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What changed in Vanda Pharmaceuticals Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Vanda Pharmaceuticals 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.

+515 added−536 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-14)

Top changes in Vanda Pharmaceuticals Inc.'s 2025 10-K

515 paragraphs added · 536 removed · 399 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

148 edited+38 added−36 removed267 unchanged
Biggest changeProduct Number Type Fanapt ® US 8,586,610* Method of treatment US 8,652,776 Method of treatment US 8,999,638 Method of treatment US 9,072,742 Method of treatment US 9,074,254 Method of treatment US 9,074,255 Method of treatment US 9,074,256 Method of treatment US 9,138,432* Method of treatment US 9,157,121 Method of treatment HETLIOZ ® US 9,060,995 Method of treatment US 9,539,234 Method of treatment US 9,549,913 Method of treatment US 9,730,910* Method of treatment US 9,855,241 Method of treatment US RE46,604* Method of treatment US 10,071,977 Drug substance US 10,149,829* Method of treatment US 10,179,119 Method of treatment US 10,376,487* Method of treatment US 10,449,176 Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance 16 Table of Contents Product Number Type US 10,945,988 Method of treatment US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,266,622 Method of treatment US 11,285,129* Method of treatment US 11,566,011 Drug substance US 11,633,377 Method of treatment US 11,759,446 Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,826,339 Method of treatment US 11,833,130 Method of treatment US 11,850,229 Method of treatment US 11,918,556* Method of treatment US 11,918,557 Method of treatment US 12,049,457 Drug substance HETLIOZ LQ ® US 9,539,234 Method of treatment US 9,730,910* Method of treatment US 10,071,977 Drug substance US 10,149,829* Method of treatment US 10,179,119* Method of treatment US 10,376,487* Method of treatment US 10,610,510* Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,980,770* Method of treatment US 11,141,400 Method of treatment US 11,202,770 Drug formulation US 11,266,622* Method of treatment US 11,285,129* Method of treatment US 11,566,011 Drug substance US 11,633,377 Method of treatment US 11,759,446* Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,826,339 Method of treatment US 11,833,130 Method of treatment US 11,850,229* Method of treatment US 11,918,556 Method of treatment US 11,918,557 Method of treatment US 12,049,457 Drug substance PONVORY ® US 8,273,779 Method of treatment US 9,062,014 Drug substance US 10,220,023 Method of treatment 17 Table of Contents Product Number Type US RE43,728 New chemical entity US 11,951,097 Method of treatment Fanapt ® The NCE patent for Fanapt ® , which expired in 2016 in the U.S. and in 2010 in other countries, was owned by Sanofi.
Biggest changeProduct Number Type Fanapt ® US 8,586,610 Method of treatment US 8,652,776 Method of treatment US 8,999,638 Method of treatment US 9,072,742 Method of treatment US 9,074,254 Method of treatment US 9,074,255 Method of treatment US 9,074,256 Method of treatment US 9,157,121 Method of treatment HETLIOZ ® US 9,060,995 Method of treatment US 9,539,234 Method of treatment US 9,549,913 Method of treatment US 9,730,910 Method of treatment US 9,855,241 Method of treatment US RE46,604 Method of treatment US 10,071,977 Drug substance US 10,149,829 Method of treatment 16 Table of Contents Product Number Type US 10,179,119 Method of treatment US 10,376,487 Method of treatment US 10,449,176 Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,945,988 Method of treatment US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,266,622 Method of treatment US 11,285,129* Method of treatment US 11,566,011 Drug substance US 11,633,377 Method of treatment US 11,759,446 Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,826,339 Method of treatment US 11,833,130 Method of treatment US 11,850,229 Method of treatment US 11,918,556* Method of treatment US 11,918,557 Method of treatment US 12,049,457 Drug substance US 12,201,604 Method of treatment HETLIOZ LQ ® US 9,539,234 Method of treatment US 9,730,910 Method of treatment US 10,071,977* Drug substance US 10,149,829* Method of treatment US 10,179,119* Method of treatment US 10,376,487* Method of treatment US 10,610,510* Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,980,770* Method of treatment US 11,141,400 Method of treatment US 11,202,770 Drug formulation US 11,266,622* Method of treatment US 11,285,129* Method of treatment US 11,566,011* Drug substance US 11,633,377 Method of treatment US 11,759,446* Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,826,339 Method of treatment US 11,833,130 Method of treatment US 11,850,229* Method of treatment 17 Table of Contents Product Number Type US 11,918,556* Method of treatment US 11,918,557 Method of treatment US 12,049,457 Drug substance US 12,201,604 Method of treatment US 12,447,141 Method of treatment PONVORY ® US 9,062,014 Drug substance US 10,220,023 Method of treatment US RE43,728 New chemical entity US 11,951,097 Method of treatment US 12,336,980 Method of treatment NEREUS TM US 10,772,880 Method of treatment US 10,821,099 Method of treatment US 11,324,735 Method of treatment US 12,318,375 Method of treatment Fanapt ® The NCE patent for Fanapt ® , which expired in 2016 in the U.S. and in 2010 in other countries, was owned by Sanofi.
This pharmacokinetic study is ongoing and will serve to inform the dosing for a later clinical study of Fanapt ® LAI for the treatment of schizophrenia. We initiated a Phase III program for the LAI formulation of Fanapt ® in the fourth quarter of 2024.
This pharmacokinetic study is ongoing and will serve to inform the dosing for a later clinical study of Fanapt ® LAI for the treatment of schizophrenia. We initiated a Phase III program for the LAI formulation of Fanapt ® in the fourth quarter of 2024. The Phase III study is ongoing.
Either party may terminate the agreement under certain circumstances, including a material breach of the agreement by the other.
Either party may terminate the agreement under certain circumstances, including a material breach of the agreement by the other.
People with bipolar disorders have extreme and intense emotional states that occur at distinct times, called mood episodes. These mood episodes are categorized as manic, hypomanic or depressive. People with bipolar disorders generally have periods of normal mood as well. See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® .
People with bipolar disorders have extreme and intense emotional states that occur at distinct times, called mood episodes. These mood episodes are categorized as manic, hypomanic or depressive. People with bipolar disorders generally have periods of normal mood as well. See Competition below for a discussion of commonly prescribed antipsychotics in addition to Fanapt ® .
In the U.S., the patent protection may be subject to extension under the Biologics Price Competition and Innovation Act (BPCIA), which provides a framework similar to the Hatch-Waxman Act for small molecules, allowing for potential exclusivity extensions for biologics. The patents protecting imsidolimab are expected to provide exclusivity into the late 2030s.
In the U.S., the patent protection may be subject to extension under the Biologics Price Competition and Innovation Act, which provides a framework similar to the Hatch-Waxman Act for small molecules, allowing for potential exclusivity extensions for biologics. The patents protecting imsidolimab are expected to provide exclusivity into the late 2030s.
See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® . 6 Table of Contents Fanapt ® for bipolar I disorder (tablets) In April 2024, the FDA approved Fanapt ® tablets for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults.
See Competition below for a discussion of commonly prescribed antipsychotics in addition to Fanapt ® . 6 Table of Contents Fanapt ® for bipolar I disorder (tablets) In April 2024, the FDA approved Fanapt ® tablets for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults.
Additionally, in September 2018, we announced results from a driving study, which demonstrated that tasimelteon did not impair measures of driving performance. The FDA accepted the filing of our sNDA for HETLIOZ ® for the treatment of jet lag disorder in December 2018.
Additionally, in September 2018, we announced results from a driving study, which demonstrated that HETLIOZ ® did not impair measures of driving performance. The FDA accepted the filing of our sNDA for HETLIOZ ® for the treatment of jet lag disorder in December 2018.
Jet lag disorder is characterized by nighttime sleep disruption, a decrease in daytime alertness and impairment to social and occupational functioning. Jet lag disorder symptoms are more severe during eastward travel. U.S.
Jet lag disorder is characterized by nighttime sleep disruption, a decrease in daytime alertness and impairment to social and occupational functioning. Jet lag disorder symptoms are more severe during eastward travel. The U.S.
Among the provisions of the ACA of importance to pharmaceutical companies are: • added 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 government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expanded the eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program (MDRP) by increasing the minimum rebate for both branded and generic drugs and extending rebate liability to prescriptions for individuals enrolled in Medicaid managed care plans and otherwise made amendments to the MDRP; • expanded the types of entities eligible for the 340B drug discount program; • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point‑of‑sale‑discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • established a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • added a requirement to annually report product samples that manufacturers and distributors provide to physicians; • expanded healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, and enhanced penalties for noncompliance; and 32 Table of Contents • established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Among the provisions of the ACA of importance to pharmaceutical companies are: • added 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 government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expanded the eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program (MDRP) by increasing the minimum rebate for both branded and generic drugs and extending rebate liability to prescriptions for individuals enrolled in Medicaid managed care plans and otherwise made amendments to the MDRP; • expanded the types of entities eligible for the 340B drug discount program; • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point‑of‑sale‑discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D (replaced with the Medicare Part D Manufacturer Discount Program in 2025); • established a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • added a requirement to annually report product samples that manufacturers and distributors provide to physicians; • expanded healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, and enhanced penalties for noncompliance; and • established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Although governed by the applicable country, clinical trials conducted outside of the U.S. typically are administered with the three-Phase sequential process that is discussed above under U.S. drug development and regulation . However, the foreign equivalent of an IND is not a prerequisite to performing pilot studies or Phase I clinical trials.
Although governed by the applicable country, clinical trials conducted outside of the U.S. typically are administered with the three-Phase sequential process that is discussed above under U.S. drug development and regulation . However, the foreign equivalent of an IND is not a prerequisite to performing pilot studies.
Health Canada approved PONVORY ® for the treatment of RMS in April 2021. MS is a chronic autoimmune inflammatory disease of the central nervous system (CNS) in which immune cells attack myelin (the protective casing that insulates nerve cells), damaging or destroying it and causing inflammation.
Health Canada approved PONVORY ® for the treatment of RMS in April 2021. Multiple sclerosis (MS) is a chronic autoimmune inflammatory disease of the central nervous system (CNS) in which immune cells attack myelin (the protective casing that insulates nerve cells), damaging or destroying it and causing inflammation.
The GDPR implements stringent operational requirements for controllers and processors of personal data, including, for example, the implementation of transparent information for data subjects regarding the processing of their personal data, appropriate legal basis for the processing of personal data, which may include the obtaining of valid consent in certain circumstances, expanded individual data subject rights, limitations on retention of personal data, increased requirements pertaining to data security and confidentiality, mandatory data breach notification to the competent supervisory authority and higher standards for controllers and processors to demonstrate their compliance with 31 Table of Contents the GDPR through appropriate documentation.
