, this period of regulatory data protection, or RDP, is commonly referred to as the “8+2+1” approach. This period of RDP equally applies to medicinal products that are authorized through the national procedure (or decentralized or mutual recognition procedures) under national law or through the centralized procedure.
In addition, other federal and state laws may govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, other federal and state laws may govern the privacy and security of health and other information in certain circumstances and may differ from each other in significant ways and may not have the same effect.
Our Strategy Our goal is to efficiently develop and commercialize novel, differentiated therapies for the treatment of CNS disorders. The primary elements of our strategy to achieve this goal are the following: • Pursue novel CNS indications with high unmet medical need. We believe that CNS disorders are significantly underserved therapeutic segments with currently limited treatment options.
The primary elements of our strategy to achieve this goal are the following: • Pursue novel CNS indications with high unmet medical need. We believe that CNS disorders are significantly underserved therapeutic segments with currently limited treatment options.
Research and development expenses are expected to stabilize in the near term as certain development programs near completion while new development programs are initiated. 44 Table of Contents Employees and Human Capital Management As of February 11, 2025, we had 683 full‑time employees.
Research and development expenses are expected to stabilize in the near term as certain development programs near completion while new development programs are initiated. 39 Table of Contents Employees and Human Capital Management As of February 16, 2026, we had 925 full‑time employees.
In addition, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.
Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement, and utilization, which may adversely affect our future product sales and results of operations.
Further, the increased emphasis on managed healthcare in the U.S. and on country and regional pricing and reimbursement controls in Europe will likely put additional pressure on product pricing, reimbursement, and utilization, which may adversely affect our future product sales and results of operations.
As a result, submission of an IND may not result in FDA authorization to commence a clinical trial. 23 Table of Contents Clinical Trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirements that all research subjects provide their informed consent in writing for their participation in any clinical trial, as well as review and approval of the study by an IRB.
Clinical Trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirements that all research subjects provide their informed consent in writing for their participation in any clinical trial, as well as review and approval of the study by an IRB.
We are leveraging our deep expertise and experience in neuroscience to maximize the potential of our approved products for additional CNS conditions, as well as advance our novel product candidates that we believe may offer distinct advantages over currently available therapies. 4 Table of Contents Commercial Products 1. Auvelity ® .
We are leveraging our deep expertise and experience in neuroscience to maximize the potential of our approved products in additional CNS conditions, as well as advance our novel product candidates that we believe may, if successfully developed and approved, offer distinct advantages over currently available therapies.
Government Regulation and Product Approval Government authorities in the United States, at the federal, state, and local level, and in other countries and supranational regions, extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, adverse event reporting and pharmacovigilance, marketing, import, and export of pharmaceutical products, such as those we are developing and for which we are seeking FDA approval.
Other contract manufacturing organizations, or CMOs, may be used in the future for clinical supplies and/or commercial manufacturing. 16 Table of Contents Government Regulation and Product Approval Government authorities in the United States, at the federal, state, and local level, and in other countries and supranational regions, extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, adverse event reporting and pharmacovigilance, marketing, import, and export of pharmaceutical products, such as those we are developing and for which we are seeking FDA approval.
The approval process varies from country to country and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country.
The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country.
Exclusive License Agreements with Antecip In 2012, we entered into three exclusive license agreements with Antecip Bioventures II LLC, or Antecip, an entity owned by our Chief Executive Officer and Chairman of the Board of Directors, or the Board, Herriot Tabuteau, M.D., in which we were granted exclusive licenses to develop, manufacture, and commercialize Antecip’s patents and applications related to the development of AXS-05 anywhere in the world for veterinary and human therapeutic and diagnostic use, and additional patents and applications that are not relevant to our current programs in development.
We may terminate the agreement for any reason upon ninety days written notice to Pfizer at any time after the first anniversary of the agreement. 11 Table of Contents Exclusive License Agreements with Antecip In 2012, we entered into three exclusive license agreements with Antecip Bioventures II LLC, or Antecip, an entity owned by our Chief Executive Officer and Chairman of the Board of Directors, or the Board, Herriot Tabuteau, M.D., in which we were granted exclusive licenses to develop, manufacture, and commercialize Antecip’s patents and applications related to the development of AXS-05 anywhere in the world for human therapeutic, veterinary, and diagnostic use, and additional patents and applications that are not relevant to our current programs in development.
In addition to the laws discussed above, we may see more stringent state and federal privacy legislation in the future, as the increased cyber-attacks during the pandemic have heightened attention to data privacy and security in the U.S. and other jurisdictions.
In addition to the laws discussed above, we may see more stringent state and federal privacy legislation in coming years, as a continued increase in cyber-attacks have heightened attention to data privacy and security in the U.S. and other jurisdictions.
Private payors often rely on the lead of the governmental payors in rendering coverage and reimbursement determinations. Therefore, achieving favorable CMS coverage and reimbursement is usually a significant gating issue for successful introduction of a new product.
Achieving favorable CMS coverage and reimbursement is usually a significant gating issue for successful introduction of a new product because Medicare and Medicaid can represent a sizeable share of the market and because private payors often rely on the lead of the governmental payors in rendering coverage and reimbursement determinations.
We are currently developing solriamfetol in ADHD, MDD, BED, and SWD. 15 Table of Contents Attention Deficit Hyperactivity Disorder ADHD is a chronic neurobiological and developmental disorder characterized by a persistent pattern of inattention, hyperactivity, or impulsivity that interferes with functioning or development. Impairments in cognition are apparent in attention, planning and problem solving, working memory, and behavioral inhibition.
ADHD is a chronic neurobiological and developmental disorder characterized by a persistent pattern of inattention, hyperactivity, or impulsivity that interferes with functioning or development. Impairments in cognition are apparent in attention, planning and problem solving, working memory, and behavioral inhibition.
This is considered to be a related party transaction. 18 Table of Contents Royalty Agreement with Jazz Pharmaceuticals, SK Biopharmaceuticals Co., Ltd. and Aerial Biopharma, LLC In connection with the Acquisition, in addition to the upfront purchase price, we assumed certain liabilities in connection with the Acquisition and agreed to make non-refundable, non-creditable royalty payments to Jazz on U.S. net sales.
Royalty Agreement with Jazz Pharmaceuticals, SK Biopharmaceuticals Co., Ltd. and Aerial Biopharma, LLC In connection with the Acquisition, in addition to the upfront purchase price, we assumed certain liabilities in connection with the Acquisition and agreed to make non-refundable, non-creditable royalty payments to Jazz on U.S. net sales.
Manufacturers can be audited by HRSA and be subjected to civil monetary penalties for knowingly and intentionally overcharging covered entities for drugs. 34 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, also created federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, a healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items, or services relating to healthcare matters.
The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil penalties and prohibits, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items, or services relating to healthcare matters.
In June 2024, we entered into a settlement agreement with Unichem Laboratories Ltd., or Unichem, resolving patent litigation related to Sunosi that permits Unichem to begin selling its generic version of Sunosi on June 30, 2042, or earlier under certain circumstances.
As a result, the litigation has been dismissed without prejudice. In June 2024, we entered into a settlement agreement with Unichem Laboratories Ltd. (Unichem) that permits Unichem to begin selling its generic version of SUNOSI on June 30, 2042, or earlier under certain circumstances.
In addition, we are unable to predict what additional legislation or regulation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future, or what effect such legislation or regulation would have on our business. Many hospitals implement a controlled and defined process for developing and approving formularies.
In addition, we are unable to predict what additional legislation or regulation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future, or what effect such legislation or regulation would have on our business.
We are aware of several companies developing compounds for the treatment of depression, including Xenon Pharmaceuticals, Inc., Neumora Therapeutics, Inc., Johnson & Johnson, Otsuka Pharmaceutical Co. Ltd., Neurocrine Biosciences, Inc., Intra-Cellular Therapies, Inc., and Biohaven Ltd.
We are aware of several companies developing compounds for the treatment of depression, including AbbVie, Compass Pathways, Inc., Definium Therapeutics, Inc., Xenon Pharmaceuticals, Inc., Neumora Therapeutics, Inc., Johnson & Johnson, Otsuka Pharmaceutical Co. Ltd., Acadia Pharmaceuticals Inc., and Neurocrine Biosciences, Inc.
Preclinical Studies and IND Submission The testing and approval process of product candidates requires substantial time, effort, and financial resources. Preclinical studies include laboratory evaluation of drug substance chemistry, pharmacology, toxicity, and drug product formulation, as well as animal studies to assess potential safety and efficacy. Such studies must generally be conducted in accordance with the FDA’s GLP regulations.
Preclinical studies include laboratory evaluation of drug substance chemistry, pharmacology, toxicity, and drug product formulation, as well as animal studies to assess potential safety and efficacy. Such studies must generally be conducted in accordance with the FDA’s GLP regulations.
For some specialty drugs, payors are conditioning payment on successful treatment measured by objective metrics. While we cannot predict whether any proposed cost‑containment measures will be adopted or otherwise implemented in the future, the announcement or adoption of these proposals could have a material adverse effect on our ability to obtain adequate prices for our products and operate profitably.
While we cannot predict whether any proposed cost containment measures will be adopted or otherwise implemented in the future, the announcement or adoption of these proposals could have a material adverse effect on our ability to obtain adequate prices for our products and product candidates and operate profitably.
Due to product sales of Auvelity since the fourth quarter of 2022, we recorded royalty expense for royalty payments due to Antecip equal to 3.0% of net sales.
Due to product sales of AUVELITY since the fourth quarter of 2022, we recorded royalty expense for royalty payments due to Antecip equal to 3.0% of net sales. This is considered to be a related party transaction.
These statutes are not limited to items and services reimbursed by a governmental health care program and have been used to prosecute commercial insurance fraud as well. 33 Table of Contents The federal Civil Monetary Penalties Law authorizes the imposition of substantial civil monetary penalties against an entity, such as a pharmaceutical manufacturer, that engages in activities including, among others: (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment.
The CMP Law establishes substantial civil monetary penalties that may be assessed against any person or entity, such as a pharmaceutical manufacturer, that engages in activities including, among others: (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

185 edited+93 added−37 removed477 unchanged
Biggest changeWe expect that we will be subject to additional risks related to entering into international business relationships, including: • different regulatory requirements for approval of drugs in foreign countries; • the potential for so‑called parallel importing, particularly within Europe, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally with EU laws supporting such “free movement of goods” within the EU; • stricter harmonized EU rules on data privacy particularly in relation to personal data, including health data, than is the case in the United States which are being further toughened with the EU General Data Protection Regulation, or the GDPR, which became enforceable beginning May 25, 2018; • challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • unexpected changes in tariffs, trade barriers, and regulatory requirements and in the health care policies of foreign jurisdictions; • economic weakness, including inflation, or political instability in particular foreign economies and markets; 68 Table of Contents • compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States and worker rights tend to be stronger; • costs of compliance with U.S. laws and regulations for foreign operations, including the FCPA or comparable foreign regulations, and the risks and costs of noncompliance; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods, and fires.
Biggest changeThe NIS 2 Directive establishes a harmonized cybersecurity framework for 18 critical sectors, including the health sector, and imposes significant compliance obligations on in-scope organizations, including risk management measures, incident prevention, detection and notification requirements, supply chain security controls, and enhanced governance and oversight, including potential personal liability at the Board level; • challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • unexpected changes in tariffs, trade barriers, and regulatory requirements and in the health care policies of foreign jurisdictions; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States and worker rights tend to be stronger; • costs of compliance with U.S. laws and regulations for foreign operations, including the FCPA or comparable foreign regulations, and the risks and costs of noncompliance; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods, and fires.
We have received a Fast Track product designation for AXS-05 for both the treatment of TRD as well as for the treatment of AD agitation, and we may seek Fast Track designation for other of our current or future product candidates.
We have received a Fast Track product designation for AXS-05 for both the treatment of TRD as well as for the treatment of AD agitation, and we may seek Fast Track designation for our other current or future product candidates.
Specifically, there are a large number of companies developing or marketing therapies for CNS disorders, including many major pharmaceutical and biotechnology companies. Among the companies that currently market or are developing therapies that, if approved, our product candidates would potentially compete with include: AbbVie Inc.; Amgen Inc.; Avadel Pharmaceuticals plc; Biogen Inc.; Eli Lilly and Company; H.
Specifically, there are a large number of companies developing or marketing therapies for CNS disorders, including many major pharmaceutical and biotechnology companies. Among the companies that currently market or are developing therapies that, if approved, our product candidates would potentially compete with include: AbbVie; Amgen Inc.; Avadel Pharmaceuticals plc; Biogen Inc.; Eli Lilly and Company; H.
However, there is no guarantee that we will receive this designation for any of our other product candidates or receive or maintain any corresponding benefits for any of our other product candidates that may receive Orphan Drug Designation in the future, including periods of exclusivity. AXS-12 received Orphan Drug Designation from FDA for the treatment of narcolepsy.
However, there is no guarantee that we will receive this designation for any of our other product candidates or receive or maintain any corresponding benefits for any of our other product candidates that may receive Orphan Drug Designation in the future, including periods of exclusivity. AXS-12 received Orphan Drug Designation from the FDA for the treatment of narcolepsy.
The costs of compliance with such laws and regulations, or the negative results of non-compliance, could adversely affect our business, cash flow, results of operations, financial condition, and prospects; these laws and regulations include (i) additional health care reform initiatives in the U.S. or in other countries, including additional mandatory discounts or fees; (ii) the FCPA or other anti-bribery and corruption laws; (iii) new laws, regulations, and judicial or other governmental decisions affecting pricing, drug reimbursement, and access or marketing within or across jurisdictions; (iv) changes in intellectual property laws; (v) changes in accounting standards; (vi) new and increasing data privacy regulations and enforcement, particularly in the EU, the U.S., and China; (vii) legislative mandates or preferences for local manufacturing of pharmaceutical products; (viii) emerging and new global regulatory requirements for reporting payments and other value transfers to healthcare professionals; (ix) environmental regulations, such as the EU’s Corporate Sustainability Reporting Directive; and (x) the potential impact of importation restrictions, embargoes, trade sanctions, and legislative and/or other regulatory changes.
The costs of compliance with such laws and regulations, or the negative results of non-compliance, could adversely affect our business, cash flow, results of operations, financial condition, and prospects; these laws and regulations include (i) additional health care reform initiatives in the U.S. or in other countries, including additional mandatory discounts or fees; (ii) the FCPA or other anti-bribery and corruption laws; (iii) new laws, regulations, and judicial or other governmental decisions affecting pricing, drug reimbursement, and access or marketing within or across jurisdictions; (iv) changes in intellectual property laws; (v) changes in accounting standards; (vi) new and increasing cybersecurity and data privacy regulations and enforcement, particularly in the EU, the U.S., and China; (vii) legislative mandates or preferences for local manufacturing of pharmaceutical products; (viii) emerging and new global regulatory requirements for reporting payments and other value transfers to healthcare professionals; (ix) environmental regulations, such as the EU’s Corporate Sustainability Reporting Directive; and (x) the potential impact of importation restrictions, embargoes, trade sanctions, and legislative and/or other regulatory changes.
We may also experience numerous unforeseen events during, or as a result of, clinical trials and in the course of our preparation, submission, and review of NDA filings that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: • regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or amend trial protocols; • we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our CROs; 57 Table of Contents • clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary level of statistical or clinical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • interim analyses may result in our clinical trials being discontinued for safety or futility reasons or may result in modifications to our clinical trials that prolong the trials or make them difficult and more expensive to complete, such as increases in the number of subjects; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; • our third‑party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or meet their contractual obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical trial site monitoring; • we, the regulators, or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics of the product candidate, or due to findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate.
We may also experience numerous unforeseen events during, or as a result of, clinical trials and in the course of our preparation, submission, and review of NDA filings that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: • regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or amend trial protocols; • we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our CROs; • clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary level of statistical or clinical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • interim analyses may result in our clinical trials being discontinued for safety or futility reasons or may result in modifications to our clinical trials that prolong the trials or make them difficult and more expensive to complete, such as increases in the number of subjects; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; • our third‑party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or meet their contractual obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical trial site monitoring; 54 Table of Contents • we, the regulators, or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics of the product candidate, or due to findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate.
Any future collaborations we might enter into may pose a number of risks, including: • collaborators may not perform their obligations as expected; • collaborators may not pursue development and commercialization of any product candidates which achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could fail to make timely regulatory submissions for a product candidate; • collaborators may not comply with all applicable regulatory requirements or may fail to report safety data in accordance with all applicable regulatory requirements; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product candidate or product; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation, or the preferred course of development, might cause delays or termination of the research, development, or commercialization of product candidates, lead to additional responsibilities for us with respect to product candidates, or result in litigation or arbitration, any of which would be time consuming and expensive; • collaborators 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; and • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability.
Any future collaborations we might enter into may pose a number of risks, including: • collaborators may not perform their obligations as expected; • collaborators may not pursue development and commercialization of any product candidates which achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could fail to make timely regulatory submissions for a product candidate; • collaborators may not comply with all applicable regulatory requirements or may fail to report safety data in accordance with all applicable regulatory requirements; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; 78 Table of Contents • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product candidate or product; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation, or the preferred course of development, might cause delays or termination of the research, development, or commercialization of product candidates, lead to additional responsibilities for us with respect to product candidates, or result in litigation or arbitration, any of which would be time consuming and expensive; • collaborators 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; and • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability.
Patient enrollment is affected by other factors, including: • the size and nature of the patient population; • the severity of the disease under investigation; • the eligibility criteria for, and design of, the clinical trial in question, including factors such as frequency of required assessments, length of the study, and ongoing monitoring requirements; • the perceived risks and benefits of the product candidate under study, including the potential advantages or disadvantages of the product candidate being studied in relation to other available therapies; • competition in recruiting and enrolling patients in clinical trials; • the efforts to facilitate timely enrollment in clinical trials; • the patient referral practices of physicians; • effectiveness of publicity created by clinical trial sites regarding the trial; • patients’ ability to comply with the specific instructions related to the trial protocol, proper documentation, and use of the drug product; • inability to obtain or maintain patient informed consents; • risk that enrolled patients will drop out before completion; • the ability to identify patients for enrollment and maintain a sufficient level of patient participants in our clinical studies; • the ability to monitor patients adequately during and after treatment; and 62 Table of Contents • the proximity and availability of clinical trial sites for prospective patients.
Patient enrollment is affected by other factors, including: • the size and nature of the patient population; • the severity of the disease under investigation; • the eligibility criteria for, and design of, the clinical trial in question, including factors such as frequency of required assessments, length of the study, and ongoing monitoring requirements; • the perceived risks and benefits of the product candidate under study, including the potential advantages or disadvantages of the product candidate being studied in relation to other available therapies; • competition in recruiting and enrolling patients in clinical trials; • the efforts to facilitate timely enrollment in clinical trials; • the patient referral practices of physicians; • effectiveness of publicity created by clinical trial sites regarding the trial; • patients’ ability to comply with the specific instructions related to the trial protocol, proper documentation, and use of the drug product; • inability to obtain or maintain patient informed consents; 59 Table of Contents • risk that enrolled patients will drop out before completion; • the ability to identify patients for enrollment and maintain a sufficient level of patient participants in our clinical studies; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
Our future funding requirements will depend on many factors, including, but not limited to: • the rate of progress and costs related to the development of our product candidates, including the costs of preparing filings for regulatory approval; • the costs associated with conducting additional clinical and non-clinical studies with any of our product candidates; • the potential for delays in our efforts to seek regulatory approval for our product candidates, and any costs associated with such delays; 49 Table of Contents • the costs associated with selling, marketing, and distributing our approved products; • the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights associated with our product candidates; • the cost and timing of manufacturing, or having third parties manufacture, sufficient supplies of our product candidates in preparation for commercialization; • the effect of competing technological and market developments; • revenues from commercial sales of our approved products; • the terms and timing of any collaborative, licensing, co‑promotion, or other arrangements that we may establish; and • the success of the commercialization of any of our current products and, if approved, any of our product candidates.
Our future funding requirements will depend on many factors, including, but not limited to: • the rate of progress and costs related to the development of our product candidates, including the costs of preparing filings for regulatory approval; • the costs associated with conducting additional clinical and non-clinical studies with any of our product candidates; • the potential for delays in our efforts to seek regulatory approval for our product candidates, and any costs associated with such delays; 44 Table of Contents • the costs associated with selling, marketing, and distributing our approved products; • the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights associated with our product candidates; • the cost and timing of manufacturing, or having third parties manufacture, sufficient supplies of our product candidates in preparation for commercialization; • the effect of competing technological and market developments; • revenues from commercial sales of our approved products; • the terms and timing of any collaborative, licensing, co‑promotion, or other arrangements that we may establish; and • the success of the commercialization of any of our current products and, if approved, any of our product candidates.
If we are unable to implement appropriate controls and procedures to manage our growth, we will not be able to implement our business plan successfully. • If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock. • Our principal stockholders and management own a significant percentage of our stock and may be able to exert significant control over matters subject to stockholder approval. • The use of our net operating loss carryforwards and research tax credits may be limited. 47 Table of Contents RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTS We have incurred significant losses since our inception, anticipate that we will continue to have losses, and may never achieve or maintain profitability.
If we are unable to implement appropriate controls and procedures to manage our growth, we will not be able to implement our business plan successfully. • If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock. • Our principal stockholders and management own a significant percentage of our stock and may be able to exert significant control over matters subject to stockholder approval. • The use of our net operating loss carryforwards and research tax credits may be limited. 42 Table of Contents RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTS We have incurred significant losses since our inception, anticipate that we will continue to have losses, and may never achieve or maintain profitability.
The recent coming into force of the GDPR has increased our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business.
The coming into force of the GDPR has increased our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business.
Our business may be adversely affected by these restrictions on our ability to operate our business. The covenants under the Loan Agreement also require maintaining a minimum amount of cash in an account or accounts in which the Lenders have a first priority security interest.
Our business may be adversely affected by these restrictions on our ability to operate our business. The covenants under the Blackstone Loan Agreement also require maintaining a minimum amount of cash in an account or accounts in which the Lenders have a first priority security interest.
Under the agreement, we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize the compounds and products in the United States and to seek and maintain regulatory approvals for the compounds and products. The agreement will expire on a product-by-product basis upon expiration of the last-to-expire royalty term for such product.
Under the agreement, we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize the products in the United States and to seek and maintain regulatory approvals for the products. The agreement will expire on a product-by-product basis upon expiration of the last-to-expire royalty term for such product.
Regardless of merit or eventual outcome, liability claims may result in loss of revenue, including from: • decreased demand for our products; • impairment of our business reputation or financial stability; • costs of related litigation; • substantial monetary awards to patients or other claimants; • diversion of management attention; • loss of revenues; • withdrawal of clinical trial participants and potential termination of clinical trial sites or entire clinical programs; • the inability to commercialize our product candidates; • significant negative media attention; • decrease in our stock price; • initiation of investigations and enforcement actions by regulators; and 75 Table of Contents • product recalls, withdrawals, or labeling, marketing, or promotional restrictions.
Regardless of merit or eventual outcome, liability claims may result in loss of revenue, including from: • decreased demand for our products; • impairment of our business reputation or financial stability; 72 Table of Contents • costs of related litigation; • substantial monetary awards to patients or other claimants; • diversion of management attention; • loss of revenues; • withdrawal of clinical trial participants and potential termination of clinical trial sites or entire clinical programs; • the inability to commercialize our product candidates; • significant negative media attention; • decrease in our stock price; • initiation of investigations and enforcement actions by regulators; and • product recalls, withdrawals, or labeling, marketing, or promotional restrictions.
However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets. Accordingly, these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.
However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets. Accordingly, these agreements may not effectively prevent disclosure of proprietary information and may not provide an adequate remedy in the event of unauthorized disclosure of proprietary information.
Our operating results will suffer if we fail to compete effectively. • If we are unable to establish effective marketing, sales and distribution capabilities or enter into agreements with third parties to market, sell and distribute our products, we may be unable to generate substantial product revenues. • If any of our products do not achieve broad market acceptance, we may be unable to generate substantial product revenues. 46 Table of Contents • We rely, and expect to continue to rely, on third parties to perform many essential services for our products and product candidates, including services related to our preclinical studies and clinical trials, warehousing and inventory control, distribution, government price reporting, customer service, and adverse event reporting.
Our operating results will suffer if we fail to compete effectively. • If we are unable to establish effective marketing, sales and distribution capabilities or enter into agreements with third parties to market, sell and distribute our products, we may be unable to generate substantial product revenues. • If any of our products do not achieve broad market acceptance, we may be unable to generate substantial product revenues. 41 Table of Contents • We rely, and expect to continue to rely, on third parties to perform many essential services for our products and product candidates, including services related to our preclinical studies and clinical trials, warehousing and inventory control, distribution, government price reporting, customer service, and adverse event reporting.
We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. We have transitioned from a company with solely a research and development focus to a company also capable of undertaking commercial activities.
We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. We have transitioned from a company with solely a research and development focus to a company also undertaking commercial activities.
The GDPR, which is wide-ranging in scope, imposes several requirements relating to the legal basis of the processing of personal data, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of personal data.
The GDPR, which is wide-ranging in scope, imposes several requirements including relating to the legal basis of the processing of personal data, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of personal data.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on third parties does not relieve us of our regulatory responsibilities.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable protocol, legal, regulatory, and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities.
Filing, prosecuting, and defending patent applications and patents on products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.
Filing, prosecuting, enforcing, and defending patent applications and patents on products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.
These FCA lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements, pertaining to certain sales practices and promoting off-label drug uses.
These FCA lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil settlements and criminal resolutions, pertaining to certain sales practices and promoting off-label drug uses.
The outcome of our studies may further necessitate additional clinical or preclinical work; • we may fail to reach an agreement with regulators regarding the scope or design of our clinical trials; • we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical trial sites; • patients that enroll in our studies may misrepresent their eligibility or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the study or clinical trial, increase the needed enrollment size for the study or clinical trial, or extend the study’s or clinical trial’s duration; 58 Table of Contents • there may be regulatory questions regarding interpretations of data and results, or new information may emerge regarding our product candidates; • the FDA or comparable foreign regulatory authorities may disagree with our study design or our interpretation of data from preclinical studies and clinical trials or find that a product candidate’s benefits do not outweigh its safety risks.
The outcome of our studies may further necessitate additional clinical or preclinical work; • we may fail to reach an agreement with regulators regarding the scope or design of our clinical trials; • we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical trial sites; • patients that enroll in our studies may misrepresent their eligibility or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the study or clinical trial, increase the needed enrollment size for the study or clinical trial, or extend the study’s or clinical trial’s duration; • there may be regulatory questions regarding interpretations of data and results, or new information may emerge regarding our product candidates; • the FDA or comparable foreign regulatory authorities may disagree with our study design or our interpretation of data from preclinical studies and clinical trials or find that a product candidate’s benefits do not outweigh its safety risks.
We anticipate that our expenses will increase substantially as we: • seek regulatory approval for additional product candidates; • hire additional commercial, clinical, medical, quality, regulatory, and scientific personnel; • add operational, financial, and management information systems and personnel; • expand our sales, marketing, and distribution infrastructure; • expand external manufacturing capabilities and production to commercialize any additional products for which we may obtain regulatory approval and that we choose not to license to a third party; • undertake additional manufacturing activities of our product candidates to satisfy FDA requirements for marketing application submissions; • continue to evaluate, plan for, and conduct clinical trials for AXS-05 as an aid to smoking cessation treatment and other CNS disorders; • continue to evaluate, plan for, and conduct clinical trials for solriamfetol in additional indications; • continue to evaluate, plan for, and potentially submit NDAs for other pipeline products; • continue to expand commercial sales of Auvelity and Sunosi; • commercially launch Symbravo; • develop, in‑license, or acquire additional product candidates; • conduct late‑stage clinical trials for any product candidates that successfully complete early‑stage clinical trials; • conduct additional non‑clinical studies with any product candidates; and • maintain, expand, and protect our intellectual property portfolio. 48 Table of Contents To become and remain profitable, we must succeed in developing (or in-licensing) and commercializing products that generate significant revenue.