The GDPR implements stringent operational requirements for controllers and processors of personal data, including, for example, the implementation of transparent information for data subjects regarding the processing of their personal data, appropriate legal basis for the processing of personal data, which may include the obtaining of valid consent in certain circumstances, expanded individual data subject rights, limitations on retention of personal data, increased requirements pertaining to data security and confidentiality, mandatory data breach notification to the competent supervisory authority and higher standards for controllers and processors to demonstrate their compliance with the GDPR through appropriate documentation.
FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical holds on post-marketing clinical trials, enforcement letters, product recalls, product seizures, total or partial suspension of 26 Table of Contents production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties, any of which could have a material adverse effect on our business.
FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical holds on post-marketing clinical trials, enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties, any of which could have a material adverse effect on our business.
In December 2023, we purchased the right to market and sell PONVORY ® in the U.S. and Canadian markets from Actelion Pharmaceuticals Ltd. (Janssen), a Johnson & Johnson Company. In March 2021, the FDA granted U.S. marketing approval of PONVORY ® for the treatment of RMS in adults.
In December 2023, we purchased the rights to market and sell PONVORY ® in the U.S. and Canadian markets from Actelion Pharmaceuticals Ltd. (Janssen), a Johnson & Johnson Company. In March 2021, the FDA granted U.S. marketing approval of PONVORY ® for the treatment of RMS in adults.
Anti-kickback laws The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease, or order of any health care item or service reimbursable under federal healthcare programs such as Medicare and Medicaid.
Anti-kickback laws 28 Table of Contents The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease, or order of any health care item or service reimbursable under federal healthcare programs such as Medicare and Medicaid.
In June 2024, we received a Notice of Opportunity for a Hearing, and we accepted the opportunity for a hearing in July 2024. In August 2024, we filed for summary judgment requesting approval or a hearing on approvability of tasimelteon to treat insomnia associated with difficulties with sleep initiation.
In June 2024, we received a Notice of Opportunity for a Hearing, and we accepted the opportunity for a hearing in July 2024. In August 2024, we filed for summary judgment requesting approval or a hearing on approvability of HETLIOZ ® to treat insomnia associated with difficulties with sleep initiation.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined in certain cases: • Phase I: The compound is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined in certain cases: 23 Table of Contents • Phase I: The compound is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness.
In the event that we terminate the agreement, or if Lilly terminates the agreement due to our breach or for certain other reasons set forth in the agreement, all rights licensed and developed by us under the agreement will revert or otherwise be licensed back to Lilly on an exclusive basis, subject to payment by Lilly to us of a royalty on net sales of products that contain tradipitant.
In the event that we terminate the agreement, or if Lilly terminates the agreement due to our breach or for certain other reasons set forth in the agreement, all rights licensed and developed by us under the agreement will revert or otherwise be licensed back to Lilly on an exclusive basis, subject to payment by Lilly to us of a royalty on net sales of products that contain NEREUS TM .
These lawsuits do not affect the sale of HETLIOZ ® in the E.U. and there is no generic litigation pending outside of the U.S. with respect to HETLIOZ ® . Furthermore, this litigation does not relate to the HETLIOZ LQ ® oral suspension formulation.
These lawsuits do not affect the sale of HETLIOZ ® in the E.U. and there is no generic litigation pending outside of the U.S. with respect to HETLIOZ ® . Furthermore, these lawsuits do not relate to the HETLIOZ LQ ® oral suspension formulation.
With regard to a fast track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
With regard to a fast track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the 26 Table of Contents NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance. The breakthrough therapy designation is a distinct status from 27 Table of Contents both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met.
The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance. The breakthrough therapy designation is a distinct status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met.
A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescribing or dispensing of products.
A REMS could include medication guides, physician communication plans or 25 Table of Contents elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescribing or dispensing of products.
In June 2023, VCA-894A, an ASO molecule, was granted orphan designation by the FDA for the treatment of a patient with CMT2S, caused by cryptic splice site variants within IGHMBP2. In January 2024, we announced that the FDA had approved the Investigational New Drug (IND) application to evaluate VCA-894A for the treatment of a patient with CMT2S.
In June 2023, VCA-894A, an ASO molecule, was granted orphan designation by the FDA for the treatment of a patient with CMT2S, caused by cryptic splice site variants within IGHMBP2. In January 2024, we announced that the FDA had approved the IND application to evaluate VCA-894A for the treatment of a patient with CMT2S.
This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval. As a general matter, three-year exclusivity granted for a new drug does not prohibit the FDA from approving additional ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.
This three-year 27 Table of Contents exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval. As a general matter, three-year exclusivity granted for a new drug does not prohibit the FDA from approving additional ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.
(Apotex), MSN Pharmaceuticals, Inc. and MSN Laboratories Private Limited (MSN) asserting infringement of patents covering HETLIOZ ® 20 mg capsules. In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC resolving the lawsuits against MSN. The consolidated lawsuits against Teva and Apotex were tried in March 2022.
(Apotex), MSN Pharmaceuticals, Inc. and MSN Laboratories Private Limited (MSN) asserting infringement of patents covering HETLIOZ ® 20 mg capsules. In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC resolving the lawsuits against MSN. The 18 Table of Contents consolidated lawsuits against Teva and Apotex were tried in March 2022.
Member States may approve a specific price for a drug product or may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product on the market. Other Member States allow companies to fix their own prices for drug products but monitor and control company profits.
Member States may 33 Table of Contents approve a specific price for a drug product or may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product on the market. Other Member States allow companies to fix their own prices for drug products but monitor and control company profits.
We intend 34 Table of Contents to satisfy the disclosure requirements under Item 5.05 of Form 8‑K regarding amendments to, or waivers from, provisions of our code of business conduct and ethics by posting such information on the website address and location specified above.
We intend to satisfy the disclosure requirements under Item 5.05 of Form 8‑K regarding amendments to, or waivers from, provisions of our code of business conduct and ethics by posting such information on the website address and location specified above.
In addition, we have filed numerous other patent applications relating to drugs not presently in clinical studies. The claims in these various patents and patent applications are directed to compositions of matter, including claims covering other products, pharmaceutical compositions and methods of use.
In addition, we have filed numerous other patent applications relating to drugs not presently in clinical studies. The 20 Table of Contents claims in these various patents and patent applications are directed to compositions of matter, including claims covering other products, pharmaceutical compositions and methods of use.
Tradipitant Lilly owns the NCE patent as well as patent applications directed to polymorphic forms of, and methods of making tradipitant. This patent protection was sought in the U.S. and in other countries worldwide. These patents and patent applications have been licensed to us.
NEREUS TM Lilly owns the NCE patent as well as patent applications directed to polymorphic forms of, and methods of making NEREUS TM . This patent protection was sought in the U.S. and in other countries worldwide. These patents and patent applications have been licensed to us.
False Claims Act The federal False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds and knowingly making, or causing to be made or used, a false record or 29 Table of Contents statement to get a false claim paid.
False Claims Act The federal False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds and knowingly making, or causing to be made or used, a false record or statement to get a false claim paid.
The key elements of our strategy to accomplish this goal are to: • Maximize the commercial success of Fanapt ® , HETLIOZ ® , and PONVORY ® ; • Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach; • Pursue the clinical development and regulatory approval of our products, including tradipitant; • Apply our pharmacogenetics and pharmacogenomics expertise to differentiate our products; 5 Table of Contents • Expand our product portfolio through the identification and acquisition of additional products; and • Utilize novel and innovative approaches in pursuit of each of these strategies.
The key elements of our strategy to accomplish this goal are to: • Maximize the commercial success of our commercial products; • Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach; • Pursue the clinical development and regulatory approval of our products; • Apply our pharmacogenetics and pharmacogenomics expertise to differentiate our products; 5 Table of Contents • Expand our product portfolio through the identification and acquisition of additional products; and • Utilize novel and innovative approaches in pursuit of each of these strategies.
Pursuant to the license agreement, we are obligated to use commercially reasonable efforts to develop and commercialize VQW-765 and are responsible for all development costs. We have no milestone obligations, but Novartis is eligible to receive tiered-royalties on net sales at percentage rates up to the mid-teens.
Pursuant to the license agreement, we are obligated to use commercially reasonable efforts to develop and 15 Table of Contents commercialize VQW-765 and are responsible for all development costs. We have no milestone obligations, but Novartis is eligible to receive tiered-royalties on net sales at percentage rates up to the mid-teens.
We have also filed and plan on filing additional patent applications covering the use of iloperidone (Fanapt ® active ingredient) LAI formulations. Patents for the microsphere LAI formulation of Fanapt ® expired in 2022 in some markets in Europe and expired in 2024 in the U.S.
We have also filed and plan on filing additional patent applications covering the use of Fanapt ® LAI formulations. Patents for the microsphere LAI formulation of Fanapt ® expired in 2022 in some markets in Europe and expired in 2024 in the U.S.
In addition to requiring reporting transfers of value, some states have imposed price reporting requirements. These state laws apply to items 30 Table of Contents and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
In addition to requiring reporting transfers of value, some states have imposed price reporting requirements. These state laws apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
In addition, we have a number of drugs and/or additional indications for current products in development, including: • Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia; • Bysanti TM (milsaperidone), the active metabolite of Fanapt ® (iloperidone), for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD); • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24; • PONVORY ® (ponesimod) for the treatment of psoriasis and ulcerative colitis; • Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis; • Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP); • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis and hematologic malignancies and with potential use as a treatment for several oncology indications; • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera; • VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders; and • Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy.
In addition, we have a number of drugs and/or additional indications for current products in development, including: • Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia and hypertension; • Bysanti TM (milsaperidone), the active metabolite of Fanapt ® , for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD); • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24; • PONVORY ® (ponesimod) for the treatment of psoriasis and ulcerative colitis; • NEREUS TM (tradipitant) for the prevention of vomiting induced by GLP-1 receptor agonists, the treatment of gastroparesis and the treatment of atopic dermatitis; • Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP); • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and onychomycosis and with potential use as a treatment for several oncology indications; • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera; • VQW-765, a small molecule alpha-7 nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders; and • Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy.
In October 2024, we received a Proposed Order denying a hearing on approvability for the insomnia sNDA and we submitted a response to the Proposed Order in December 2024. HETLIOZ ® for DSPD A Phase III clinical study of HETLIOZ ® in DSPD is ongoing.