We anticipate that our expenses will increase substantially as we: • seek regulatory approval for additional product candidates; • hire additional commercial, clinical, medical, quality, regulatory, and scientific personnel; • add operational, financial, and management information systems and personnel; • expand our sales, marketing, and distribution infrastructure; • expand external manufacturing capabilities and production to commercialize any additional products for which we may obtain regulatory approval and that we choose not to license to a third party; • undertake additional manufacturing activities of our product candidates to satisfy FDA requirements for marketing application submissions; • continue to evaluate, plan for, and conduct clinical trials for AXS-05 as an aid to smoking cessation treatment and other CNS disorders; • continue to evaluate, plan for, and conduct clinical trials for solriamfetol in additional indications; • continue to evaluate, plan for, and potentially submit NDAs for other pipeline products; • continue to expand commercial sales of AUVELITY, SUNOSI, and SYMBRAVO; • develop, in‑license, or acquire additional product candidates; • conduct late‑stage clinical trials for any product candidates that successfully complete early‑stage clinical trials; • conduct additional non‑clinical studies with any product candidates; and • maintain, expand, and protect our intellectual property portfolio. 43 Table of Contents To become and remain profitable, we must succeed in developing (or in-licensing) and commercializing products that generate significant revenue.
Our ability to develop, manufacture, market, and sell any of our products depends upon our ability to avoid infringing the proprietary rights of third parties, and our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market, and sell our products and use our proprietary technologies without infringing the proprietary rights of third parties.
Our ability to develop, manufacture, market, and sell any of our products depends upon our ability to avoid infringing the proprietary rights of third parties, and our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market, and/or sell our products and use our proprietary technologies without infringing the proprietary rights of third parties.
This could delay completion of clinical trials; require the conduct of bridging clinical trials or studies, or the repetition of one or more clinical trials; increase clinical trial costs; delay approval of our product candidates; and jeopardize our ability to commence product sales and generate revenue. 63 Table of Contents Failure to obtain marketing approval in international jurisdictions would prevent our products from being marketed abroad.
This could delay completion of clinical trials; require the conduct of bridging clinical trials or studies, or the repetition of one or more clinical trials; increase clinical trial costs; delay approval of our product candidates; and jeopardize our ability to commence product sales and generate revenue. 60 Table of Contents Failure to obtain marketing approval in international jurisdictions would prevent our products from being marketed abroad.
If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, is found not to be in compliance with applicable laws, it may be subject to criminal, civil, or administrative sanctions, including but not limited to, exclusions from participation in government healthcare programs, which could also materially affect our business.
If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, is found not to be in compliance with applicable laws, such physicians or other healthcare providers or entities may be subject to criminal, civil, or administrative sanctions, including but not limited to, exclusions from participation in government healthcare programs, which could also materially affect our business.
Our business may be materially harmed if the licenses are not available or terminated for any reason. • If we fail to comply with federal, state, and foreign healthcare laws, including laws governing fraud and abuse, transparency, health and other data protection, information privacy and security, we could face substantial penalties and liabilities, and our business, financial condition, results of operations, and prospects could be adversely affected. • If the government or third-party payors fail to provide adequate coverage and payment rates for any of our products, or if such payors and health care providers including health maintenance organizations (HMOs) and long-term care facilities choose to use therapies that are less expensive, our revenue and prospects for profitability may be limited. • We have and may continue to significantly increase the size of our organization, and we may experience difficulties in managing growth.
Our business may be materially harmed if the licenses are not available or terminated for any reason. • If we fail to comply with federal, state, and foreign healthcare laws, including laws governing fraud and abuse, transparency, health and data protection, information privacy and security, we could face substantial penalties and liabilities, and our business, financial condition, results of operations, and prospects could be adversely affected. • If the government or third-party payors fail to provide adequate coverage and payment rates for any of our products, or if such payors and health care providers including health maintenance organizations (HMOs) and long-term care facilities choose to use therapies that are less expensive, our products may lose or fail to generate potential revenue and our prospects for profitability may be limited. • We have and may continue to significantly increase the size of our organization, and we may experience difficulties in managing growth.
If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization efforts. • Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan and security agreement with Hercules and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business. • We have a limited operating history of commercializing products, which may make it difficult to evaluate our business and prospects. • We are substantially dependent on the success of our products and cannot guarantee that any of our product candidates will successfully complete any planned or ongoing clinical trials, receive regulatory approval, or be successfully commercialized. • If safety and efficacy data for our product candidates, a reference drug, or published literature does not satisfactorily demonstrate safety and efficacy to the FDA, or if the FDA and other regulators do not permit us to rely on the data of a reference drug or published literature, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. • Although Breakthrough Therapy, Fast Track, and other designations are designed to expedite the development and review of drugs, they may not ultimately lead to a faster approval process or faster development of regulatory review, and they will not increase the likelihood that our product candidates will receive marketing approval, for example, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of AD agitation. • We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations.
If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization efforts. • Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan facility with Blackstone, and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business. • We have a limited operating history of commercializing products, which may make it difficult to evaluate our business and prospects. • We are substantially dependent on the success of our products and cannot guarantee that any of our product candidates will successfully complete any planned or ongoing clinical trials, receive regulatory approval, or be successfully commercialized. • If safety and efficacy data for our product candidates, a reference drug, or published literature does not satisfactorily demonstrate safety and efficacy to the Food and Drug Administration (FDA), or if the FDA and other regulators do not permit us to rely on the data of a reference drug or published literature, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. • Although Breakthrough Therapy, Fast Track, and other designations are designed to expedite the development and review of drugs, they may not ultimately lead to a faster approval process or faster development of regulatory review, and they will not increase the likelihood that our product candidates will receive marketing approval, for example, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of AD agitation. • We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations.
For instance, in our communications with the FDA, the FDA has raised questions and had comments regarding our preclinical studies and clinical trials, such as comments on the acceptability of the proposed trial designs for our product candidates, the number of patients planned for our studies, our data analysis plans, the species and doses used in our preclinical studies, and the results of our preclinical studies; • the FDA or comparable foreign regulatory authorities may disagree with our belief that certain product attributes are advantageous or may require further study of product attributes that are different than our reference listed drugs.
For instance, in our communications with the FDA, the FDA has raised questions and had comments regarding our preclinical studies and clinical trials, such as comments on the acceptability of the proposed trial designs for our product candidates, the number of patients planned for our studies, our data analysis plans, the species and doses used in our preclinical studies, and the results of our preclinical studies; 55 Table of Contents • the FDA or comparable foreign regulatory authorities may disagree with our belief that certain product attributes are advantageous or may require further study of product attributes that are different than our reference listed drugs.
We may experience numerous unforeseen events during, or as a result of, the testing process, which could delay or prevent our ability to develop or commercialize our product candidates, including: • our preclinical or nonclinical testing may produce inconclusive or negative safety results, which may require us to conduct additional nonclinical testing or to abandon product candidates; • our product candidates may have unfavorable pharmacology or toxicity characteristics or suggest possible drug-drug interaction; • our product candidates may cause undesirable side effects; and • the FDA or other regulatory authorities may determine that additional safety testing is required.
We may experience numerous unforeseen events during, or as a result of, the testing process, which could delay or prevent our ability to develop or commercialize our product candidates, including: • our preclinical or non-clinical testing may produce inconclusive or negative safety results, which may require us to conduct additional non-clinical testing or to abandon product candidates; • our product candidates may have unfavorable pharmacology or toxicity characteristics or suggest possible drug-drug interaction; • our product candidates may cause undesirable side effects; and • the FDA or other regulatory authorities may determine that additional safety testing is required.
We may also discontinue clinical research and programs due to changing business priorities; • changes in marketing approval policies during the development period rendering our data insufficient to obtain marketing approval; • changes in or the enactment of additional statutes or regulations; • changes in regulatory review for each submitted product application; • the cost of clinical trials of our product candidates may be greater than we anticipate, or we may have insufficient funds for a clinical trial or to pay the substantial user fees required by the FDA upon the filing of an NDA; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; • we may decide, or regulators may require us, to conduct additional clinical trials, analyses, reports, data, or preclinical/nonclinical studies than we currently plan, or we may abandon product development programs.
We may also discontinue clinical research and programs due to changing business priorities; • changes in marketing approval policies during the development period rendering our data insufficient to obtain marketing approval; • changes in or the enactment of additional statutes or regulations; • changes in regulatory review for each submitted product application; • the cost of clinical trials of our product candidates may be greater than we anticipate, or we may have insufficient funds for a clinical trial or to pay the substantial user fees required by the FDA upon the filing of an NDA; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; • we may decide, or regulators may require us, to conduct additional clinical trials, analyses, reports, data, or preclinical/non-clinical studies, or we may abandon product development programs.
At the time of initiating human clinical trials, we may not have conducted or may not conduct all the types of nonclinical testing ultimately required by regulatory authorities, or future nonclinical tests may indicate safety concerns regarding our product candidates. Nonclinical testing and clinical testing are both expensive and time-consuming and have uncertain outcomes.
At the time of initiating human clinical trials, we may not have conducted or may not conduct all the types of non-clinical testing ultimately required by regulatory authorities, or future non-clinical tests may indicate safety concerns regarding our product candidates. Non-clinical testing and clinical testing are both expensive and time-consuming and have uncertain outcomes.
Under the terms of the agreement, we received from Pfizer an exclusive U.S. license to Pfizer data for reboxetine and esreboxetine encompassing a full range of nonclinical studies, and short-term and long-term clinical trials involving more than five thousand patients.
Under the terms of the agreement, we received from Pfizer an exclusive U.S. license to Pfizer data for reboxetine and esreboxetine encompassing a full range of non-clinical studies, and short-term and long-term clinical trials involving more than five thousand patients.
Our management will have broad discretion in the application of the net proceeds from our capital raises, which we refer to as our Capital Raises, including the proceeds from sales pursuant to the March 2022 Sales Agreement with Leerink, which provides for the sale of up to $250.0 million of our common stock from time to time, and our stockholders will not have the opportunity as part of their investment decision to assess whether the net proceeds from our Capital Raises are being used appropriately.
Our management will have broad discretion in the application of the net proceeds from our capital raises, which we refer to as our Capital Raises, including the proceeds from sales pursuant to the March 2022 Sales Agreement with Leerink Partners LLC (“Leerink”), which provides for the sale of up to $250.0 million of our common stock from time to time, and our stockholders will not have the opportunity as part of their investment decision to assess whether the net proceeds from our Capital Raises are being used appropriately.
In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business. If we, or any future collaboration partner, are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.
In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business. 81 Table of Contents If we, or any future collaboration partner are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.
For instance, antidepressants, including Auvelity, include a class‑wide black box warning regarding the increased risk of suicidal thoughts and behavior. In addition, because we plan to file certain product candidates under an NDA submitted pursuant to 505(b)(2), we will rely, at least in part, upon a reference drug and published literature.
For instance, antidepressants, including AUVELITY, include a class‑wide black box warning regarding the increased risk of suicidal thoughts and behavior. 52 Table of Contents In addition, because we plan to file certain product candidates under an NDA submitted pursuant to 505(b)(2), we will rely, at least in part, upon a reference drug and published literature.
We may be unable to build a successful brand identity for a new trademark in a timely manner, or at all, which would limit our ability to commercialize our product candidates. 69 Table of Contents RISKS RELATED TO THE COMMERCIALIZATION OF OUR PRODUCTS We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations.
We may be unable to build a successful brand identity for a new trademark in a timely manner, or at all, which would limit our ability to commercialize our product candidates. RISKS RELATED TO THE COMMERCIALIZATION OF OUR PRODUCTS We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations.
Pfizer received 82,019 shares of our common stock having a value of $8.0 million, based on the average closing price of our common stock for the 10 prior trading days of $97.538, in consideration for the license and rights.
Pfizer received 82,019 shares of our common stock having a value of $8.0 million, based on the average closing price of our common stock for the 10 prior trading days of $97.54, in consideration for the license and rights.
If we fail to comply with our obligations under these agreements, the applicable licensor may have the right to terminate our license, in which case we may not be able to develop or commercialize the products covered by such license. 85 Table of Contents In January 2020, we entered into an agreement with Pfizer for an exclusive U.S. license to Pfizer’s clinical and nonclinical data, and intellectual property for reboxetine, the active pharmaceutical ingredient in AXS-12, which Axsome is developing for the treatment of narcolepsy.
If we fail to comply with our obligations under these agreements, the applicable licensor may have the right to terminate our license, in which case we may not be able to develop or commercialize the products covered by such license. 83 Table of Contents In January 2020, we entered into an agreement with Pfizer for an exclusive U.S. license to Pfizer’s clinical and non-clinical data, and intellectual property for reboxetine, the active pharmaceutical ingredient in AXS-12, which Axsome is developing for the treatment of narcolepsy.
However, these business activities may entail numerous operational and financial risks, including: • difficulty or inability to secure financing to fund business activities for such development; • disruption of our business and diversion of our management’s time and attention; • higher than expected development costs; • exposure to unknown liabilities; • difficulty in managing multiple product development programs; and • inability to successfully develop new products or clinical failure.
However, these business activities may entail numerous operational and financial risks, including: • difficulty or inability to secure financing to fund business activities for such development; 51 Table of Contents • disruption of our business and diversion of our management’s time and attention; • higher than expected development costs; • exposure to unknown liabilities; • difficulty in managing multiple product development programs; and • inability to successfully develop new products or clinical failure.
Moreover, our inability to pursue a 505(b)(2) application could result in new competitive products reaching the market more quickly than our product candidates, which could hurt our competitive position and our business prospects. 56 Table of Contents The regulatory approval timelines and processes of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable.
Moreover, our inability to pursue a 505(b)(2) application could result in new competitive products reaching the market more quickly than our product candidates, which could hurt our competitive position and our business prospects. The regulatory approval timelines and processes of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable.
Under the FCA, a penalty may be imposed for each false claim, for example, a claim for payment for each prescription for the product, and, when aggregated, these penalties often total millions of dollars and incentivize qui tam lawsuits.
Under the FCA, a penalty may be imposed for each false claim, which, for example, might be a claim for payment for each prescription for the product, and, when aggregated, these penalties often total millions of dollars and incentivize qui tam lawsuits.
Further, the cost of compliance with post‑approval regulations may have a negative effect on our operating results and financial condition. A variety of risks associated with international operations could materially adversely affect our business. We are, and may become party to further agreements, pursuant to which we out-license our products outside of the United States.
Further, the cost of compliance with post‑approval regulations may have a negative effect on our operating results and financial condition. 65 Table of Contents A variety of risks associated with international operations could materially adversely affect our business. We are, and may become party to further agreements, pursuant to which we out-license our products outside of the United States.
The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.
Further, the degree of future protection for our proprietary rights is uncertain, for example, because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.
These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations. We are exposed to market risk from fluctuations in currency exchange rates and interest rates. We operate in multiple jurisdictions, and virtually all sales are denominated in currencies of the local jurisdiction.
These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations. 66 Table of Contents We are exposed to market risk from fluctuations in currency exchange rates and interest rates. We operate in multiple jurisdictions, and virtually all sales are denominated in currencies of the local jurisdiction.
Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is typically lost to the generic product. Moreover, in addition to generic competition, we could face competition from other companies seeking approval of drug products that are similar to ours using the 505(b)(2) pathway.
Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is typically lost to the generic product. 68 Table of Contents Moreover, in addition to generic competition, we could face competition from other companies seeking approval of drug products that are similar to ours using the 505(b)(2) pathway.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations, and prospects. We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming, and unsuccessful.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations, and prospects. 82 Table of Contents We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming, and unsuccessful.
In order to obtain approval of a product candidate we must demonstrate safety in various nonclinical tests (including, for example, carcinogenicity studies, drug-drug interaction studies, and toxicity studies), in addition to human clinical trials.
In order to obtain approval of a product candidate we must demonstrate safety in various non-clinical tests (including, for example, carcinogenicity studies, drug-drug interaction studies, and toxicity studies), in addition to human clinical trials.
As such, we are currently primarily focused on the development of solriamfetol for additional indications, AXS-05 for the treatment of agitation associated with AD and smoking cessation, AXS-12 for the treatment of narcolepsy, and AXS-14 for the treatment of fibromyalgia.
As such, we are currently primarily focused on the development of solriamfetol for additional indications, AXS-05 for the treatment of AD agitation and smoking cessation, AXS-12 for the treatment of narcolepsy, and AXS-14 for the treatment of fibromyalgia.
The degree of market acceptance of any of our products will depend on a number of factors, including: • the efficacy of our products; • the prevalence and severity of adverse events associated with such product; • the clinical indications for which the product is approved and the approved claims that we may make for the product; • limitations or warnings contained in the product’s FDA‑approved labeling, including potential limitations or warnings for such product candidate, that may be more restrictive than other competitive products; • changes in the standard of care for the targeted indications for such product candidate, which could reduce the marketing impact of any claims that we could make following FDA approval, if obtained; • the relative convenience and ease of administration of such product; • cost of treatment versus economic and clinical benefit in relation to alternative treatments or therapies; • the availability of adequate coverage or reimbursement by third parties, such as insurance companies and other healthcare payors, and by government healthcare programs, including Medicare and Medicaid; • the willingness of third-party payors to prefer other products, even if not approved for our product’s indication; • the extent and strength of our marketing and distribution of such product; • the safety, efficacy, and other potential advantages over, and availability of, alternative treatments already used or that may later be approved for any of our intended indications; • distribution and use restrictions imposed by the FDA with respect to such product or to which we agree as part of a mandatory REMS or voluntary risk management plan; • the timing of market introduction of such product, as well as competitive products; • our ability to offer such product candidate for sale at competitive prices, including prices that are competitive with generic products; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the extent and strength of our third‑party manufacturer and supplier support; • the approval of other new products for the same indications; • adverse publicity about the product or favorable publicity about competitive products; and • potential product liability claims. 74 Table of Contents Our efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources and may never be successful.
The degree of market acceptance of any of our products will depend on a number of factors, including: • the efficacy of our products; • the prevalence and severity of adverse events associated with such product; • the clinical indications for which the product is approved and the approved claims that we may make for the product; • limitations or warnings contained in the product’s FDA‑approved labeling, including potential limitations or warnings for such product candidate, that may be more restrictive than other competitive products; • changes in the standard of care for the targeted indications for such product candidate, which could reduce the marketing impact of any claims that we could make following FDA approval, if obtained; • the relative convenience and ease of administration of such product; • cost of treatment versus economic and clinical benefit in relation to alternative treatments or therapies; • the availability of adequate coverage or reimbursement by third parties, such as insurance companies and other healthcare payors, and by government healthcare programs, including Medicare and Medicaid; 71 Table of Contents • the willingness of third-party payors to prefer other products, even if not approved for our product’s indication; • the extent and strength of our marketing and distribution of such product; • the safety, efficacy, and other potential advantages over, and availability of, alternative treatments already used or that may later be approved for any of our intended indications; • distribution and use restrictions imposed by the FDA with respect to such product or to which we agree as part of a mandatory REMS or voluntary risk management plan; • the timing of market introduction of such product, as well as competitive products; • our ability to offer such product candidate for sale at competitive prices, including prices that are competitive with generic products; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the extent and strength of our third‑party manufacturer and supplier support; • the approval of other new products for the same indications; • adverse publicity about the product or favorable publicity about competitive products; and • potential product liability claims.
For example: • we may not have been the first to conceive of and reduce to practice the inventions covered by each of our pending patent applications and issued patents; • we may not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies; • it is possible that none of the pending patent applications will result in issued patents; • the issued patents may not cover commercially viable active products, may not provide us with any competitive advantages, or may be successfully challenged by third parties; • we may not develop additional proprietary technologies that are patentable; • patents of others may have an adverse effect on our business; 82 Table of Contents • noncompliance with requirements of governmental patent agencies can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction, potentially allowing competitors to enter the market earlier than would otherwise have been the case; • our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use, and sell our potential product candidates; or • there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of available patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns.
For example: • we may not have been the first to conceive of and reduce to practice the inventions covered by each of our pending patent applications and issued patents; • we may not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies; • it is possible that none of the pending patent applications will result in issued patents; • the issued patents may not cover commercially viable active products, may not provide us with any competitive advantages, or may be successfully challenged by third parties, and we may not have a continuing application (e.g., divisional, continuation, continuation-in-part) pending that covers the relevant subject matter; • we may not develop additional proprietary technologies that are patentable; • patents of others may have an adverse effect on our business; • noncompliance with requirements of governmental patent agencies can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction, potentially allowing competitors to enter the market earlier than would otherwise have been the case; • our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use, and sell our products and potential product candidates; or • there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of available patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns. 80 Table of Contents Patents have a limited lifespan.
These risks could disrupt our operations and its supply chain, which may result in increased costs. New legal or regulatory requirements may be enacted to prevent, mitigate, or adapt to the implications of a changing climate and its effects on the environment.
These risks could disrupt our operations and its supply chain, which may result in increased costs. 48 Table of Contents New legal or regulatory requirements may be enacted to prevent, mitigate, or adapt to the implications of a changing climate and its effects on the environment.
Third-party payors may also implement onerous access controls, which could further impede our efforts to effectively transition eligible patients to our therapies. 73 Table of Contents Efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources and may not be successful.
Third-party payors may also implement onerous access controls, which could further impede our efforts to effectively transition eligible patients to our therapies. Efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources and may not be successful.
A breach of any of the covenants under the Loan Agreement could result in a default under the 2020 Term Loan. Upon the occurrence of an event of default under the 2020 Term Loan, the Lenders could elect to declare all amounts outstanding, if any, to be immediately due and payable and terminate all commitments to extend further credit.
A breach of any of the covenants under the Blackstone Loan Agreement could result in a default. Upon the occurrence of an event of default, the Lenders could elect to declare all amounts outstanding, if any, to be immediately due and payable and terminate all commitments to extend further credit.
U.S facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and must comply with the security, control, recordkeeping and reporting obligations under the CSA, DEA regulations and corresponding state requirements. DEA and state regulatory bodies conduct periodic inspections of certain registered establishments that handle controlled substances.
U.S facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and must comply with the security, control, recordkeeping and reporting obligations under the CSA, DEA regulations and corresponding state requirements. DEA and state regulatory bodies conduct inspections periodically or as needed of certain registered establishments that handle controlled substances.
Factors that may inhibit our efforts to commercialize any of our products on our own include: • our inability to recruit, train, manage, and retain adequate numbers of effective sales and marketing personnel; • the inability of sales personnel to obtain access to physicians or appropriately persuade adequate numbers of physicians to prescribe any of our current or future product candidates; • our inability to effectively oversee a geographically dispersed sales and marketing team; • the application of federal and state drug distribution and supply chain requirements to our business; 72 Table of Contents • the costs associated with training sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions; • an inability to secure adequate or any coverage and reimbursement by government and private health plans or other payers; • the clinical indications and labeled claims for which the product is approved; • limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling; • any distribution and use restrictions imposed by the FDA or to which we agree as part of a mandatory REMS or voluntary risk management plan; • liability for sales or marketing personnel who fail to comply with the applicable legal and regulatory requirements; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization or engaging a contract sales organization.
Factors that may inhibit our efforts to commercialize any of our products on our own include: • our inability to recruit, train, manage, and retain adequate numbers of effective sales and marketing personnel; • the inability of sales personnel to obtain access to physicians or appropriately persuade adequate numbers of physicians to prescribe any of our current or future product candidates; • our inability to effectively oversee a geographically dispersed sales and marketing team; • the application of federal and state drug distribution and supply chain requirements to our business; • the costs associated with training sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions; • an inability to secure adequate or any coverage and reimbursement by government and private health plans or other payers; • the clinical indications and labeled claims for which the product is approved; • limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling; • any distribution and use restrictions imposed by the FDA or to which we agree as part of a mandatory REMS or voluntary risk management plan; • liability for sales or marketing personnel who fail to comply with the applicable legal and regulatory requirements; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization or engaging a contract sales organization. 70 Table of Contents If additional product candidates are approved, we may incur expenses prior to product launch in expanding our sales force and compliant marketing and sales infrastructure.
U.S. federal net operating loss carry forwards amounting to $59.8 million generated before the 2018 tax year will start expiring beginning 2032, if we have not used them prior to that time, and the U.S. federal net operating losses of approximately $512.3 million generated in 2018 and later have an indefinite carryforward period.
U.S. federal net operating loss carry forwards amounting to $59.8 million generated before the 2018 tax year will start expiring beginning 2032, if we have not used them prior to that time, and the U.S. federal net operating losses of approximately $518.1 million generated in 2018 and later have an indefinite carryforward period.
Prior to our commercialization of Auvelity and Sunosi in 2022, and the recent approval of Symbravo, we had not obtained marketing approvals for any product candidates, manufactured products on a commercial scale or arranged for a third party to do so on our behalf, or conducted sales and marketing activities necessary for successful commercialization.
Prior to our commercialization of AUVELITY and SUNOSI in 2022, and the approval and U.S. commercialization of SYMBRAVO in 2025, we had not obtained marketing approvals for any product candidates, manufactured products on a commercial scale or arranged for a third party to do so on our behalf, or conducted sales and marketing activities necessary for successful commercialization.
Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, heightened security requirements and additional criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription. Sunosi is a Schedule IV controlled substance.
Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, heightened security requirements and additional criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription.
We may also seek Orphan Drug Designation for our other products, as appropriate. 71 Table of Contents Orphan Drug Designation, however, may be lost if the indications for which we develop any of our future product candidates do not meet the orphan drug criteria.
We may also seek Orphan Drug Designation for our other products, as appropriate. Orphan Drug Designation, however, may be lost if the indications for which we develop any of our future product candidates do not meet the orphan drug criteria.
Thus, we and any of our collaborators will not be able to promote any products we develop for indications or uses for which they are not approved. 65 Table of Contents In the United States, engaging in the impermissible promotion of our products, following approval, for off-label uses can also subject us to false claims and other litigation under federal and state statutes, including fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties and fines, agreements with governmental authorities that materially restrict the manner in which we promote or distribute drug products and do business through, for example, corporate integrity agreements, suspension or exclusion from participation in federal and state healthcare programs, and debarment from government contracts and refusal of future orders under existing contracts.
Thus, we and any of our collaborators will not be able to promote any products we develop for indications or uses for which they are not approved. 62 Table of Contents In the United States, engaging in the impermissible promotion of our products, following approval, for off-label uses can also subject us to false claims and other litigation under federal and state statutes, including fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties, damages, fines, and actions, agreements with governmental authorities that materially restrict the manner in which we promote or distribute drug products and do business through, for example, corporate integrity agreements, suspension or exclusion from participation in federal and state healthcare programs, and suspension or debarment from government procurement and potential adverse actions affecting future orders under existing contracts.
As a pharmaceutical company, we are subject to many federal and state healthcare laws, including those described in the “Business—Government Regulation and Product Approval” section of this Annual Report on Form 10-K, such as the federal Anti-Kickback Statute, the federal civil and criminal FCA, the civil monetary penalties statute, the Medicaid Drug Rebate Statute and other price reporting requirements, the Veterans Health Care Act of 1992, the Sunshine Act, HIPAA, the FCPA, the ACA, and other state and foreign laws.
As a pharmaceutical company, we are subject to many federal and state healthcare laws, including those described in the “Business—Government Regulation and Product Approval” section of this Annual Report on Form 10-K, such laws may include the federal Anti-Kickback Statute, the federal civil and criminal FCA, the CMP Law, the Medicaid Drug Rebate Statute and other price reporting requirements, the Veterans Health Care Act of 1992, the Sunshine Act, HIPAA, the FCPA, the ACA, and other state and foreign laws.
For example, in February 2023, we received a paragraph IV certification notice letter from Teva providing notification to the Company that Teva has submitted an ANDA to the FDA seeking approval to manufacture, use, or sell a generic version of Auvelity.
For example, in February 2023, we received a paragraph IV certification notice letter from Teva providing notification to the Company that Teva has submitted an ANDA to the FDA seeking approval to manufacture, use, or sell a generic version of AUVELITY. We settled the ensuing litigation in February 2025.
Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflicts in Ukraine and the Middle East, geopolitical tensions, or record inflation.
Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflicts in South America, Russia and Ukraine, the Middle East and elsewhere, and geopolitical tensions, or record inflation.
The FCA allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims or causing others to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid.