In October 2024, we received a Proposed Order denying a hearing on approvability for the insomnia sNDA and we submitted a response to the Proposed Order in December 2024. 10 Table of Contents HETLIOZ ® for DSPD A Phase III clinical study of HETLIOZ ® in DSPD is ongoing.
The most commonly prescribed drugs are hypnotics. See Competition below for a discussion of commonly prescribed drugs for patients with sleep disorders. PONVORY ® for relapsing multiple sclerosis (tablets) PONVORY ® is a product approved for the treatment of relapsing forms of MS (RMS), including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults.
The most commonly prescribed drugs are hypnotics. See Competition below for a discussion of commonly prescribed drugs for patients with sleep disorders. PONVORY ® for RMS (tablets) PONVORY ® is a product approved for the treatment of RMS, including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults.
Human Capital We had 368 full-time employees as of December 31, 2024, compared with 203 employees as of December 31, 2023. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our employee relations to be good.
Human Capital We had 533 full-time employees as of December 31, 2025, compared with 368 employees as of December 31, 2024. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our employee relations to be good.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve tradipitant for a chronic indication.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve NEREUS TM for a chronic indication.
The Sunshine Act also requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members and related payments or other “transfers of value.” Failure to report relevant data may result in civil fines and/or penalties.
The Sunshine Act also requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members and related payments or other “transfers of value.” Failure to report relevant data may result in civil fines and/or penalties. Foreign Corrupt Practices Act The U.S.
Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. In June 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Other legislative changes have been proposed and adopted since the ACA was enacted.
Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. For example, in June 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Other legislative changes have been proposed and adopted since the ACA was enacted.
Tradipitant is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years and, if approved, will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years.
NEREUS TM is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years and, if approved, will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years.
Imsidolimab In January 2025, we entered into an exclusive global license agreement with Anaptys under which we acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab, an IL-36R antagonist. The agreement grants us exclusive rights to imsidolimab, which has successfully completed two global Phase III clinical studies for the treatment of GPP.
Imsidolimab In January 2025, we entered into an exclusive global license agreement with AnaptysBio, Inc. (Anaptys) under which we acquired the worldwide rights to develop, manufacture and commercialize imsidolimab. The agreement grants us exclusive rights to imsidolimab, which has successfully completed two global Phase III clinical studies for the treatment of GPP.
PONVORY ® tablets were approved in Canada for the treatment of RMS in adults in April 2021 and commercially launched in Canada by Janssen in November 2021. We acquired the U.S. and Canadian rights to PONVORY ® in December 2023 from Janssen and we transitioned U.S. operations of PONVORY ® during 2024.
PONVORY ® tablets were approved in Canada for the treatment of RMS in adults in April 2021. We acquired the U.S. and Canadian rights to PONVORY ® in December 2023 from Janssen and we transitioned U.S. operations of PONVORY ® during 2024.
Tradipitant for gastroparesis In December 2018, we announced results from a Phase II randomized clinical study (2301) of tradipitant as a monotherapy in the treatment of gastroparesis.
NEREUS TM for gastroparesis In December 2018, we announced results from a Phase II randomized clinical study (2301) of NEREUS TM as a monotherapy in the treatment of gastroparesis.
We have paid UCSF $1.6 million in upfront fees and development milestones. As of December 31, 2024, remaining milestones include $11.9 million for development milestones and $33.0 million for future regulatory approval and sales milestones.
We have paid UCSF $1.8 million in upfront fees and development milestones. As of December 31, 2025, remaining milestones include $11.9 million for development milestones and $33.0 million for future regulatory approval and sales milestones.
There have been several Congressional inquiries and proposed and enacted legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare, and reform government program reimbursement methodologies for drug products. The likelihood of implementation of these and other reform initiatives is uncertain.
There have been several Congressional inquiries and proposed and enacted legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
Health Canada’s Patent Register lists Canadian Patent Nos. 2740313 and 2968180 for PONVORY ® , which are respectively directed to the crystalline form of ponesimod, the active ingredient in PONVORY ® and methods of treatment. These listed patents will respectively expire in October 2029 and, as a result of the CSP granted for 2968180, in April 2036.
Health Canada’s Patent Register lists Canadian Patent Nos. 19 Table of Contents 2740313 and 2968180 for PONVORY ® , which are respectively directed to the crystalline form of PONVORY ® and methods of treatment. These listed patents will respectively expire in October 2029 and, as a result of the CSP granted for 2968180, in April 2036.
The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved.
The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is 31 Table of Contents approved.
OliPass’ unique OliPass Peptide Nucleic Acids technology provides the delivery platform to enable these gene expression modifications. 13 Table of Contents ASOs may have broad applicability in addressing a number of disorders, from nervous system treatments to systemic treatments.
OliPass’ unique OliPass Peptide Nucleic Acids technology provides the delivery platform to enable these gene expression modifications. 13 Table of Contents ASOs may have broad applicability in addressing a number of disorders, from nervous system treatments to systemic treatments, including treatments for CMT2S and Parkinson’s disease.
We have agreements in place with Patheon Pharmaceuticals Inc. and Patheon Inc. (collectively, Patheon), subsidiaries of Thermo Fisher Scientific, for the manufacture of Fanapt ® oral tablets and HETLIOZ ® capsules. As part of a settlement agreement in 2014, we assumed Novartis’ manufacturing agreement with Patheon for the manufacture of commercial supplies of Fanapt ® .
(collectively, Patheon), subsidiaries of Thermo Fisher Scientific, for the manufacture of Fanapt ® oral tablets and HETLIOZ ® capsules. As part of a settlement agreement in 2014, we assumed Novartis’ manufacturing agreement with Patheon for the manufacture of commercial supplies of Fanapt ® .
We also have other pending patent applications covering methods of treatment and compositions of tasimelteon (HETLIOZ ® active ingredient) oral suspensions. We filed several Hatch-Waxman lawsuits in the U.S. District Court for the District of Delaware (Delaware District Court) against Teva Pharmaceuticals USA, Inc. (Teva), Apotex Inc.
We also have other pending patent applications covering methods of treatment and compositions of HETLIOZ LQ ® . We filed several Hatch-Waxman lawsuits in the U.S. District Court for the District of Delaware (Delaware District Court) against Teva Pharmaceuticals USA, Inc. (Teva), Apotex Inc.
Our commercial portfolio is currently comprised of three products: Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease.
Our commercial portfolio is currently comprised of four products: Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease and NEREUS TM for the prevention of vomiting induced by motion (collectively, our commercial products).
In July 2023, the FDA accepted our sNDA for HETLIOZ ® in insomnia for filing and set a target action date of March 4, 2024 under the Prescription Drug User Fee Act (PDUFA) for its decision. On March 4, 2024, we received a CRL from the FDA.
In July 2023, the FDA accepted our sNDA for HETLIOZ ® in insomnia for filing and set a PDUFA target action date of March 4, 2024 for its decision. On March 4, 2024, we received a CRL from the FDA.
We have paid Lilly $5.0 million in upfront fees and development milestones, including a $2.0 million development milestone paid in December 2023 for the filing of the first 14 Table of Contents marketing authorization for tradipitant in the U.S. or the E.U.
We have paid Lilly $5.0 million in upfront fees and development milestones, including a $2.0 million development milestone paid in December 2023 for the filing of the first marketing authorization for NEREUS TM in the U.S. or the E.U.
For example, the FDA has communicated to us that it is considering an indication for the short-term relief of nausea in gastroparesis. While this short-term indication is not preferred, we would consider accepting this limited indication while continuing to pursue a chronic indication.
For example, the FDA has communicated to us that it is considering an indication for the short-term relief of nausea in gastroparesis. While this short-term indication is not preferred, we would consider accepting this limited indication while continuing to pursue a chronic indication. However, the FDA may not deem the safety information sufficient even for a short-term indication.
We believe that milsaperidone represents a potential improvement over the clinical profile of Fanapt ® and has the potential to create sustained, long-term value in the treatment of psychiatric disorders, including bipolar I disorder and schizophrenia, the indications already approved for Fanapt ® , as well as new indications such as MDD.
We believe that Bysanti TM represents a potential improvement over the clinical profile of Fanapt ® and has the potential to create sustained, long-term value in the treatment of psychiatric disorders, including bipolar I disorder and schizophrenia, the indications already approved for Fanapt ® .
As of December 31, 2024, remaining milestones include $10.0 million and $5.0 million milestones for the first approval of a marketing authorization for tradipitant in the U.S. and the E.U., respectively, and up to $80.0 million for sales milestones. We are obligated to use commercially reasonable efforts to develop and commercialize tradipitant.
As of December 31, 2025, remaining milestones include a $5.0 million milestone for the first approval of a marketing authorization for NEREUS TM in the E.U. and up to $80.0 million for sales milestones. We are obligated to use commercially reasonable efforts to develop and commercialize NEREUS TM .
However, there are numerous factors that could cause interruptions in the supply of our products, including regulatory reviews, changes in our sources for manufacturing, disputes with a 22 Table of Contents manufacturer, or financial instability of manufacturers, all of which could negatively impact our operations and our financial results.
However, there are numerous factors that could cause interruptions in the supply of our products, including regulatory reviews, changes in our sources for manufacturing, disputes with a manufacturer, or financial instability of manufacturers, all of which could negatively impact our operations and our financial results. We have agreements in place with Patheon Pharmaceuticals Inc. and Patheon Inc.
Foreign regulation Foreign drug development, review and approval processes Regardless of whether a sponsor obtains FDA approval for a product, it must obtain approval by the comparable regulatory authorities of foreign countries before it can commence clinical trials or marketing of the product in those countries.
Every state maintains a data breach notification law. 30 Table of Contents Foreign regulation Foreign drug development, review and approval processes Regardless of whether a sponsor obtains FDA approval for a product, it must obtain approval by the comparable regulatory authorities of foreign countries before it can commence clinical trials or marketing of the product in those countries.
Post-approval trials may also be conducted after a drug receives initial marketing approval. These trials, often referred to as “Phase IV” trials, are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
Post-approval trials may also be conducted after a drug receives initial marketing approval. These trials, often referred to as “Phase IV” trials, are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of such clinical trials as a condition of approval of an NDA.
Corresponding NCE patent protection has expired in most other markets. The USPTO has also issued 25 method of treatment patents for HETLIOZ ® that will expire between 2033 and 2041 and five drug substance patents that will expire in 2035. Additionally, the USPTO has issued a drug formulation patent for HETLIOZ LQ ® that will expire in 2040.
The USPTO has also issued 26 method of treatment patents for HETLIOZ ® that will expire between 2033 and 2041 and five drug substance patents that will expire in 2035. Additionally, the USPTO has issued a drug formulation patent for HETLIOZ LQ ® that will expire in 2040.