The FCA allows a private individual to bring a qui tam lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims or causing others to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid.
If there are any amounts outstanding that we are unable to repay, the Lenders could proceed against the collateral granted to it to secure such indebtedness. We have a limited operating history of commercializing products, which may make it difficult to evaluate our business and prospects. We are a commercial-stage company.
If there are any amounts outstanding that we are unable to repay, the Lenders could proceed against the collateral granted to it to secure such indebtedness. We have a limited operating history of commercializing products, which may make it difficult to evaluate our business and prospects. We are a fully integrated biopharmaceutical company.
Symbravo was subsequently approved by the FDA. Furthermore, there is the possibility that the FDA or comparable foreign regulatory authorities have not previously reviewed product candidates for the indications we are pursuing, such as AD agitation or smoking cessation. As a result, we may experience delays in regulatory approval due to uncertainties in the approval process.
Furthermore, there is the possibility that the FDA or comparable foreign regulatory authorities have not previously reviewed product candidates for the indications we are pursuing, such as AD agitation or smoking cessation. As a result, we may experience delays in regulatory approval due to uncertainties in the approval process.
Moreover, if we are required to conduct additional clinical trials or other testing of our product candidates beyond that which we currently contemplate, if we are unable to successfully complete clinical trials or other testing of our product candidates, if the results of these trials or tests are not positive, or are only modestly positive, or if there are safety concerns, we may: • be delayed in obtaining marketing approval for our product candidates; • not obtain marketing approval at all; • obtain approval for indications or patient populations that are not as broad as intended or desired or are not covered by our intellectual property; • obtain approval with labeling that includes significant use or distribution restrictions, including restrictions on the intended patient population, or safety warnings, including boxed warnings, contraindications, and precautions, or may not include label statements necessary or desirable for successful commercialization; 59 Table of Contents • be subject to additional post‑marketing testing and surveillance requirements, including REMS; or • have the product removed from the market after obtaining marketing approval.
Moreover, if we are required to conduct additional clinical trials or other testing of our product candidates beyond that which we currently contemplate, if we are unable to successfully complete clinical trials or other testing of our product candidates, if the results of these trials or tests are not positive, or are only modestly positive, or if there are safety concerns, we may: • be delayed in obtaining marketing approval for our product candidates; • not obtain marketing approval at all; • obtain approval for indications or patient populations that are not as broad as intended or desired or are not covered by our intellectual property; • obtain approval with labeling that includes significant use or distribution restrictions, including restrictions on the intended patient population, or safety warnings, including boxed warnings, contraindications, and precautions, or may not include label statements necessary or desirable for successful commercialization; • be subject to additional post‑marketing testing and surveillance requirements, including REMS; or • have the product removed from the market after obtaining marketing approval. 56 Table of Contents In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted.
Patents have a limited lifespan. In most countries, including the United States, the expiration of a patent is typically 20 years from the date that the application for the patent is filed or 20 years from the earliest non-provisional filing date to which priority is claimed if the patent is granted from a continuing application (e.g., continuation, divisional, or continuation-in-part).
In most countries, including the United States, the expiration of a utility patent is typically 20 years from the date that the application for the patent is filed or 20 years from the earliest non-provisional filing date to which priority is claimed if the patent is granted from a continuing application (e.g., continuation, divisional, or continuation-in-part).
Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan and security agreement with Hercules and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.
Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan facility with Blackstone, and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.
We, and any of our collaborators, must comply with requirements concerning advertising and promotion for any of our products for which we or they obtain marketing approval.
We, and any of our collaborators, must comply with laws, regulations, and other requirements concerning advertising and promotion for any of our products for which we or they obtain marketing approval.
If a third-party claims that we infringe their intellectual property rights, we could face a number of issues, including: • infringement and other intellectual property claims which, whether meritorious or not, can be expensive and time consuming to litigate and can divert management’s attention from our core business; • substantial damages for past infringement which we may have to pay if a court decides that our product infringes on a competitor’s patent; • a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be required to do; • if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and • redesigning our products and processes so they do not infringe, which may not be possible or could require substantial funds and time. 84 Table of Contents If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology.
If a third party claims that we infringe their intellectual property rights, we could face a number of issues, including: • infringement and other intellectual property claims which, whether meritorious or not, can be expensive and time consuming to litigate and can divert management’s attention from our core business; • substantial damages for past infringement which we may have to pay if a court decides that our product infringes on a competitor’s patent; • a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be required to do; • if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and • redesigning our products and processes so they do not infringe, which may not be possible or could require substantial funds and time.
The IRA makes significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits, and government price-setting for certain Medicare Part D drugs, starting in 2026, and Medicare Part B drugs starting in 2028.
The IRA makes significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits, and government price-setting for certain Medicare Part D drugs, with the first negotiated prices effective as of January 1, 2026, and Medicare Part B drugs starting in 2028.
These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 85 Table of Contents Many companies have encountered significant problems in protecting, enforcing, and defending intellectual property rights in foreign jurisdictions.
We continue to monitor the potential impact of proposals and recently enacted legislation to lower prescription drug costs at the federal and state level. For example, the IRA was signed into law by President Biden in August 2022.
We continue to monitor the potential impact of proposals and recently enacted legislation to lower prescription drug costs at the federal and state level. For example, the Inflation Reduction Act (“IRA”) was signed into law by President Biden in August 2022.
Patent litigation is inherently uncertain, and we cannot guarantee the outcome of any such proceedings or that we would succeed in stopping the “at risk” launch of a generic version of either of our currently commercialized products during the pendency of litigation following expiry of the 30-month stay. Such a generic launch could materially impact our commercial success.
Patent litigation is inherently uncertain, and we cannot guarantee the outcome of any such proceedings, that we would succeed in stopping the “at risk” launch of a generic version of either of our currently commercialized products during the pendency of litigation following expiry of the 30-month stay, or that we would commence such proceedings.
General political uncertainty may have an adverse impact on our operating performance and results of operations. In particular, the U.S. continues to experience significant political events that cast uncertainty on global financial and economic markets, especially following the recent presidential election.
General political uncertainty may have an adverse impact on our operating performance and results of operations. In particular, the U.S. continues to experience significant political events that cast uncertainty on the U.S. and global financial and economic markets.
If we are unable to implement appropriate controls and procedures to manage our growth, we will not be able to implement our business plan successfully. As of February 11, 2025, we had 683 full‑time employees. Our management, personnel, systems, and facilities currently in place may not be adequate to support future growth.
If we are unable to implement appropriate controls and procedures to manage our growth, we will not be able to implement our business plan successfully. As of February 16, 2026, we had 925 full‑time employees. Our management, personnel, systems, and facilities currently in place may not be adequate to support future growth.
Application fees may apply to certain changes. 66 Table of Contents In addition, later discovery of previously unknown adverse events or that the drug is less effective than previously thought or other problems with our products, manufacturers, or manufacturing processes, or failure to comply with regulatory requirements both before and after approval, may yield various results, including: • restrictions on manufacturing or distribution, or marketing of such products; • restrictions on the labeling, including required additional warnings, such as black box warnings, contraindications, precautions, and restrictions on the approved indication or use; • modifications to promotional pieces; • requirements to conduct post‑marketing studies or clinical trials; • clinical holds or termination of clinical trials; • requirements to establish or modify a REMS or a comparable foreign authority may require that we establish or modify a similar strategy, that may, for instance, require us to create or modify a medication guide outlining the risks of the previously unidentified side effects for distribution to patients, or restrict distribution of the product, if and when approved, and impose burdensome implementation requirements on us; • changes to the way the drug is administered; • liability for harm caused to patients or subjects; • reputational harm; • the drug becoming less competitive; • warning or untitled letters; • suspension of marketing or withdrawal of the products from the market; • regulatory authority issuance of safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing warnings or other safety information about the drug; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, damages, restitution, or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure or detention; • FDA debarment, debarment from government contracts, and refusal of future orders under existing contracts, exclusion from federal healthcare programs, consent decrees, or corporate integrity agreements; or • injunctions or the imposition of civil or criminal penalties, including imprisonment. 67 Table of Contents Any of these events could prevent us from achieving or maintaining market acceptance of the particular product, or could substantially increase the costs and expenses of commercializing such product, which in turn could delay or prevent us from generating significant revenues from its sale.
In addition, later discovery of previously unknown adverse events or that the drug is less effective than previously thought or other problems with our products, manufacturers, or manufacturing processes, or failure to comply with regulatory requirements both before and after approval, may yield various results, including: • restrictions on manufacturing or distribution, or marketing of such products; • restrictions on the labeling, including required additional warnings, such as black box warnings, contraindications, precautions, and restrictions on the approved indication or use; • modifications to promotional pieces; • requirements to conduct post‑marketing studies or clinical trials; • clinical holds or termination of clinical trials; • requirements to establish or modify a REMS or a comparable foreign authority may require that we establish or modify a similar strategy, that may, for instance, require us to create or modify a medication guide outlining the risks of the previously unidentified side effects for distribution to patients, or restrict distribution of the product, if and when approved, and impose burdensome implementation requirements on us; • changes to the way the drug is administered; • liability for harm caused to patients or subjects; • reputational harm; • the drug becoming less competitive; • warning or untitled letters; • suspension of marketing or withdrawal of the products from the market; 64 Table of Contents • regulatory authority issuance of safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing warnings or other safety information about the drug; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, damages, restitution, or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • refusal to permit the import or export of our products; • product seizure or detention; • FDA debarment, debarment from government contracts, and refusal of future orders under existing contracts, exclusion from federal healthcare programs, consent decrees, or corporate integrity agreements; or • injunctions or the imposition of civil or criminal penalties, including imprisonment.
Our principal stockholders and management own a significant percentage of our stock and may be able to exert significant control over matters subject to stockholder approval. As of February 11, 2025, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 44% of our outstanding common stock.
Our principal stockholders and management own a significant percentage of our stock and may be able to exert significant control over matters subject to stockholder approval. As of February 16, 2026, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 33% of our outstanding common stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors - Our business and operations would suffer in the event of system failures. ”
Biggest changeRisk Factors - Our business and operations would suffer in the event of system failures. ” 105 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company is responsible for base rent under the Sublease and certain additional customary variable costs, such as an allocable portion of building taxes and operating expenses. In connection with the Sublease and First Amendment, the Company received certain rent and work concessions from the sublandlord.
Biggest changeWe now have a one-time option to terminate the Sublease effective March 30, 2031 upon the payment of a fee to the sublandlord. The Company is responsible for base rent under the Sublease and certain additional customary variable costs, such as an allocable portion of building taxes and operating expenses.
ITEM 2. PROPERTIE S. On February 21, 2023, we entered into a Sublease with Advance Magazine Publishers d/b/a Conde Nast for the entirety of the twenty-second floor of One Word Trade Center in New York, NY, or the Sublease. This space is utilized by the Company for its corporate and executive offices.
ITEM 2. PROPERTIE S. On February 21, 2023, we entered into a Sublease with Advance Magazine Publishers d/b/a Conde Nast for the entirety of the twenty-second floor of One World Trade Center in New York, NY (“Sublease”). This space is utilized by the Company for its corporate and executive offices.
The Company had a one-time option to terminate the Sublease on its fifth anniversary upon the payment of a fee to the sublandlord. 105 Table of Contents On January 17, 2025, we entered into an Amendment to our Sublease (the “First Amendment”), pursuant to which we will relinquish our existing space in One World Trade Center and commence occupancy of different space within the building.
On January 17, 2025, we entered into an Amendment to our Sublease (the “First Amendment”), pursuant to which we will relinquish our existing space in One World Trade Center and commence occupancy of different space within the building. The First Amendment extends the Sublease expiration date to January 31, 2036.
The Sublease commenced on April 7, 2023 and was for ten (10) years.
The Sublease commenced on April 7, 2023 and was for ten (10) years. The Company had a one-time option to terminate the Sublease on its fifth anniversary upon the payment of a fee to the sublandlord.
Removed
The First Amendment extends the Sublease expiration date to January 31, 2036. We now have a one-time option to terminate the Sublease effective March 30, 2031 upon the payment of a fee to the sublandlord.
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In connection with the Sublease and First Amendment, the Company received certain rent and work concessions from the sublandlord.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. Except as described herein, we, and our subsidiaries, are currently not a party to, and our property is not currently the subject of, any material pending legal proceedings; however, we may also become involved in various claims and legal actions arising in the ordinary course of business.
Biggest changeITEM 3. LEGAL PROCEEDINGS. Except as described in Note 10. Commitments and Contingencies, we, and our subsidiaries, are currently not a party to, and our property is not currently the subject of, any material pending legal proceedings; however, we may also become involved in various claims and legal actions arising in the ordinary course of business.
Removed
Securities Class Action On May 13, 2022, Evy Gru filed a putative class action complaint captioned Gru v. Axsome Therapeutics, Inc., et al. in the U.S.
Removed
District Court for the Southern District of New York, or the SDNY District Court, against the Company and certain of its current and former officers and one director, which we refer to as the Securities Class Action.
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The complaint asserts claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and alleges, among other things, that the defendants made false statements and omissions concerning the Company’s Chemistry Manufacturing and Controls practices, and its NDA with the FDA, with respect to one of its product candidates, AXS-07.
Removed
The named plaintiff sought unspecified damages, fees, interest, and costs. On August 11, 2022, the SDNY District Court appointed co-lead plaintiffs in the Securities Class Action, one of whom later withdrew. On October 7, 2022, the Securities Class Action plaintiffs filed an amended complaint, which contained substantially similar allegations as in the initial complaint.
Removed
On September 25, 2023, the SDNY District Court granted defendants’ motion to dismiss the amended complaint. On October 13, 2023, plaintiffs’ counsel filed a letter seeking leave to file an amended complaint and to substitute new plaintiffs, which defendants opposed. The SDNY District Court re-opened the lead plaintiff appointment process.
Removed
Thomas Giblin, Paul Berger, and Paul Sutherland moved jointly to be appointed replacement plaintiffs. On January 22, 2024, the SDNY District Court granted that motion and ordered that the case name be changed to In re Axsome Therapeutics, Inc. Securities Litigation .
Removed
On January 26, 2024, the replacement plaintiffs renewed their request for leave to file a proposed second amended complaint, and, on February 6, 2024, the SDNY District Court granted that request. Plaintiffs filed the second amended complaint on February 7, 2024. On March 11, 2024, the defendants moved to dismiss the second amended complaint.
Removed
Shareholder Derivative Action On July 21, 2022, Daniel Engel filed a stockholder derivative complaint captioned Engel v. Herriot Tabuteau, et al. in the SDNY District Court against the Company’s current directors, certain of the Company’s current and former officers, and the Company (as nominal defendant). On January 27, 2023, Kyle Guterba filed a stockholder derivative complaint captioned Guterba v.
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Tabuteau, et al. in the SDNY District Court against the Company’s current directors, certain of the Company’s current and former officers, and the Company (as nominal defendant). The derivative complaints arise out of similar allegations as those made in the Securities Class Action.
Removed
The plaintiffs assert claims for breach of fiduciary duties against all of the defendants and for contribution for violations of Section 10(b) and 21D of the Exchange Act. The plaintiffs seek unspecified damages, fees, interest, and costs, as well as corporate governance changes.
Removed
The Engel and Guterba matters were consolidated on February 28, 2023 and are currently stayed pending further proceedings in the Securities Class 106 Table of Contents Action. Auvelity Paragraph IV Litigation On March 24, 2023, we commenced a patent infringement action against Teva Pharmaceuticals, Inc., or Teva, relating to Teva’s ANDA for Auvelity.
Removed
This action is captioned Axsome Therapeutics, Inc. and Antecip Bioventures II LLC v. Teva Pharmaceuticals, Inc. No. 2:23-CV-01695 in the United States District Court for the District of New Jersey, or the NJ District Court. On December 15, 2023, we commenced a second patent infringement action against Teva relating to Teva’s ANDA.
Removed
This action is captioned Axsome Therapeutics, Inc., and Antecip Bioventures II LLC v. Teva Pharmaceuticals, Inc. No. 2:23-cv-23142 in the NJ District Court. On February 26, 2024, the NJ District Court consolidated the first and second actions. Fact discovery is currently scheduled to close on March 24, 2025 in the consolidated action.
Removed
On May 28, 2024, we commenced a third patent infringement action against Teva relating to Teva’s ANDA. This action is captioned Axsome Therapeutics, Inc., and Antecip Bioventures II LLC v. Teva Pharmaceuticals, Inc. No. 2:24-cv-06489 in the NJ District Court. On September 30, 2024, we commenced a fourth patent infringement action against Teva relating to Teva’s ANDA.
Removed
This action is captioned Axsome Therapeutics, Inc., and Antecip Bioventures II LLC v. Teva Pharmaceuticals, Inc. No. 2-24-cv-09535 in the NJ District Court. On December 5, 2024, we commenced a fifth patent infringement action against Teva relating to Teva’s ANDA. The fifth action is captioned Axsome Therapeutics, Inc., and Antecip Bioventures II LLC v. Teva Pharmaceuticals, Inc.
Removed
No. 2-24-cv-10938 in the NJ District Court. On January 7, 2025, the NJ District Court consolidated that third, fourth, and fifth actions. On February 10, 2025, the Company announced that it had entered into a settlement agreement with Teva to resolve all outstanding litigation between the parties relating to Auvelity.
Removed
Under the terms of the settlement agreement, Axsome will grant Teva a license to sell its generic version of Auvelity beginning on or after March 31, 2039, if pediatric exclusivity is granted for Auvelity, or on or after September 30, 2038, if no pediatric exclusivity is granted, subject to FDA approval and conditions and exceptions customary for agreements of this type.
Removed
Sunosi Paragraph IV Litigation On September 13, 2023, we commenced a patent infringement action against Hikma and five other drug companies relating to each defendant’s ANDA for Sunosi. This action is captioned Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Alkem Laboratories Ltd., et al . No. 2:23-CV-20354 in the NJ District Court.
Removed
We commenced related patent infringement actions against the defendants relating to their ANDAs on December 20, 2023, January 11, 2024, January 18, 2024, February 14, 2024, March 19, 2024 (2 actions filed), April 5, 2024, July 2, 2024, August 8, 2024, August 21, 2024, September 16, 2024, November 20, 2024 (4 actions filed), January 21, 2025.
Removed
Those actions are captioned Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Unichem Laboratories Ltd . No. 2:23-cv-23255; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Hetero USA, Inc. et al . No 2:24-cv-00196; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al . No. 2:24-cv-00309; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v.
Removed
Sandoz, Inc . No. 2:24-cv-00860; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Hetero USA, Inc. et al . No 2:24-cv-03999; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al . No. 2:24-cv-04002; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Alkem Laboratories Ltd., et al .
Removed
No. 2:24-CV-04608; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al . No. 2-24-cv-07511; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Alkem Laboratories Ltd. No. 2-24-cv-08365; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al. No. 2-24-cv-08624; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v.
Removed
Alkem Laboratories Ltd. et al. No. 2-24-cv-09209; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Alkem Laboratories Ltd. No. 2-24-cv-10617; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Hetero USA, Inc. et al . No 2:24-cv-10618; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al .
Removed
No 2:24-cv-10619; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Hikma Pharmaceuticals USA Inc . No 2:24-cv-10620; Axsome Malta Ltd. & Axsome Therapeutics, Inc. v. Aurobindo Pharma USA, Inc. et al . No 2:25-cv-00643, respectively, all of which are in the NJ District Court.
Removed
On June 4, 2024, Axsome and the Malta Subsidiary entered into a settlement agreement with Unichem under which agreement Unichem agreed not to launch its generic solriamfetol product until June 30, 2042, or earlier under certain circumstances. On August 21, 2024, Axsome and the Malta Subsidiary reached an agreement to dismiss the actions pending against Sandoz.
Removed
All other actions are currently pending. On September 25, 2024, Hikma Pharmaceuticals USA, Inc. filed a petition for Inter Partes Review of U.S. Patent No. 11,560,354 before the United States Patent and Trademark Office’s Patent Trial and Appeal Board. That petition is captioned Hikma Pharmaceuticals USA Inc. f/k/a West-Ward Pharmaceuticals Corp. v. Axsome Malta Ltd .

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2019 to 12/31/2024. 109 Table of Contents Holders The number of record holders of our common stock as of February 11, 2025, was two.
Biggest changeThe graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2020 to 12/31/2025. 107 Table of Contents Holders The number of record holders of our common stock as of February 16, 2026, was 5.
Removed
In addition, the terms of our existing term loan with Hercules precludes us from paying cash dividends without the consent of Hercules, except under certain circumstances.
Added
In addition, the Blackstone Loan Agreement contains restrictive covenants that prohibit us from declaring or paying any dividends or making any other distributions on our common stock, except as may be expressly permitted under the facility.

Item 7. Management's Discussion & Analysis

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

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Biggest changeFor awards only subject to service-based vesting conditions, we elected to recognize stock-based compensation expense on a straight-line basis. 117 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except share and per share amounts): Year ended December 31, 2024 2023 Revenues: Product sales, net $ 381,677 $ 202,460 License revenue — 65,735 Royalty and milestone revenue 4,016 2,405 Total revenues 385,693 270,600 Operating expenses: Cost of revenue (excluding amortization and depreciation) 33,303 26,065 Research and development 187,077 97,944 Selling, general and administrative 411,359 323,123 Loss in fair value of contingent consideration 28,124 48,918 Intangible asset amortization 6,392 6,375 Total operating expenses 666,255 502,425 Loss from operations (280,562 ) (231,825 ) Interest expense, net (6,569 ) (6,453 ) Loss before income taxes (287,131 ) (238,278 ) Income tax expense (85 ) (960 ) Net loss $ (287,216 ) $ (239,238 ) Net loss per common share, basic and diluted $ (5.99 ) $ (5.27 ) Weighted average common shares outstanding, basic and diluted 47,914,253 45,425,212 Product sales, net.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands, except share and per share amounts): Year ended December 31, 2025 2024 Revenues: Product sales, net $ 633,796 $ 381,677 Royalty revenue and milestone revenue 4,700 4,016 Total revenues 638,496 385,693 Operating expenses: Cost of revenue (excluding amortization and depreciation) 47,478 33,303 Research and development 183,279 187,077 Selling, general and administrative 570,599 411,359 Loss (Gain) in fair value of contingent consideration (2,473 ) 28,124 Intangible asset amortization 6,375 6,392 Total operating expenses 805,258 666,255 Loss from operations (166,762 ) (280,562 ) Interest expense, net (6,557 ) (6,569 ) Loss on debt extinguishment (10,385 ) — Loss before income taxes (183,704 ) (287,131 ) Income tax benefit (expense) 530 (85 ) Net loss $ (183,174 ) $ (287,216 ) Net loss per common share, basic and diluted $ (3.68 ) $ (5.99 ) Weighted average common shares outstanding, basic and diluted 49,747,178 47,914,253 Product sales, net.
Pfizer can also receive up to $323 million upon the achievement of certain regulatory and sales milestones, and tiered mid-single to low double-digit royalties on future sales of any such approved clinical products containing compounds reboxetine esreboxetine. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.
Pfizer can also receive up to $323 million upon the achievement of certain regulatory and sales milestones, and tiered mid-single to low double-digit royalties on future sales of any such approved clinical products containing compounds reboxetine and esreboxetine. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.
Our future capital requirements will depend on many factors, including: • the scope, rate of progress, results, and cost of our clinical studies and other related activities; • our ability to enter into collaborative agreements for the development and commercialization of our product candidates; 122 Table of Contents • the number and development requirements of any other product candidates that we pursue; • the costs, timing, and outcome of regulatory reviews of our product candidates; • the costs and timing of our commercialization activities, including product manufacturing, marketing, sales, and distribution, for any of our products and product candidates for which we receive marketing approval; • any product liability or other lawsuits related to our product candidates; • the expenses needed to attract and retain skilled personnel; • the general and administrative expenses related to being a public company; • the revenue received from commercial sales of our products and product candidates for which we receive marketing approval; and • the costs involved in preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending our intellectual property‑related claims.
Our future capital requirements will depend on many factors, including: • the scope, rate of progress, results, and cost of our clinical studies and other related activities; • our ability to enter into collaborative agreements for the development and commercialization of our product candidates; • the number and development requirements of any other product candidates that we pursue; • the costs, timing, and outcome of regulatory reviews of our product candidates; • the costs and timing of our commercialization activities, including product manufacturing, marketing, sales, and distribution, for any of our products and product candidates for which we receive marketing approval; • any product liability or other lawsuits related to our product candidates; • the expenses needed to attract and retain skilled personnel; • the general and administrative expenses related to being a public company; • the revenue received from commercial sales of our products and product candidates for which we receive marketing approval; and • the costs involved in preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending our intellectual property‑related claims.
Selling, general and administrative expenses Selling, general and administrative expenses primarily consist of salaries and related costs for personnel in executive, commercial, finance, and operational functions, including stock-based compensation and travel expenses.
Selling, general and administrative expenses Selling, general and administrative expenses consist of salaries and related costs for personnel in executive, commercial, finance, and operational functions, including stock-based compensation and travel expenses.
If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in our consolidated statements of operations. As of December 31, 2024, we determined that we have one reporting unit.
If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in our consolidated statements of operations. As of December 31, 2025, we determined that we have one reporting unit.
We have not identified any events or changes in circumstances that indicate the existence of potential impairment of goodwill during the year ended December 31, 2024. Intangible asset The intangible asset is amortized using the straight-line method over its estimated period of benefit of ten years.
We have not identified any events or changes in circumstances that indicate the existence of potential impairment of goodwill during the year ended December 31, 2025. Intangible asset The intangible asset is amortized using the straight-line method over its estimated period of benefit of ten years.
At the time any of our securities covered by the 2022 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.
At the time any of our securities covered by the 2025 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.
At the time any of our securities covered by the 2022 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.
At the time any of our securities covered by the 2025 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.
In the future, we may conduct additional offerings of one or more of these securities utilizing the 2022 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered.
In the future, we may conduct additional offerings of one or more of these securities utilizing the 2025 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered.
“Business” for a summary of our clinical programs. Since our incorporation in January 2012, our operations to date have included organizing and staffing our company, business planning, raising capital, developing our compounds, engaging in other discovery and preclinical activities, the commercial launches of Auvelity and Sunosi, and preparatory activities for the launch of Symbravo.
“Business” for a summary of our marketed products and clinical development programs. Since our incorporation in January 2012, our operations to date have included organizing and staffing our company, business planning, raising capital, developing our compounds, engaging in other discovery and preclinical activities, the commercial launches of AUVELITY and SUNOSI, and preparatory activities for the launch of SYMBRAVO.
Funding Requirements We have not achieved profitability since our inception, and we expect to continue to have losses as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercially launch Symbravo while further investing in Auvelity and Sunosi.
Funding Requirements We have not achieved profitability since our inception, and we expect to continue to have losses as we continue the development of, and seek regulatory approvals for, our product candidates, while further investing in AUVELITY, SUNOSI, and SYMBRAVO.
The assumed commitments to SK and Aerial include single-digit tiered royalties based on our sales of Sunosi, and we are committed to pay up to $165.0 million based on revenue milestones and $1.0 million based on development milestones.
The assumed commitments to SK and Aerial include single-digit tiered royalties based on our sales of SUNOSI, and we are committed to pay up to $162.5 million based on revenue milestones and $1.0 million based on development milestones.
We amortize the intangible asset, which we recognized as part of the Acquisition, over its useful life of 10 years. Intangible asset amortization was $6.4 million for both the years ended December 31, 2024 and 2023. Interest expense, net.
We amortize the intangible asset, which we recognized as part of the Acquisition, over its useful life of 10 years. Intangible asset amortization was $6.4 million for both the years ended December 31, 2025 and 2024. Interest expense, net. Interest expense, net, was $6.6 million for both the years ended December 31, 2025 and 2024. Income tax expense.
Please see “Risk Factors” for additional risks associated with our substantial capital requirements. Contractual Obligations and Commitments License agreement with Pfizer In January 2020, we entered into a license agreement with Pfizer.
Please see “Risk Factors” for additional risks associated with our substantial capital requirements. 120 Table of Contents Contractual Obligations and Commitments License agreement with Pfizer In January 2020, we entered into a license agreement with Pfizer.