PONVORY ® was launched commercially in the U.S. in April 2021 and in Canada in November 2021 by one of the Johnson & Johnson Companies. There are a number of drugs approved and prescribed to treat patients with MS.
PONVORY ® was launched commercially in the U.S. in April 2021 by one of the Johnson & Johnson Companies. There are a number of drugs approved and prescribed to treat patients with MS. See Competition below for a discussion of these commonly prescribed drugs.
In December 2024, we entered into a non-exclusive manufacturing agreement of PONVORY ® . The PONVORY ® manufacturing agreement has an initial term of three years and automatically renews after the initial term until the termination or expiration of any outstanding project agreements.
The PONVORY ® manufacturing agreement has an initial term of three years and automatically renews after the initial term until the termination or expiration of any outstanding project agreements. In December 2025, we entered into a non-exclusive product agreement for the manufacture of commercial supplies of NEREUS TM drug product.
Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA), prohibits U.S. corporations and their representatives and intermediaries from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.
Foreign Corrupt Practices Act (FCPA), prohibits U.S. corporations and their representatives and intermediaries from offering, promising, authorizing or giving anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad or otherwise secure an improper business advantage.
The EAP is ongoing and a number of patients have initiated treatment. Although this EAP is not intended for data collection, we collect safety data from this cohort of expanded access patients and included this data in the NDA that we submitted for tradipitant for patients with gastroparesis.
Although this EAP is not intended for data collection, we collect safety data from this cohort of expanded access patients and included this data in the NDA that we submitted for NEREUS TM for patients with gastroparesis.
VQW-765 In connection with the settlement agreement with Novartis relating to Fanapt ® , we received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.
VQW-765 In connection with the settlement agreement with Novartis relating to Fanapt ® , we received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize VQW-765.
In Canada, the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) create a regime analogous to the Hatch-Waxman Act and link the regulatory approval process for generic and biosimilar drugs to the adjudication of innovator patent rights.
Also, a number of patent applications covering further methods of treatment remain pending at the USPTO. In Canada, the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) create a regime analogous to the Hatch-Waxman Act and link the regulatory approval process for generic and biosimilar drugs to the adjudication of innovator patent rights.
For these and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. The cost of prescription pharmaceuticals in the U.S. is likely to remain the subject of considerable discussion.
For these and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.
Patent applications for these active ingredients remain pending. Although the NCE patents protecting Fanapt ® and HETLIOZ ® have expired, Fanapt ® remains protected by additional patents and HETLIOZ ® and HETLIOZ LQ ® remain protected by additional patents, some of which we have asserted against current generic competitors.
Although NCE exclusivity and the NCE patents protecting Fanapt ® and HETLIOZ ® have expired, Fanapt ® remains protected by additional patents and HETLIOZ ® and HETLIOZ LQ ® also remain protected by additional patents, some of which we have asserted against current generic competitors.
The IRA, as well as other federal, state and foreign healthcare reform measures that have been and may be adopted in the future, could have a material adverse effect on our business. 33 Table of Contents These healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price for any approved product and/or the level of reimbursement physicians receive for administering any approved product.
These healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price for any approved product and/or the level of reimbursement physicians receive for administering any approved product.
These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning 23 Table of Contents letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and/or civil or criminal penalties.
These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and/or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our business.
These new definitions became effective on January 1, 2022. In September 2024, CMS issued a final rule that implemented regulations to, among other things, reflect the removal of the rebate cap in accordance with the American Rescue Plan Act of 2021. Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law.
These new definitions became effective on January 1, 2022. In September 2024, CMS issued a final rule that 32 Table of Contents implemented regulations to, among other things, reflect the removal of the rebate cap in accordance with the American Rescue Plan Act of 2021.
In addition, the ACA amended the Social Security Act to provide that a claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false claim for purposes of the False Claims Act.
Under the False Claims Act, “knowing” is defined the include actual knowledge, deliberate ignorance or reckless disregard. In addition, the ACA amended the Social Security Act to provide that a claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false claim for purposes of the False Claims Act.
We have also filed patent infringement lawsuits against each of Teva and Apotex in the Delaware District Court, in each case, asserting infringement of U.S. Patent No. 11,918,556, another method of administration patent that was not litigated in the prior litigation.
We also filed patent infringement lawsuits against each of Teva and Apotex in the Delaware District Court, in each case, asserting infringement of U.S. Patent No. 11,918,556, another method of administration patent that was not litigated in the prior litigation. A trial is scheduled to begin in these cases on August 3, 2026.
We have pending patent applications covering the use of VTR-297 and plan on filing additional applications based on discoveries made throughout the development plan of this molecule.
We are committed to advancing the development of imsidolimab and may file additional patent applications based on discoveries made during its development. VTR-297 We have pending patent applications covering the use of VTR-297 and plan on filing additional applications based on discoveries made throughout the development plan of this molecule.
These meetings can provide an opportunity for the sponsor to share information about the progress of the application or clinical trials, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.
During the development of a new drug, sponsors are given several opportunities to meet with the FDA. These meetings can provide an opportunity for the sponsor to share information about the progress of the application or clinical trials, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.
Health Insurance Portability and Accountability Act of 1996 The Health Insurance Portability and Accountability Act of 1996 (HIPAA), includes federal criminal statutory provisions that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Health Insurance Portability and Accountability Act of 1996 The Health Insurance Portability and Accountability Act of 1996 (HIPAA), includes federal criminal statutory provisions that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. 29 Table of Contents HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their implementing regulations, impose certain requirements and restrictions on certain types of entities relating to the privacy and security of individually identifiable health information.
In a randomized placebo controlled clinical study, PONVORY ® has been shown to reduce the symptoms and signs of psoriasis. Investigational New Drug (IND) applications for PONVORY ® in the treatments of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024.
In a randomized placebo controlled clinical study, PONVORY ® has been shown to reduce the symptoms and signs of psoriasis. The Investigational New Drug (IND) application for PONVORY ® for the treatment of psoriasis was accepted by the FDA in the fourth quarter of 2024. A Phase III clinical study of PONVORY ® for the treatment of psoriasis is ongoing.
In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S. Patent No. RE46,604, and that the asserted claims of U.S. Patent Nos. RE46,604; 9,730,910; 10,149,829; and 10,376,487 were invalid. We appealed the decision to the U.S.
In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S. Patent No. RE46,604, and that the asserted claims of U.S. Patent Nos. RE46,604; 9,730,910; 10,149,829; and 10,376,487 were invalid, which was affirmed by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) in May 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, despite the positive results of the completed trials for Fanapt ® , HETLIOZ ® and PONVORY ® , as well as the FDA’s approval of the NDA for HETLIOZ ® for the treatment of Non-24 in January 2014, the NDA for Fanapt ® for the treatment of schizophrenia in May 2009, the EC’s grant of the centralized marketing authorization for HETLIOZ ® for the treatment of Non-24 in totally blind adults in July 2015, the FDA’s approval of the sNDA and NDA for HETLIOZ ® capsule and liquid formulation for the treatment of adults and children, respectively, with nighttime sleep disturbances in SMS in December 2020, and the NDA for PONVORY ® for the treatment of RMS in March 2021 and Health Canada’s approval of PONVORY ® for the treatment of RMS in April 2021, we are uncertain whether any of these products will ultimately prove to be effective and safe in humans long term and in all uses.
Biggest changeFor example, despite the positive results of the completed trials for our commercial products, as well as various FDA approvals of these commercial products, we are uncertain whether any of these products will ultimately prove to be effective and safe in humans long term and in all uses.
The degree of further market acceptance of any of our products, including with respect to new indications, or market acceptance of approved product candidates among physicians, patients, health care payors and the medical community, will depend on a number of factors, including but not limited to: • the impact and outcome of our pending patent litigation and appeals efforts; • the commercialization and pricing of any generic version of HETLIOZ ® on the market; • acceptable evidence of safety and efficacy; 37 Table of Contents • relative convenience and ease of administration; • the prevalence and severity of any adverse side effects; • availability of alternative treatments; • market awareness of the condition to be treated; and • pricing and cost effectiveness.
The degree of further market acceptance of any of our products, including with respect to new indications, or market acceptance of approved product candidates among physicians, patients, health care payors and the medical community, will depend on a number of factors, including but not limited to: • the impact and outcome of our pending patent litigation and appeals efforts; • the commercialization and pricing of any generic version of HETLIOZ ® on the market; • acceptable evidence of safety and efficacy; • relative convenience and ease of administration; • the prevalence and severity of any adverse side effects; • availability of alternative treatments; • market awareness of the condition to be treated; and 37 Table of Contents • pricing and cost effectiveness.
While the full impact of the CREATES Act is unclear at this time, its provisions do have the potential to facilitate the development and future approval of generic versions of our products, introducing generic competition that could have a material adverse effect on our business, results of operations and financial condition. Certain states have also taken similar actions.
While the full impact of the CREATES Act is unclear at this time, its provisions do have the potential to facilitate the development and future approval of generic versions of our products, introducing generic competition that could have a material adverse effect on our business, financial condition and results of operations. Certain states have also taken similar actions.
These events, among others, could result in product recalls, product liability actions or withdrawals or additional regulatory controls, any of which could have a material adverse effect on our business, results of operations and financial condition.
These events, among others, could result in product recalls, product liability actions or withdrawals or additional regulatory controls, any of which could have a material adverse effect on our business, financial condition and results of operations.
Our CROs, third-party vendors and investigators could merge with or be acquired by other companies or experience financial or other setbacks unrelated to our collaboration that could, nevertheless, materially adversely affect our business, results of operations and financial condition.
Our CROs, third-party vendors and investigators could merge with or be acquired by other companies or experience financial or other setbacks unrelated to our collaboration that could, nevertheless, materially adversely affect our business, financial condition and results of operations.
This could prevent the commercialization or limit the commercial potential of our products. Even if we are able to maintain insurance that we believe is adequate, our results of operations and financial condition may be materially adversely affected by a product liability claim.
This could prevent the commercialization or limit the commercial potential of our products. Even if we are able to maintain insurance that we believe is adequate, our financial condition and results of operations may be materially adversely affected by a product liability claim.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap, with the first drug price negotiations effective January 1, 2026; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation beginning October 1, 2022; and replaces the Medicare Part D coverage gap discount program with a new discounting program beginning January 1, 2025.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap, with the first drug price negotiations effective January 1, 2026; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation beginning October 1, 2022; and replaces the Medicare Part D coverage gap discount program with a new discounting program beginning January 1, 2025.