We have not identified any events or changes in circumstances that indicate the existence of potential impairment of the intangible asset during the year ended December 31, 2024. Contingent consideration Consideration paid in a business combination may include contingent consideration.
We have not identified any events or changes in circumstances that indicate the existence of potential impairment of the intangible asset during the year ended December 31, 2025. 114 Table of Contents Contingent consideration Consideration paid in a business combination may include contingent consideration.
Additionally, in connection with this public offering, in July 2023, the underwriters fully exercised their option to purchase 450,000 additional shares of our common stock, at a public offering price of $75.00 per share. The net proceeds were $31.7 million, net of underwriting discounts and commissions of $2.0 million and other minimal offering costs.
Net proceeds were $211.3 million, net of underwriting discounts and commissions of $13.5 million and other offering costs of $0.2 million. Additionally, in connection with this public offering, in July 2023, the underwriters fully exercised their option to purchase 450,000 additional shares of our common stock, at a public offering price of $75.00 per share.
Summary of Significant Accounting Policies to our consolidated financial statements included in Part IV, Exhibits and Financial Statement Schedules, of this Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements. 125 Table of Contents
Recent Accounting Pronouncements Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements included in Part IV, Exhibits and Financial Statement Schedules, of this Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements. 123 Table of Contents
We have recorded a valuation allowance on all of our deferred tax assets. Stock‑based compensation For issued stock options, we estimate the grant date fair value of each option using the Black-Scholes option pricing model.
We have recorded a valuation allowance against substantially all of our deferred tax assets. 115 Table of Contents Stock‑based compensation For issued stock options, we estimate the grant date fair value of each option using the Black-Scholes option pricing model.
We will receive a royalty percentage in the mid-twenties on net sales of the Licensed Products (as defined in the Pharmanovia License Agreement) in the Territory. For the year ended December 31, 2024, we recognized royalty revenue of $3.5 million related to Pharmanovia’s sales of Sunosi.
We will receive a royalty percentage in the mid-twenties on net sales of the Licensed Products (as defined in the Pharmanovia License Agreement) in the Territory. We recognized royalty revenue of $4.7 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively, related to Pharmanovia’s sales of SUNOSI.
The fair value measurement of the contingent consideration is sensitive to the change in discount rates. As of December 31, 2024, if the discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range from $91.5 million to $104.5 million.
The fair value measurement of the contingent consideration is sensitive to the change in discount rates. As of December 31, 2025, if the discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range from $79.5 million to $89.5 million.
As of December 31, 2024, we had U.S. federal net operating loss carryforwards of approximately $572.1 million and foreign NOL carryforwards of $4.8 million. U.S. federal NOLs amounting to $59.8 million generated before the 2018 tax year will start expiring beginning 2032, and the NOLs of approximately $512.3 million generated in 2018 and later have an indefinite carryforward period.
As of December 31, 2025, we had U.S. federal net operating loss carryforwards of approximately $577.9 million and foreign NOL carryforwards of $281.3 million. U.S. federal NOLs amounting to $59.8 million generated before the 2018 tax year will start expiring beginning 2032, and the NOLs of approximately $518.1 million generated in 2018 and later have an indefinite carryforward period.
In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends.
Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends.
We have recently begun commercial sales of Auvelity and Sunosi, and plan to commercially launch Symbravo, but we have limited experience with commercializing these, or any, products. We have incurred significant operating and net losses since inception. We incurred net losses of $287.2 million and $239.2 million for the years ended December 31, 2024 and 2023, respectively.
We have recently begun commercial sales of AUVELITY and SUNOSI, and we launched SYMBRAVO, but we have limited experience with commercializing these, or any, products. We have incurred significant operating and net losses since inception. We incurred net losses of $183.2 million and $287.2 million for the years ended December 31, 2025 and 2024, respectively.
In connection with the Loan Agreement (see below), Antecip consented to the collateral assignment of one of the license agreements, among other things, under a direct agreement with us and Hercules. Loan and Security Agreement with Hercules Capital, Inc.
In connection with the Blackstone Loan Agreement (see below), Antecip consented to the collateral assignment of one of the license agreements, among other things, under a direct agreement among us, Antecip, a related party, and Blackstone. This new direct agreement superseded the prior direct agreement among us, Antecip, a related party, and Hercules Capital, Inc.
We recorded an income tax expense of $0.1 million for the year ended December 31, 2024 due to state taxes that we expect to pay based on minimum tax requirements in various states.
We recorded an income tax expense of $0.1 million for the year ended December 31, 2024 due to state taxes that we expect to pay based on minimum tax requirements in various states. Net loss. Net loss for the year ended December 31, 2025 was $183.2 million as compared to $287.2 million for the year ended December 31, 2024.
Our accumulated deficit as of December 31, 2024 was $1,122.8 million, and we expect to incur significant expenses and continuing operating losses.
Our accumulated deficit as of December 31, 2025 was $1,306.0 million, and we expect to incur significant expenses and continuing operating losses.
Research and development expenses Research and development expenses primarily include preclinical studies, clinical trials, manufacturing costs, employee-related expenses including salaries, benefits, travel, and stock based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as CROs, facilities costs, overhead costs, depreciation, and other related costs. 112 Table of Contents Research and development activities are central to our business model.
Research and development expenses Research and development expenses primarily include preclinical studies, clinical trials, manufacturing costs, employee-related expenses including salaries, benefits, travel, and stock based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as contract research organizations, or CROs, facilities costs, overhead costs, depreciation, and other related costs.
We will adjust our estimates based on new information, including information regarding actual rebates, chargebacks and discounts for our products, as it becomes available. License revenue We generate revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain products. Such agreements may include the transfer of intellectual property rights in the form of licenses.
We will adjust our estimates based on new information, including information regarding actual rebates, chargebacks and discounts for our products, as it becomes available. 112 Table of Contents License revenue We generate revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain products.
As of December 31, 2024, if the revenue discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range from $92.9 million to $102.9 million. 116 Table of Contents Income taxes Income taxes are accounted for under the asset and liability method.
As of December 31, 2025, if the revenue discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range from $80.6 million to $88.3 million. Income taxes Income taxes are accounted for under the asset and liability method.
Loss in Fair Value of Contingent Consideration. The $28.1 million change for the year ended December 31, 2024, as compared to a $48.9 million change for the year ended December 31, 2023 was primarily related to changes in significant unobservable inputs, including discount rates, and significant assumptions, including future sales estimates. Intangible asset amortization .
The $2.5 million change for the year ended December 31, 2025, as compared to a $28.1 million change for the year ended December 31, 2024 was primarily related to changes in significant unobservable inputs, including discount rates, and significant assumptions, including future sales estimates. Intangible asset amortization .
We test the carrying amounts of goodwill for recoverability on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Goodwill Goodwill is deemed to have an indefinite life and therefore not amortized. We test the carrying amounts of goodwill for recoverability on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired.
In December 2022, in connection with the 2022 Shelf Registration Statement, we filed a new sales agreement prospectus to replace the prior prospectus supplement filed in August 2022 associated with the expired 2019 Shelf Registration Statement.
Also in connection with the 2025 Shelf Registration Statement, we filed a new sales agreement prospectus to replace the prior prospectus supplement filed in December 2022, which would have expired in December 2025.
For the year ended December 31, 2024, we received approximately $40.8 million in gross proceeds through the sale of 466,108 shares, of which net proceeds were approximately $40.0 million, under the March 2022 Sales Agreement.
For the year ended December 31, 2025, we received approximately $52.9 million in gross proceeds through the sale of 451,176 shares, of which net proceeds were approximately $51.9 million. For the year ended December 31, 2024, we received approximately $40.8 million in gross proceeds through the sale of 466,108 shares, of which net proceeds were approximately $40.0 million.
Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations.
If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations.
Cost of revenue for the year ended December 31, 2024 includes a $2.5 million expense for the achievement of a sales-based milestone related to world-wide Sunosi sales. Additionally, cost of revenue for the year ended December 31, 2023 includes a $5.0 million license sharing expense related to the Pharmanovia License Agreement. Research and development.
The increase was in line with the increase in sales of AUVELITY and SUNOSI. Cost of revenue for the year ended December 31, 2024 includes a $2.5 million expense for the achievement of a sales-based milestone related to world-wide SUNOSI sales. Research and development.
We will need to generate significant revenue to achieve profitability, and we may never do so. 111 Table of Contents Financial Overview Revenue We generated $381.7 million and $202.5 million in net revenue from product sales for the years ended December 31, 2024 and 2023, respectively.
We will need to generate significant revenue to achieve profitability, and we may never do so. 109 Table of Contents Financial Overview Revenue We generated total revenues of $638.5 million and $385.7 million for the years ended December 31, 2025 and 2024, respectively.
The following table summarizes our research and development expenses for our primary products for the years ended December 31, 2024 and 2023 (in thousands): Year ended December 31, 2024 2023 Solriamfetol $ 53,678 $ 18,232 AXS-05 62,877 34,011 AXS-07 15,587 8,101 AXS-12 9,362 10,431 AXS-14 11,881 7,091 Other research and development (*) 12,274 5,998 Stock-based compensation 21,418 14,080 Total research and development expenses $ 187,077 $ 97,944 (*) Other research and development expenses primarily consist of facilities charges, third party consultant costs, costs related to other product candidates, and other unallocated costs.
The following table summarizes our research and development expenses for our primary products for the years ended December 31, 2025 and 2024 (in thousands): Year ended December 31, 2025 2024 Solriamfetol $ 42,106 $ 53,678 AXS-05 55,312 62,877 AXS-07 21,421 15,587 AXS-12 8,482 9,362 AXS-14 8,485 11,881 Other research and development (*) 20,645 12,274 Stock-based compensation 26,828 21,418 Total research and development expenses $ 183,279 $ 187,077 (*) Other research and development expenses primarily consist of facilities charges, third party consultant costs, costs related to other product candidates, costs related to asset acquisitions, and other unallocated costs.
In connection with the February 2023 Pharmanovia License Agreement to commercialize Sunosi in certain ex-U.S. markets, we recognized royalty revenue of $3.5 million for the year ended December 31, 2024, as compared to $2.4 million for the year ended December 31, 2023 attributable to Pharmanovia sales of Sunosi in the out-licensed markets.
Royalty revenue was $4.7 million for the year ended December 31, 2025, as compared to $3.5 million for the year ended December 31, 2024 attributable to Pharmanovia sales of SUNOSI in the out-licensed markets. The increase was in line with the increase in unit sales volume of SUNOSI in certain ex-U.S. markets.
On December 2, 2022, we filed an automatic shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units up to an unlimited amount, which we refer to as the 2022 Shelf Registration Statement. It was declared effective by the SEC upon filing.
Shelf Registration Statement On November 3, 2025, we filed an automatic shelf registration statement (File No. 333-291228) with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units up to an unlimited amount, which we refer to as the 2025 Shelf Registration Statement.
In the future, we may conduct additional offerings of one or more of the securities covered by the 2022 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered.
The net proceeds were $31.7 million, net of underwriting discounts and commissions of $2.0 million and other minimal offering costs. In the future, we may conduct additional offerings of one or more of the securities covered by the 2025 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered.
Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
We estimate the fair value of the contingent consideration as of the acquisition date and reporting periods thereafter using the estimated future cash outflows based on future sales. 111 Table of Contents Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
See Note 11. Commitments and Contingencies for further information on future contractual obligations. We believe that our current cash is sufficient to fund anticipated operations into cash flow positivity, based on the current operating plan.
We believe that our current cash is sufficient to fund anticipated operations into cash flow positivity, based on the current operating plan.
Leerink is entitled to receive a commission of up to 3.0% of the gross proceeds for any shares sold under the March 2022 Sales Agreement. The March 2022 Sales Agreement supersedes the December 2019 Sales Agreement, by and between us and Leerink. We exhausted sales of shares of our common stock under our prior at-the-market offering program.
The March 2022 Sales Agreement supersedes the sales agreement, dated December 5, 2019, by and between us and Leerink. We exhausted sales of shares of our common stock under our prior at-the-market offering program.
The new sales agreement prospectus covered the issuance and sale by us of up to the same $250 million of our common stock that may be issued and sold from time to time through Leerink, as the sales agent, under the March 2022 Sales Agreement.
The new sales agreement prospectus covered the issuance and sale by us of up to the same $250 million of our common stock that may be issued and sold from time to time through Leerink, as the sales agent, under the March 2022 Sales Agreement. 122 Table of Contents Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off‑balance sheet arrangements, as defined by applicable SEC regulations.
Auvelity U.S. net sales were $291.4 million and $130.1 million for the years ended December 31, 2024 and 2023, respectively. Sunosi net sales were $90.3 million and $72.4 million for the years ended December 31, 2024 and 2023, respectively. The increases were primarily due to the increase in unit sales volume for both Auvelity and Sunosi.
AUVELITY U.S. net sales were $507.1 million and $291.4 million for the years ended December 31, 2025 and 2024, respectively. SUNOSI net sales were $120.1 million and $90.3 million for the years ended December 31, 2025 and 2024, respectively.
When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of December 31, 2024, we do not believe any material uncertain tax positions are present.
When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of December 31, 2025, we recognized gross uncertain tax positions which have been recognized as a reduction to deferred tax assets.
Research and development expenses are expected to stabilize at current levels in the near term as certain development programs near completion while new development programs are initiated. Selling, general and administrative. Selling, general and administrative expenses were $411.4 million for the year ended December 31, 2024, as compared to $323.1 million for the year ended December 31, 2023.
We expect research and development costs to moderately increase in 2026 as new development programs commence while certain development programs near completion. Selling, general and administrative. Selling, general and administrative expenses were $570.6 million for the year ended December 31, 2025, as compared to $411.4 million for the year ended December 31, 2024.
Actual results may differ from these estimates under different assumptions or conditions. 113 Table of Contents Management considers many factors in developing the estimates and assumptions that are used in the preparation of our consolidated financial statements. Management must apply significant judgment in this process.
In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Management considers many factors in developing the estimates and assumptions that are used in the preparation of our consolidated financial statements.
Risk Factors.” See also the “Special Cautionary Notice Regarding Forward-Looking Statements” set forth at the beginning of this report. Overview We are a biopharmaceutical company leading a new era in the treatment of CNS disorders.
Risk Factors.” See also the “Special Cautionary Notice Regarding Forward-Looking Statements” set forth at the beginning of this report. Overview We are a biopharmaceutical company dedicated to the development and commercialization of innovative medicines for people impacted by central nervous system (CNS) conditions.
The increase was in line with the increase in unit sales volume of Sunosi in certain ex-U.S. markets. Further, in the fourth quarter of 2024, we recognized milestone revenue of $0.5 million related to an achievement of a regulatory milestone in China for Sunosi from SK. Cost of revenue.
Further, in the fourth quarter of 2024, we recognized milestone revenue of $0.5 million related to an achievement of a regulatory milestone in China for SUNOSI from SK. Cost of revenue. Cost of revenue was $47.5 million for the year ended December 31, 2025, as compared to $33.3 million for the year ended December 31, 2024.
The increase was primarily related to greater commercial activities for Auvelity and Sunosi, and higher personnel costs related to organizational growth, including non-cash stock-based compensation. We expect selling, general and administrative expenses to increase as we expand marketing, promotional, and advertising costs for Auvelity and Sunosi, launch Symbravo, and to support general administrative needs.
The increase was primarily related to higher commercial activities for AUVELITY, including a national direct-to-consumer advertising campaign and sales force expansion, the commercial launch of SYMBRAVO, and higher personnel costs related to organizational growth, including non-cash stock-based compensation.
On February 21, 2023, we entered into a Sublease with Advance Magazine Publishers d/b/a Conde Nast for the entirety of the twenty-second floor of One Word Trade Center in New York, NY, or the Sublease. This space is utilized as our corporate and executive offices. The Sublease commenced on April 7, 2023 and will run for ten (10) years.
On February 21, 2023, we entered into a Sublease with Advance Magazine Publishers d/b/a Conde Nast for the entirety of the twenty-second floor of One World Trade Center in New York, NY, or the Sublease. 118 Table of Contents On January 17, 2025, we entered into an Amendment to our Sublease, or the First Amendment, pursuant to which we relinquished our then existing space in One World Trade Center and commenced occupancy of different space within the building.
Cash provided by financing activities was $331.0 million for the year ended December 31, 2023, which included net proceeds related to the June 2023 public offering of $211.3 million and additional net proceeds of $31.7 million as the underwriters fully exercised their option to purchase additional shares, net proceeds of $83.6 million from draw-downs related to the Loan Agreement with Hercules, and proceeds of $12.4 million from the issuance of common stock upon the exercise of employee stock options, offset by payments of contingent consideration and tax withholdings on stock awards for a total of $8.0 million.
Cash provided by financing activities was $101.5 million for the year ended December 31, 2025, which primarily included net proceeds of $66.7 million from issuance of common stock for financing purposes as well as proceeds of $59.6 million from the issuance of common stock upon the exercise of employee stock options and under the 2023 Employee Stock Purchase Plan, or ESPP, which was partially offset by payments of contingent consideration and tax withholdings on stock awards, for a total of $17.1 million.
Because the process of commercializing products and evaluating product candidates in clinical trials is costly and the timing of progress in these trials is uncertain, it is possible that the assumptions upon which we have based this estimate may prove to be wrong, and we could use our capital resources sooner than we currently expect. 121 Table of Contents Cash Flows The following table summarizes our primary sources and uses of cash for the periods indicated (in thousands): Year ended December 31, 2024 2023 Net cash (used in) provided by: Operating activities $ (128,410 ) $ (145,080 ) Investing activities (270 ) (582 ) Financing activities 57,840 331,013 Net increase (decrease) in cash $ (70,840 ) $ 185,351 Operating Activities.
Because the process of commercializing products and evaluating product candidates in clinical trials is costly and the timing of progress in these trials is uncertain, it is possible that the assumptions upon which we have based this estimate may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred. 115 Table of Contents Goodwill Goodwill is deemed to have an indefinite life and therefore not amortized.
If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly. Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred.
The decrease of $16.7 million was mainly due to higher net product revenues from Auvelity and Sunosi in 2024, which was offset by the increase in cash used in commercial and clinical activities in 2024. Operating activities in 2023 also was impacted by the receipt of a $65.7 million upfront payment from Pharmanovia in the first quarter of 2023.
Cash used in operating activities for the year ended December 31, 2025 was $93.4 million as compared to $128.4 million for the year ended December 31, 2024. The decrease of $35.0 million was mainly due to higher net product revenues from AUVELITY and SUNOSI, which was offset by the increase in cash used in commercial activities in 2025. Investing Activities.
In June 2023, we completed an underwritten public offering of our common stock and sold 3.0 million shares of our common stock at a public offering price of $75.00 per share. Net proceeds were $211.3 million, net of underwriting discounts and commissions of $13.5 million and other offering costs of $0.2 million.
We did not utilize the March 2022 Sales Agreement with Leerink during the year ended December 31, 2023. In June 2023, we completed an underwritten public offering of our common stock and sold 3.0 million shares of our common stock at a public offering price of $75.00 per share.
The increase was primarily due to higher research and development spend from pre-clinical and ongoing clinical trial expenses, higher selling, general and administrative expenses from commercial activities related to Auvelity and Sunosi, including sales force and marketing spend, and higher personnel costs due to organizational growth, including non-cash stock compensation expense.
The decrease was primarily due to higher net product revenues from AUVELITY and SUNOSI, which was partially offset by higher selling, general and administrative expenses from commercial activities for AUVELITY, including a national direct-to-consumer advertising campaign and sales force expansion, the commercial launch of SYMBRAVO, and higher personnel costs related to organizational growth, including non-cash stock-based compensation.
Investing Activities. Cash used in investing activities for the year ended December 31, 2024 was $270 thousand, as compared to $582 thousand for the year ended December 31, 2023. The decrease was impacted by the expansion of our corporate headquarters during 2023. Financing Activities.
Cash used in investing activities for the year ended December 31, 2025 was $480 thousand, as compared to $270 thousand for the year ended December 31, 2024. The increase was mainly due to additional equipment purchases to support our organizational growth. 119 Table of Contents Financing Activities.
Payments made by the customer may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of products. 114 Table of Contents If a license to the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize the transaction price allocated to the license as revenue upon transfer of control of the license.
If a license to the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize the transaction price allocated to the license as revenue upon transfer of control of the license. All other promised goods or services in the agreement are evaluated to determine if they are distinct.
In connection with the Sublease, we received certain rent and work concessions from the sublandlord. The Company entered into a fleet lease program beginning the first quarter of 2024. The lease agreement includes an initial 12-month noncancelable period with monthly renewal options thereafter. Lease terms range from approximately 40 to 50 months and are classified as finance leases.
The lease agreement includes an initial 12-month noncancelable period with monthly renewal options thereafter. Lease terms range from approximately 40 to 50 months and are classified as finance leases. See Note 10. Commitments and Contingencies for further information on future contractual obligations.
Additionally, the increase in net loss was impacted by the upfront payment of $65.7 million received from Pharmanovia in the first quarter of 2023. Liquidity and Capital Resources Since our inception through December 31, 2024, we have financed our operations primarily through proceeds from equity offerings, debt borrowings, and proceeds from product sales. See discussion below.
Liquidity and Capital Resources Since our inception through December 31, 2025, we have financed our operations primarily through proceeds from equity offerings, debt borrowings, and proceeds from product sales. See discussion below. In March 2022, we entered into a sales agreement with Leerink, or the March 2022 Sales Agreement with Leerink, and filed a prospectus supplement.
We have a one-time option to terminate the Sublease on its fifth anniversary upon the payment of a fee to the sublandlord. We are responsible for base rent under the Sublease and certain additional customary variable costs such as an allocable portion of building taxes and operating expenses.
The Company is responsible for base rent under the Sublease and certain additional customary variable costs, such as an allocable portion of building taxes and operating expenses. In connection with the Sublease and First Amendment, we received certain rent and work concessions from the sublandlord. The Company entered into a fleet lease program in the first quarter of 2024.
In August 2022, Auvelity ® was approved by the FDA for the treatment of MDD in adults and we initiated the commercial launch of Auvelity in the U.S. in October 2022. In January 2025, Symbravo ® was approved by the FDA for the acute treatment of migraine with or without aura in adults. Refer to Part I, Item 1.
SYMBRAVO is approved by the FDA for the acute treatment of migraine in adults with or without aura, which we recently launched in the U.S. We are also advancing a pipeline of novel product candidates addressing a broad range of serious neurological and psychiatric conditions, including narcolepsy, fibromyalgia, and ADHD. Refer to Part I, Item 1.
We deliver scientific breakthroughs by identifying critical gaps in care and developing differentiated products with a focus on novel mechanisms of action that enable meaningful advancements in patient outcomes. Our CNS portfolio includes multiple FDA-approved products that are being further developed for additional neurological or psychiatric conditions and novel product candidates in late-stage clinical development.
We deliver scientific breakthroughs by identifying critical gaps in care and developing differentiated medicines with a focus on novel mechanisms of action that have the potential to transform patient outcomes. Our broad commercial portfolio is comprised of AUVELITY, SUNOSI, and SYMBRAVO.
The following table summarizes the activity of our sales allowance and reserves as of and for the year ended December 31, 2024 (in thousands): Commercial discounts and rebates, returns and other Cash discounts and chargebacks Medicaid and Medicare rebates Total Balance at December 31, 2023 $ 37,492 $ 12,501 $ 9,222 $ 59,215 Provisions 239,549 97,169 41,277 377,995 Payments/credits (221,629 ) (96,166 ) (31,961 ) (349,756 ) Balance at December 31, 2024 $ 55,412 $ 13,504 $ 18,538 $ 87,454 License revenue.
The increases were primarily due to the increase in unit sales volume for both AUVELITY and SUNOSI, and commercial launch of SYMBRAVO in June 2025. 116 Table of Contents The following table summarizes the activity of our sales allowance and reserves as of and for the year ended December 31, 2025 (in thousands): Commercial discounts and rebates, returns and other Cash discounts and chargebacks Medicaid and Medicare rebates Total Balance at December 31, 2024 $ 55,412 $ 13,504 $ 18,538 $ 87,454 Provisions 372,126 147,097 98,237 617,460 Payments/credits (322,535 ) (138,391 ) (71,533 ) (532,459 ) Balance at December 31, 2025 $ 105,003 $ 22,210 $ 45,242 $ 172,455 Royalty and milestone revenue.
Removed
In May 2022, we completed the U.S. acquisition of Sunosi from Jazz and in November 2022, we acquired the ex-U.S. assets of Sunosi from Jazz for certain international markets.
Added
AUVELITY is the first and only oral NMDA receptor antagonist approved by the FDA for the treatment of MDD in adults, which we are further developing in additional psychiatric conditions, including Alzheimer’s disease agitation.
Removed
Sunosi is a product approved by the FDA and marketed in the U.S. to improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep apnea, and also approved in Europe in January 2020 by the European Commission.
Added
SUNOSI is the first and only DNRI approved by the FDA for the treatment of excessive daytime sleepiness associated with obstructive sleep apnea and narcolepsy, for which we also receive royalty revenue associated with sales in out-licensed territories.
Removed
We estimate the fair value of the contingent consideration as of the acquisition date and reporting periods thereafter using the estimated future cash outflows based on future sales.
Added
In addition, research and development costs also include costs related to asset acquisitions involving clinical development programs that have not yet received regulatory approval. 110 Table of Contents Research and development activities are central to our business model.
Removed
In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.
Added
Such agreements may include the transfer of intellectual property rights in the form of licenses. Payments made by the customer may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of products.
Removed
All other promised goods or services in the agreement are evaluated to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct.
Added
Acquisitions To determine whether acquisitions should be accounted for as an acquisition of a business or as an acquisition of an asset, we make certain judgments, which include evaluating whether the acquired set of activities and assets would meet the definition of a business.
Removed
If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly.
Added
If, based upon our evaluation, we determine that the inputs, processes, and outputs associated with the acquired set of activities and assets in a transaction include an input and a substantive process that together significantly contribute to the ability to create outputs, the transaction is treated as an acquisition of a business.
Removed
We recognize the grant date fair value of the stock options over the requisite service period, which is generally the vesting term.
Added
If we determine that substantially all of the fair value of assets acquired in a transaction is concentrated in a single asset or a group of similar assets, the transaction is treated as an acquisition of assets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed2 unchanged
Biggest changeDue to the short‑term nature of our investment portfolio and debt agreement, which use short-term interest rates and the prime rate, respectively, we do not believe an immediate 100 basis point increase in interest rates would have a material effect on the fair market value of our portfolio, and, accordingly, we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.
Biggest changeDue to the short‑term nature of our investment portfolio and debt agreement, which use short-term interest rates and the SOFR, respectively, we do not believe an immediate 100 basis point increase in interest rates would have a material effect on the fair market value of our portfolio, and, accordingly, we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.
To date, we have not incurred any material effects from foreign currency changes on these transactions. We do not believe a 10% change in these currencies on December 31, 2024 would have had a material effect on our results of operations or financial condition. Inflation Risk Inflation generally affects us by increasing our cost of labor and pricing of contracts.
To date, we have not incurred any material effects from foreign currency changes on these transactions. We do not believe a 10% change in these currencies on December 31, 2025 would have had a material effect on our results of operations or financial condition. Inflation Risk Inflation generally affects us by increasing our cost of labor and pricing of contracts.
We do not believe that inflation has had a material effect on our business, financial condition, or results of operations during the year ended December 31, 2024.
We do not believe that inflation has had a material effect on our business, financial condition, or results of operations during the year ended December 31, 2025.
Foreign Currency Exchange Risk We contract with vendors and third-party manufactures located in Europe and certain invoices are denominated in foreign currencies. Royalty revenues from Pharmanovia are derived from their sales of Sunosi in ex-U.S markets and those sales are denominated in Euros.
Foreign Currency Exchange Risk We contract with vendors and third-party manufacturers located in Europe and certain invoices are denominated in foreign currencies. Royalty revenues from Pharmanovia are derived from their sales of SUNOSI in ex-U.S markets and those sales are primarily denominated in Euros.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Interest Rate Risk We are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations. We had cash of $315.4 million as of December 31, 2024.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Interest Rate Risk We are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations. We had cash of $322.9 million as of December 31, 2025.

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