Several manufacturers and industry groups have challenged the drug price negotiation program for Medicare Parts B and D in federal court. These lawsuits are ongoing, and additional lawsuits may be filed in the future related to provisions of the IRA.
Several manufacturers and industry groups have challenged the drug price negotiation program for Medicare Parts B and D in federal court. These lawsuits are ongoing, and additional lawsuits may be filed in the future related to provisions of the IRA.
See Note 18, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” each of which is incorporated herein by reference, for additional information.
See Note 18, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful, ” each of which is incorporated herein by reference, for additional information.
We have been, and may in the future be, subject to litigation, which could harm our stock price, business, results of operations and financial condition. We have been the subject of litigation in the past and may be subject to litigation in the future.
We have been, and may in the future be, subject to litigation, which could harm our stock price, business, financial condition and results of operations. We have been the subject of litigation in the past and may be subject to litigation in the future.
While our clinical trials have since resumed patient enrollment, we may experience future disruptions as a result of other health crises that could adversely impact our sales activities, supply chain, our ongoing and planned clinical trials, and other regulatory activities, including: • curtailment of our sales force or patient access to healthcare providers, which may reduce the number of prescription refills or new patient starts, thereby adversely affecting our revenues; • interruption of, or delays in receiving, supplies of the active pharmaceutical ingredients that our contract manufacturing organizations use to manufacture our products and any related interruption of, or delays in receiving, supplies of our products from these organizations, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; 41 Table of Contents • delays or difficulties in enrolling patients in our clinical trials; • interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; • limitations on our employee resources or those of third-party clinical research organizations towards the development of our products, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and • interruption or delays in the operations of regulatory agencies, which may impact review and approval timelines.
While our clinical trials have since resumed patient enrollment, we may experience future disruptions as a result of other health crises that could adversely impact our sales activities, supply chain, our ongoing and planned clinical trials, and other regulatory activities, including: • curtailment of our sales force or patient access to healthcare providers, which may reduce the number of prescription refills or new patient starts, thereby adversely affecting our revenues; 42 Table of Contents • interruption of, or delays in receiving, supplies of the active pharmaceutical ingredients that our contract manufacturing organizations use to manufacture our products and any related interruption of, or delays in receiving, supplies of our products from these organizations, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; • delays or difficulties in enrolling patients in our clinical trials; • interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; • limitations on our employee resources or those of third-party clinical research organizations towards the development of our products, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and • interruption or delays in the operations of regulatory agencies, which may impact review and approval timelines.
The use of specialty pharmacies involves certain risks, including, but not limited to, risks that these specialty pharmacies will: • not provide us accurate or timely information regarding their inventories, the number of patients who are using HETLIOZ ® or complaints about HETLIOZ ® ; • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support HETLIOZ ® , particularly in light of the recent entry into the market of generic versions of HETLIOZ ® ; • not devote the resources necessary to sell HETLIOZ ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
The use of specialty pharmacies involves certain risks, including, but not limited to, risks that these specialty pharmacies will: • not provide us accurate or timely information regarding their inventories, the number of patients who are using HETLIOZ ® or complaints about HETLIOZ ® ; • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support HETLIOZ ® , particularly in light of the entry into the market of generic versions of HETLIOZ ® ; • not devote the resources necessary to sell HETLIOZ ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
For example, federal enforcement agencies have recently pursued enforcement actions against pharmaceutical companies’ product and patient assistance programs, including relationships with specialty pharmacies, and support for charitable foundations providing patients with co-pay assistance. In addition, Relators have filed lawsuits involving manufacturer reimbursement support services as well as promotion of pharmaceutical products beyond labeled claims.
For example, federal enforcement agencies have pursued enforcement actions against pharmaceutical companies’ product and patient assistance programs, including relationships with specialty pharmacies, and support for charitable foundations providing patients with co-pay assistance. In addition, Relators have filed lawsuits involving manufacturer reimbursement support services as well as promotion of pharmaceutical products beyond labeled claims.
The following factors, in addition to the other risk factors described in this section, may also have a significant impact on the market price of our common stock: • our level of success in commercializing our products; • our level of success in executing our commercialization strategies; • publicity regarding actual or potential litigation involving us and the outcome of any such litigation; • publicity regarding actual or potential testing or trial results relating to products under development by us or our competitors; • the outcome of regulatory review relating to products under development by us or our competitors; • regulatory developments in the U.S. and foreign countries; • newly enacted healthcare legislation or changes to existing legislation; • developments concerning any collaboration or other strategic transaction we may undertake; • announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors; • safety issues with our products or those of our competitors; • announcements of technological innovations or new therapeutic products or methods by us or others; • actual or anticipated variations in our quarterly operating results; • changes in estimates of our financial results or recommendations by securities analysts or failure to meet such financial expectations; • changes in government regulations or policies; • changes in patent legislation or patent decisions or adverse changes to patent law; • additions or departures of key personnel or members of our board of directors; • the publication of negative research or articles about our company, our business or our products by industry analysts or others; • market rumors or press reports; • publicity regarding actual or potential transactions involving us; and • economic, political and other external factors beyond our control.
The following factors, in addition to the other risk factors described in this section, may also have a significant impact on the market price of our common stock: • our level of success in commercializing our products; • our level of success in executing our commercialization strategies; • publicity regarding actual or potential litigation involving us and the outcome of any such litigation; • publicity regarding actual or potential testing or trial results relating to products under development by us or our competitors; • the outcome of regulatory review relating to products under development by us or our competitors; • regulatory developments in the U.S. and foreign countries; • newly enacted healthcare legislation or changes to existing legislation; • developments concerning any collaboration or other strategic transaction we may undertake; • announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors; • safety issues with our products or those of our competitors; • announcements of technological innovations or new therapeutic products or methods by us or others; 63 Table of Contents • actual or anticipated variations in our quarterly operating results; • changes in estimates of our financial results or recommendations by securities analysts or failure to meet such financial expectations; • changes in government regulations or policies; • changes in patent legislation or patent decisions or adverse changes to patent law; • additions or departures of key personnel or members of our board of directors; • the publication of negative research or articles about our company, our business or our products by industry analysts or others; • market rumors or press reports; • publicity regarding actual or potential transactions involving us; and • economic, political and other external factors beyond our control.
HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges. A recent court decision in the District Court of South Carolina, Genesis Health Care, Inc. v.
HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges. A court decision in the District Court of South Carolina, Genesis Health Care, Inc. v.
Our long-term capital requirements are expected to depend on many factors, including, among others: • our level of success in commercializing Fanapt ® , HETLIOZ ® and PONVORY ® , as well as other products that may be approved, globally; • outcomes of ongoing and potential patent litigation; • costs of developing and maintaining sales, marketing and distribution channels and our ability to sell our products; 53 Table of Contents • market acceptance of our products; • costs of establishing and maintaining manufacturing capabilities for commercial quantities of our products; • the number of potential formulations and products in development; • progress with preclinical studies and clinical trials; • time and costs involved in obtaining regulatory (including FDA) approval; • costs of preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property claims; • cost of evaluating and acquiring new products from third parties; • competing technological and market developments; • costs of recruiting and retaining employees and consultants; • costs of training physicians; and • legal, accounting, insurance and other professional and business-related costs.
Our long-term capital requirements are expected to depend on many factors, including, among others: • our level of success in commercializing our commercial products, as well as other products that may be approved, globally; • outcomes of ongoing and potential patent litigation; • costs of developing and maintaining sales, marketing and distribution channels and our ability to sell our products; • market acceptance of our products; • costs of establishing and maintaining manufacturing capabilities for commercial quantities of our products; • the number of potential formulations and products in development; • progress with preclinical studies and clinical trials; • time and costs involved in obtaining regulatory (including FDA) approval; • costs of preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property claims; • cost of evaluating and acquiring new products from third parties; 53 Table of Contents • competing technological and market developments; • costs of recruiting and retaining employees and consultants; • costs of training physicians; and • legal, accounting, insurance and other professional and business-related costs.
If the FDA does not approve our sNDAs for HETLIOZ ® for the treatment of jet lag disorder or insomnia, continued development of tasimelteon for the treatment of jet lag disorder and insomnia may be significantly delayed or terminated, our business will be significantly harmed, and the market price of our stock could decline.
If the FDA does not approve our sNDAs for HETLIOZ ® for the treatment of jet lag disorder or insomnia, continued development of HETLIOZ ® for the treatment of jet lag disorder and insomnia may be significantly delayed or terminated, our business will be significantly harmed and the market price of our stock could decline.
Changes to tax regulations to which we are subject could adversely affect us. We are subject to tax laws, treaties and regulations in the countries in which we operate, and these laws and treaties are subject to interpretation. New legislation or regulation that could affect our tax burden could be enacted by any governmental authority.
Changes to tax regulations to which we are subject could adversely affect us. We are subject to tax laws, treaties and regulations in the countries in which we operate, and these laws and treaties are subject to interpretation. New legislation or regulations that could affect our tax burden could be enacted by any governmental authority.
If we fail to continue to develop sales, marketing and distribution capabilities, if sales efforts are not effective or if costs of developing sales, marketing and distribution capabilities exceed their cost effectiveness, our business, results of operations and financial condition could be materially adversely affected. 36 Table of Contents As a result of the decision in favor of generic drug companies in connection with our HETLIOZ ® patent litigation, we have faced generic competition in the near term and our revenues and results of operations could be further affected by the launch of additional generic versions of HETLIOZ ® in the U.S.
If we fail to continue to develop sales, marketing and distribution capabilities, if sales efforts are not effective or if costs of developing sales, marketing and distribution capabilities exceed their cost effectiveness, our business, financial condition and results of operations could be materially adversely affected. 36 Table of Contents As a result of the decision in favor of generic drug companies in connection with our HETLIOZ ® patent litigation, we have faced generic competition and our revenues and results of operations could be further affected by the launch of additional generic versions of HETLIOZ ® in the U.S.
Our ability to use net operating loss carryforwards and tax credit carryforwards to offset future taxable income is dependent on generating future taxable income and may be limited, including as a result of transactions involving our common stock.
Our ability to use net operating loss (NOL) and tax credit carryforwards to offset future taxable income is dependent on generating future taxable income and may be limited, including as a result of transactions involving our common stock.
If we fail to adequately fund our research and development activities and commercialization efforts, we may be unable to continue operations or we may be forced to share our rights to commercialize our products with third parties on terms that may not be attractive to us. Our activities will necessitate significant uses of working capital throughout 2025 and beyond.
If we fail to adequately fund our research and development activities and commercialization efforts, we may be unable to continue operations or we may be forced to share our rights to commercialize our products with third parties on terms that may not be attractive to us. Our activities will necessitate significant uses of working capital throughout 2026 and beyond.
The use of pharmaceutical wholesalers, specialty pharmacies and specialty distributors involves certain risks, including, but not limited to, risks that these specialty pharmacies, specialty distributors and pharmaceutical wholesalers will: • not provide us accurate or timely information regarding their inventories, demand from customers buying Fanapt ® or PONVORY ® or complaints about Fanapt ® or PONVORY ® ; • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support Fanapt ® or PONVORY ® ; 48 Table of Contents • not devote the resources necessary to sell Fanapt ® or PONVORY ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
The use of pharmaceutical wholesalers, specialty pharmacies and specialty distributors involves certain risks, including, but not limited to, risks that these specialty pharmacies, specialty distributors and pharmaceutical wholesalers will: • not provide us accurate or timely information regarding their inventories, demand from customers buying Fanapt ® or PONVORY ® or complaints about Fanapt ® or PONVORY ® ; • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support Fanapt ® or PONVORY ® ; • not devote the resources necessary to sell Fanapt ® or PONVORY ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
In addition, if after receiving marketing approval of a product, we or others identify undesirable side effects caused by such product, we could face one or more of the following: • regulatory authorities may require us to implement a REMS, such as the addition of labeling statements (e.g., “black box” warning or a contraindication); • regulatory authorities may withdraw their approval of the product; • we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and 51 Table of Contents • our or the product’s reputation may suffer.
In addition, if after receiving marketing approval of a product, we or others identify undesirable side effects caused by such product, we could face one or more of the following: • regulatory authorities may require us to implement a REMS, such as the addition of labeling statements (e.g., “black box” warning or a contraindication); • regulatory authorities may withdraw their approval of the product; • we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and • our or the product’s reputation may suffer.
Other than Fanapt ® in the U.S., Mexico and Israel, HETLIOZ ® and HETLIOZ LQ ® in the U.S. and HETLIOZ ® in the European countries covered by the EC’s centralized marketing authorization and PONVORY ® in the U.S. and Canada, we have not received, and may never receive, regulatory approval to market any of our products in any jurisdiction.
Other than Fanapt ® in the U.S., Mexico and Israel, HETLIOZ ® and HETLIOZ LQ ® in the U.S. and HETLIOZ ® in the European countries covered by the EC’s centralized marketing authorization, PONVORY ® in the U.S. and Canada and NEREUS TM in the U.S., we have not received, and may never receive, regulatory approval to market any of our products in any jurisdiction.
Recently, HRSA has stated that it has received inquiries from manufacturers related to different rebate models, and some manufacturers have commenced litigation to challenge the legality of HRA’s position regarding proposed rebate models. The outcome of such litigation and impact on participating manufacturers is unknown at this time.
Recently, HRSA has stated that it has received inquiries from manufacturers related to different rebate models, and some manufacturers have commenced litigation to challenge the legality of HRSA’s position regarding proposed rebate models. The outcome of such litigation and impact on participating manufacturers is unknown at this time.
Upon the exercise of these options or settlement of the shares underlying these restricted stock units, as the case may be, in accordance with their respective terms, these shares may be resold freely, subject to restrictions imposed on our affiliates under Rule 144.
Upon the exercise of these options or settlement of the shares underlying these restricted stock units, as applicable, in accordance with their respective terms, these shares may be resold freely, subject to restrictions imposed on our affiliates under Rule 144.
We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. These transactions could include: • mergers; • acquisitions; • asset purchases; • strategic alliances; • licensing agreements; and 66 Table of Contents • co-promotion and similar agreements.
We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. These transactions could include: 65 Table of Contents • mergers; • acquisitions; • asset purchases; • strategic alliances; • licensing agreements; and • co-promotion and similar agreements.
We expect to continue to incur significant expenses and to utilize a substantial portion of our cash resources as we continue to commercialize our commercial products, evaluate foreign market opportunities for Fanapt ® and HETLIOZ ® and continue to grow our operational capabilities, both domestically and abroad.
We expect to continue to incur significant expenses and to utilize a substantial portion of our cash resources as we continue to commercialize our commercial products, evaluate foreign market opportunities for Fanapt ® , HETLIOZ ® and NEREUS TM and continue to grow our operational capabilities, both domestically and abroad.
Generally, during a period of time in which generic applications may be submitted for a branded product based on a product’s regulatory exclusivity status, if no patents are listed in the Orange Book before the date on which a complete ANDA application for a product (excluding an amendment or supplement to the application) is submitted, an ANDA application could be approved by FDA without regard to a stay.
Generally, during a period of time in which generic applications may be submitted for a branded product based on a 61 Table of Contents product’s regulatory exclusivity status, if no patents are listed in the Orange Book before the date on which a complete ANDA application for a product (excluding an amendment or supplement to the application) is submitted, an ANDA application could be approved by FDA without regard to a stay.
We believe that tradipitant has a well-established safety profile, as demonstrated by the results of extensive testing in animals and humans. Despite these results, however, the FDA informed us in December 2018 that in order to treat patients beyond 12 weeks, we would have to conduct a nine-month non-rodent chronic toxicity study.
We believe that NEREUS TM has a well-established safety profile, as demonstrated by the results of extensive testing in animals and humans. Despite these results, however, the FDA informed us in December 2018 that in order to treat patients beyond 12 weeks, we would have to conduct a nine-month non-rodent chronic toxicity study.
We believe that comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. We are increasingly dependent on information technology systems, infrastructure and data. Cybersecurity breaches could expose us to liability, damage our reputation, compromise our confidential information or otherwise adversely affect our business.
We believe that comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. 66 Table of Contents We are increasingly dependent on information technology systems, infrastructure and data. Cybersecurity breaches could expose us to liability, damage our reputation, compromise our confidential information or otherwise adversely affect our business.
Examples of such potential adverse developments include, but are not limited to: • the FDA determining that it believes additional clinical studies are required with respect to tradipitant for the treatment of gastroparesis; • safety, efficacy or other concerns arising from clinical or non-clinical studies in this program; or • the FDA determining that the tradipitant clinical trial program for gastroparesis does not demonstrate adequate safety and substantial evidence of efficacy.
Examples of such potential adverse developments include, but are not limited to: • the FDA determining that it believes additional clinical studies are required with respect to NEREUS TM for the treatment of gastroparesis; • safety, efficacy or other concerns arising from clinical or non-clinical studies in this program; or • the FDA determining that the NEREUS TM clinical trial program for gastroparesis does not demonstrate adequate safety and substantial evidence of efficacy.
In addition, if any of these customers fails to pay on a timely basis or at all, our business, financial condition and results of operations could be materially adversely affected. We face substantial competition, which may result in others developing or commercializing products before or more successfully than we do.
In addition, if any of these 48 Table of Contents customers fails to pay on a timely basis or at all, our business, financial condition and results of operations could be materially adversely affected. We face substantial competition, which may result in others developing or commercializing products before or more successfully than we do.
If we fail to complete our clinical trials successfully or have difficulty enrolling a sufficient number of patients for them, we may not receive the regulatory approvals needed to market that product. Any such failure or difficulty could have a material adverse effect on our business. 52 Table of Contents We may not be able to achieve sustained profitability.
If we fail to complete our clinical trials successfully or have difficulty enrolling a sufficient number of patients for them, we may not receive the regulatory approvals needed to market that product. Any such failure or difficulty could have a material adverse effect on our business. We may not be able to achieve sustained profitability.
Although we have received marketing authorization for HETLIOZ ® capsules from the EC, pricing negotiations 56 Table of Contents with governmental authorities may take a considerable amount of time in those Member States that impose price controls. For example, we launched HETLIOZ ® commercially in Germany in August 2016, and concluded our pricing negotiations with German authorities in October 2017.
Although we have received marketing authorization for HETLIOZ ® capsules from the EC, pricing negotiations with governmental authorities may take a considerable amount of time in those Member States that impose price controls. For example, we launched HETLIOZ ® commercially in Germany in August 2016, and concluded our pricing negotiations with German authorities in October 2017.
If an application for a generic version of a branded product or a Section 505(b)(2) application relies on a prior FDA finding of safety and effectiveness of a previously-approved product, including an alternative strength thereof, the applicant is 61 Table of Contents required to certify to the FDA concerning any patents listed for the referenced product in the Orange Book.
If an application for a generic version of a branded product or a Section 505(b)(2) application relies on a prior FDA finding of safety and effectiveness of a previously-approved product, including an alternative strength thereof, the applicant is required to certify to the FDA concerning any patents listed for the referenced product in the Orange Book.
In the past, following periods of volatility in the market price of their stock, many companies, including us, have been the subjects of securities class action litigation. Any such litigation can result in substantial costs and diversion of management’s attention and resources and 64 Table of Contents could harm our stock price, business, results of operations and financial condition.
In the past, following periods of volatility in the market price of their stock, many companies, including us, have been the subjects of securities class action litigation. Any such litigation can result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business, financial condition and results of operations.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors. Our business could be negatively affected as a result of the actions of activist stockholders.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors. 64 Table of Contents Our business could be negatively affected as a result of the actions of activist stockholders.
While we are not currently party to any material commercial collaborative arrangements, areas in which we may potentially 42 Table of Contents enter into third-party collaboration arrangements include joint sales and marketing arrangements for sales and marketing in certain E.U. countries and elsewhere outside of the U.S., and future product development arrangements.
While we are not currently party to any material commercial collaborative arrangements, areas in which we may potentially enter into third-party collaboration arrangements include joint sales and marketing arrangements for sales and marketing in certain E.U. countries and elsewhere outside of the U.S., and future product development arrangements.
If reimbursement of HETLIOZ ® is unavailable or limited in scope or amount, or if pricing for HETLIOZ ® is set at unsatisfactory levels or takes too long to establish, or if there is competition from lower priced cross-border sales, our results of operations will be negatively affected.
If reimbursement of 56 Table of Contents HETLIOZ ® is unavailable or limited in scope or amount, or if pricing for HETLIOZ ® is set at unsatisfactory levels or takes too long to establish, or if there is competition from lower priced cross-border sales, our results of operations will be negatively affected.
In addition, the U.S. Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.
Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.
In December 2018, we announced that the FDA had accepted the HETLIOZ ® sNDA for the treatment of jet lag disorder. We received a complete response letter (CRL) in August 2019 in which the FDA asserted that the measures of the study were of unclear clinical significance and declined to approve our sNDA.
In December 2018, we announced that the FDA had accepted the HETLIOZ ® sNDA for the treatment of jet lag disorder. We received a CRL in August 2019 in which the FDA asserted that the measures of the study were of unclear clinical significance and declined to approve our sNDA.
In addition, if our products face any safety or efficacy issues, including drug interaction problems, under the federal Food, Drug, and Cosmetic Act (FDCA), the FDA has broad authority to force us to take any number of actions, including, but not limited to, the following: • Requiring us to conduct post-approval clinical studies to assess product efficacy or known risks or new signals of serious risks, or to evaluate unexpected serious risks; • Mandating changes to a product’s label; 46 Table of Contents • Requiring us to implement a risk evaluation and mitigation strategy (REMS) where necessary to assure safe use of the drug; or • Removing an already approved product from the market.
In addition, if our products face any safety or efficacy issues, including drug interaction problems, under the federal FDCA, the FDA has broad authority to force us to take any number of actions, including, but not limited to, the following: • Requiring us to conduct post-approval clinical studies to assess product efficacy or known risks or new signals of serious risks, or to evaluate unexpected serious risks; • Mandating changes to a product’s label; • Requiring us to implement a risk evaluation and mitigation strategy (REMS) where necessary to assure safe use of the drug; or • Removing an already approved product from the market.
We are highly dependent on principal members of our management team and scientific staff, including our Chief Executive Officer, Mihael H. Polymeropoulos, M.D. These executives each have significant pharmaceutical industry experience. The loss of any such executives, including Dr.
We are highly dependent on principal members of our management team and scientific staff, including our President, Chief Executive Officer and Chairman of the Board, Mihael H. Polymeropoulos, M.D. These executives each have significant pharmaceutical industry experience. The loss of any such executives, including Dr.
District Court for the District of Columbia (DC District Court) challenging the FDA’s position, but 39 Table of Contents we ultimately did not prevail. Despite our disagreement with the FDA, the preclinical package has allowed us to continue to conduct all of the efficacy studies necessary for NDA filing.
District Court for the District of Columbia (DC District Court) challenging the FDA’s position, but we ultimately did not prevail. Despite our disagreement with the FDA, the preclinical package has allowed us to continue to conduct all of the efficacy studies necessary for NDA filing.
We plan to continue to pursue the marketing authorization for tradipitant but our business will be materially adversely impacted if we are not able to agree with the FDA on a regulatory path to approval for tradipitant or the FDA delays or denies approval of our NDA filing.
We plan to continue to pursue the marketing authorization for NEREUS TM but our business will be materially adversely impacted if we are not able to agree with the FDA on a regulatory path to approval for NEREUS TM or the FDA delays or denies approval of our NDA filing.
Several states have adopted legislation requiring pharmaceutical companies to establish marketing and 47 Table of Contents promotional compliance programs or codes of conduct or to file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities.
Several states have adopted legislation requiring pharmaceutical companies to establish marketing and promotional compliance programs or codes of conduct or to file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the U.S. Patent and Trademark Office (USPTO), or made a materially misleading statement, during prosecution.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent 59 Table of Contents withheld relevant material information from the U.S. Patent and Trademark Office (USPTO), or made a materially misleading statement, during prosecution.
Such restatements and recalculations increase our costs for complying with the laws and regulations governing the MDRP and the 340B program discussed below. Pursuant to the IRA, certain figures we report under the MDRP 44 Table of Contents will also be used to compute rebates under Medicare Part D triggered by price increases that outpace inflation.
Such restatements and recalculations increase our costs for complying with the laws and regulations governing the MDRP and the 340B program discussed below. Pursuant to the IRA, certain figures we report under the MDRP will also be used to compute rebates under Medicare Part D triggered by price increases that outpace inflation.
Our inability to adequately establish, supervise and conduct (either ourselves or through third parties) all aspects of the formulation and manufacturing processes would have a material adverse effect on our ability to develop and commercialize our products.
Our inability to adequately establish, supervise and conduct (either ourselves or through third parties) all aspects of the formulation and manufacturing processes would have a material adverse 54 Table of Contents effect on our ability to develop and commercialize our products.
We expect the development of products for our own account to consume substantial resources. If we are able to develop commercial products on our own, the risks associated with these programs may be greater than those associated with our programs with collaborative partners.
We expect the development of products for our own account to consume 62 Table of Contents substantial resources. If we are able to develop commercial products on our own, the risks associated with these programs may be greater than those associated with our programs with collaborative partners.
Moreover, in July 2020, the FDA authorized tradipitant through an expanded access program (EAP) for a single patient. An EAP allows a patient to request the use of tradipitant, prior to NDA approval, for up to six months with an option to request renewal.
Moreover, in July 2020, the FDA authorized NEREUS TM through an expanded access program (EAP) for a single patient. An EAP allows a patient to request the use of NEREUS TM , prior to NDA approval, for up to six months with an option to request renewal.
Many of these provisions are subject to change and reinterpretation depending on the jurisdiction and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or other harm to our business activities.
Many of these provisions are 57 Table of Contents subject to change and reinterpretation depending on the jurisdiction and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or other harm to our business activities.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we believe the package was complete for any NDA filing to treat patients for 12 weeks or less.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we 39 Table of Contents believe the package was complete for any NDA filing to treat patients for 12 weeks or less.
Risks Related to our Business and Industry We are dependent on the commercial success of Fanapt ® , HETLIOZ ® and PONVORY ® . In the U.S., HETLIOZ ® competes with generic versions of HETLIOZ ® and we could experience increased generic competition in the near term.
Risks Related to our Business and Industry We are dependent on the commercial success of our commercial products. In the U.S., HETLIOZ ® competes with generic versions of HETLIOZ ® and we could experience increased generic competition in the near term.
Any adverse developments or results or perceived adverse developments or results with respect to our regulatory submission or the tradipitant clinical program in gastroparesis will significantly harm our business and could cause the market price of our stock to decline.
Any adverse developments or results or perceived adverse developments or results with respect to our regulatory submission or the NEREUS TM clinical program in gastroparesis will significantly harm our business and could cause the market price of our stock to decline.
Since then, certain patients who experienced a benefit in tradipitant studies have requested and received expanded access, while others have been denied treatment under the EAP. The EAP is ongoing and a number of patients have initiated treatment.
Since then, certain patients who experienced a benefit in NEREUS TM studies have requested and received expanded access, while others have been denied treatment under the EAP. The EAP is ongoing and a number of patients have initiated treatment.
Physicians, patients, third-party payors and the medical community may not accept or utilize any of our products that may be approved. If Fanapt ® , HETLIOZ ® , PONVORY ® and our other products, if and when approved, do not achieve significant market acceptance, our business, results of operations and financial condition would be materially adversely affected.
Physicians, patients, third-party payors and the medical community may not accept or utilize any of our products that may be approved. If our commercial and other products, if and when approved, do not achieve significant market acceptance, our business, financial condition and results of operations would be materially adversely affected.
Moreover, if other firms develop pharmacogenetics and pharmacogenomics capabilities, we may face increased competition in identifying and acquiring additional products. If we lose key scientists or management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify, develop, and commercialize new products will be impaired.
Moreover, if other firms develop pharmacogenetics and pharmacogenomics capabilities, we may face increased competition in identifying and acquiring additional products. 55 Table of Contents If we lose key scientists or management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify, develop, and commercialize new products will be impaired.
Economic conditions, and uncertainty as to the general direction of the macroeconomic environment, are beyond our control and may make any necessary debt or equity financing more difficult, costly and dilutive.
Economic conditions, and uncertainty as to the general direction of the macroeconomic environment, are beyond our control and may make any necessary debt or equity 41 Table of Contents financing more difficult, costly and dilutive.
Although this EAP is not intended for data collection, we collect safety data from this cohort of expanded access patients and included this data in the NDA that we submitted for tradipitant for patients with gastroparesis.
Although this EAP is not intended for data collection, we collect safety data from this cohort of expanded access patients and included this data in the NDA that we submitted for NEREUS TM for patients with gastroparesis.
The 340B program is administered by the Health Resources and Services Administration (HRSA) and requires us to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered drugs when used in an outpatient setting.
The 340B program is administered by the Health Resources and Services Administration 44 Table of Contents (HRSA) and requires us to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered drugs when used in an outpatient setting.
We are increasingly dependent upon information technology systems, infrastructure and data. Our computer systems have been and will continue to be attacked, including from service interruption or destruction, malicious intrusion, phishing, 67 Table of Contents ransomware, nation-state attacks and random attack.
We are increasingly dependent upon information technology systems, infrastructure and data. Our computer systems have been and will continue to be attacked, including from service interruption or destruction, malicious intrusion, phishing, ransomware, nation-state attacks and random attack.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve tradipitant for a chronic indication.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve NEREUS TM for a chronic indication.
During challenging and uncertain economic times and in tight credit markets, there may be a disruption or delay in the performance of our third-party contractors, suppliers or partners. If such third parties are unable to satisfy their commitments to us, our business and results of operations would be adversely affected. Global health crises and pandemics may adversely impact our business.
During challenging and uncertain economic times and in tight credit markets, there may be a disruption or delay in the performance of our third-party contractors, suppliers or partners. If such third parties are unable to satisfy their commitments to us, our business and results of operations would be adversely affected.
Reductions in 57 Table of Contents reimbursement levels may negatively impact the prices we can charge or the frequency with which products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
Reductions in reimbursement levels may negatively impact the prices we can charge or the frequency with which products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
Tradipitant is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years and, if approved, will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years.
NEREUS TM is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years and, if approved, will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years.
Certain of our tax attributes, including net operating losses (NOLs) and credit carryforwards, would be subject to limitation under Section 382 and 383 should an ownership change as defined under Section 382 of the Internal Revenue Code of 1986, as amended (IRC), occur.
Certain of our tax attributes, including NOLs and credit carryforwards, would be subject to limitation under Section 382 and 383 should an ownership change as defined under Section 382 of the Internal Revenue Code of 1986, as amended, occur.
Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable 40 Table of Contents classification and other requirements.
Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
Our ability to generate significant product revenue from sales of Fanapt ® , HETLIOZ ® and PONVORY ® both in the U.S. and abroad, in the near term will depend on, among other things, our ability to: • defend our patents and intellectual property from generic competition; • properly price and obtain adequate coverage and reimbursement of these products by governmental authorities, private health insurers, managed care organizations and other third-party payors; • gain broad acceptance of our products from physicians, health care payors, patients, pharmacists and the medical community; • minimize the impact of disruptions caused by public health crises; • maintain commercial manufacturing arrangements with third-party manufacturers; • produce, through a validated process, sufficiently large quantities of inventory of our products to meet demand; • continue to maintain and grow a wide variety of internal sales, distribution and marketing capabilities sufficient to sustain sales trajectories of our products; • maintain compliance with ongoing labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other post-market requirements; • obtain regulatory approval to expand the labeling of our approved products for additional indications; • obtain regulatory approval for HETLIOZ ® or Fanapt ® in additional countries; • maintain our existing regulatory approval for HETLIOZ ® in Europe and PONVORY ® in Canada; • adequately protect against and effectively respond to any claims by holders of patents and other intellectual property rights that our products infringe their rights; and • adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops in respect to our products, as well as the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.
NEREUS TM capsules were approved in the U.S. for the preventing of vomiting induced by motion in December 2025. 35 Table of Contents Our ability to generate significant product revenue from sales of our commercial products both in the U.S. and abroad, in the near term will depend on, among other things, our ability to: • defend our patents and intellectual property from generic competition; • properly price and obtain adequate coverage and reimbursement of these products by governmental authorities, private health insurers, managed care organizations and other third-party payors; • gain broad acceptance of our products from physicians, health care payors, patients, pharmacists and the medical community; • maintain commercial manufacturing arrangements with third-party manufacturers; • produce, through a validated process, sufficiently large quantities of inventory of our products to meet demand; • continue to maintain and grow a wide variety of internal sales, distribution and marketing capabilities sufficient to sustain sales trajectories of our products; • maintain compliance with ongoing labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other post-market requirements; • obtain regulatory approval to expand the labeling of our approved products for additional indications; • obtain regulatory approval for Fanapt ® , HETLIOZ ® or NEREUS TM in additional countries; • maintain our existing regulatory approval for HETLIOZ ® in Europe and PONVORY ® in Canada; • adequately protect against and effectively respond to any claims by holders of patents and other intellectual property rights that our products infringe their rights; and • adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops in respect to our products, as well as the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.
Increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all.
Increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all. In addition, the U.S.
We are substantially dependent upon the commercial success of Fanapt ® oral tablets for the acute treatment of mixed or manic episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), HETLIOZ ® capsules and oral suspension (HETLIOZ LQ ® ) for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY ® oral tablets for the treatment of relapsing forms of multiple sclerosis (RMS) in adults.
We are substantially dependent upon the commercial success of Fanapt ® oral tablets for the acute treatment of mixed or manic episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), HETLIOZ ® capsules and oral suspension (HETLIOZ LQ ® ) for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY ® oral tablets for the treatment of relapsing forms of multiple sclerosis (RMS) in adults and NEREUS TM capsules for the prevention of vomiting induced by motion.
In addition to our outstanding common stock, as of December 31, 2024, there were a total of 7,253,587 shares of our common stock that we have registered and are obligated to issue upon the exercise of currently outstanding options and settlement of restricted stock unit awards granted under our 2006 and 2016 Equity Incentive Plans.
In addition to our outstanding common stock, as of December 31, 2025, there were a total of 7,966,833 shares of our common stock that we have registered and are obligated to issue upon the exercise of currently outstanding options and settlement of restricted stock unit awards granted under our 2006 and 2016 Equity Incentive Plans.
Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as Canada, China and Mexico, could have a material adverse effect on our business and financial results.
Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products could have a material adverse effect on our business and financial results.
There is no assurance that we will receive the extensions of our patents or other exclusive rights available under the Hatch-Waxman Act or similar foreign legislation.
NCE patent until 2028. There is no assurance that we will receive the extensions of our patents or other exclusive rights available under the Hatch-Waxman Act or similar foreign legislation.
A loss or disruption with any one of our manufacturers or suppliers could disrupt the supply of Fanapt ® , HETLIOZ ® , HETLIOZ LQ ® or PONVORY ® , possibly for a significant time period, and we may not have sufficient inventories to maintain supply before the manufacturer or supplier could be replaced or the disruption is resolved.
A loss or disruption with any one of our manufacturers or suppliers could disrupt the supply of our commercial products, possibly for a significant time period, and we may not have sufficient inventories to maintain supply before the manufacturer or supplier could be replaced or the disruption is resolved.
It is uncertain whether cash provided by our operating activities, together with our existing funds, will be sufficient to meet our long-term operating needs. As of December 31, 2024, our total cash and cash equivalents and marketable securities were $374.6 million.
It is uncertain whether cash provided by our operating activities, together with our existing funds, will be sufficient to meet our long-term operating needs. As of December 31, 2025, our total cash and cash equivalents and marketable securities were $263.8 million.
An adjustment to such net operating loss carryforwards or other tax attributes, including an adjustment from a taxing authority, could result in higher tax costs, penalties and interest, thereby adversely impacting our financial condition.
An adjustment to such NOLs or other tax attributes, including an adjustment from a taxing authority, could result in higher tax costs, penalties and interest, thereby adversely impacting our financial condition.
We cannot guarantee that we, our employees, our partners, our consultants or our contractors are or will be in compliance with all federal and state regulations.
We 47 Table of Contents cannot guarantee that we, our employees, our partners, our consultants or our contractors are or will be in compliance with all federal and state regulations.
In December 2022, the U.S. District Court for the District of Delaware (Delaware District Court) ruled in favor of certain generic drug companies in our patent litigation alleging that the companies’ generic versions of HETLIOZ ® capsules, for which they were seeking FDA approval, infringed our patents covering HETLIOZ ® . We appealed the decision to the U.S.
In December 2022, the U.S. District Court for the District of Delaware (Delaware District Court) ruled in favor of certain generic drug companies in our patent litigation alleging that the companies’ generic versions of HETLIOZ ® capsules, for which they were seeking FDA approval, infringed our patents covering HETLIOZ ® , which was affirmed by the U.S.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−1 removed12 unchanged
Biggest changeAs part of this process, and our processes to provide for the availability of critical data and systems, maintain regulatory compliance, identify and manage our risks from cybersecurity threats and to protect against, detect and respond to cybersecurity incidents, as such term is defined in Item 106(a) of Regulation S-K, we undertake the below listed activities, among others: • compare our processes to benchmark standards, such as those set by the National Institute of Standards and Technology (NIST); • closely monitor emerging data protection laws and implement changes to our processes designed to comply; • conduct annual customer data handling and use requirements training for employees; • conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; • through policy, practice and contract, as applicable, require employees, as well as third-parties who provide services on our behalf, to treat customer information and data with care; • run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • conduct regular network and endpoint monitoring, vulnerability assessments, and penetration testing to improve our information systems, as such term is defined in Item 106(a) of Regulation S-K; • leverage the NIST incident handling framework to help us govern, identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and • carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident.
Biggest changeAs part of this process, and our processes to provide for the availability of critical data and systems, maintain regulatory compliance, identify and manage our risks from cybersecurity threats and to protect against, detect and respond to cybersecurity incidents, as such term is defined in Item 106(a) of Regulation S-K, we undertake the below listed activities, among others: • compare our processes to benchmark standards, such as those set by the National Institute of Standards and Technology (NIST); • closely monitor emerging data protection laws and implement changes to our processes designed to comply; • conduct annual customer data handling and use requirements training for employees; • conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; • through policy, practice and contract, as applicable, require employees, as well as third-parties who provide services on our behalf, to treat customer information and data with care; • run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • conduct regular network and endpoint monitoring, vulnerability assessments, and penetration testing to improve our information systems, as such term is defined in Item 106(a) of Regulation S-K; • leverage the NIST incident handling framework to help us govern, identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and • carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident. 68 Table of Contents Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
We describe whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the risk factors entitled “ We are increasingly dependent on information technology systems, infrastructure and data.
We describe whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, financial condition or results of operations, under the risk factors entitled “ We are increasingly dependent on information technology systems, infrastructure and data.
These risks include, among other things, operational risks, 68 Table of Contents intellectual property theft, fraud, extortion, harm to employees or customers, violation of privacy or security laws and other litigation and legal risk and reputational risks. We have implemented several cybersecurity processes, technologies and controls to aid in our efforts to assess, identify and manage such material risks.
These risks include, among other things, operational risks, intellectual property theft, fraud, extortion, harm to employees or customers, violation of privacy or security laws and other litigation and legal risk and reputational risks. We have implemented several cybersecurity processes, technologies and controls to aid in our efforts to assess, identify and manage such material risks.
Cybersecurity Governance 69 Table of Contents Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management. Our Audit Committee is responsible for the oversight of risks from cybersecurity threats.
Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our board of directors and management. Our Audit Committee is responsible for the oversight of risks from cybersecurity threats.
Our processes also address cybersecurity threat risks associated with our use of third-party service providers, including those in our supply chain, our CROs or those who have access to our customer and employee data or our systems.
Our processes also address cybersecurity threat risks associated with our use of third-party service providers, including those in our supply chain, our contract research organizations (CRO)s or those who have access to our customer and employee data or our systems.
Members of the Audit Committee are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like risk management, business continuity planning, brand management, and other relevant matters.
Members of the Audit Committee are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Removed
Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
Added
Material cybersecurity threat risks are also considered during separate board of directors meeting discussions of important matters like risk management, business continuity planning, brand management, and other relevant matters.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we have 2,880 square feet of office space in London, England under an operating lease that has a lease term ending in 2026, and other short-term leases. We believe that these facilities are suitable and adequate to meet our anticipated near-term needs.
Biggest changeIn addition, we have 2,880 square feet of office space in London, England under an operating lease that has a lease term ending in 2026, and other short-term leases. We believe that these facilities are suitable and adequate 69 Table of Contents to meet our anticipated near-term needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAn investment of $100 (with reinvestment of dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2019 and its 70 Table of Contents relative performance is tracked through December 31, 2024.
Biggest changeAn investment of $100 (with reinvestment of dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2020 and its relative performance is tracked through December 31, 2025.
The following graph and related information is being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201), nor shall such information be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing.
The following graph and related information is being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201), nor shall such information be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing. 70 Table of Contents
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on The Nasdaq Global Market under the symbol “VNDA.” As of February 7, 2025, there were ten holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on The Nasdaq Global Market under the symbol “VNDA.” As of February 5, 2026, there were ten holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

70 edited+23 added−40 removed35 unchanged
Biggest changeCash Flow The following table summarizes our net cash flows from operating, investing and financing activities for the years ended December 31, 2024 and 2023: Year Ended December 31, (in thousands) 2024 2023 Net Change Net cash provided by (used in): Operating activities: Net income (loss) $ (18,900) $ 2,509 $ (21,409) Non-cash charges 9,701 11,039 (1,338) Net change in operating assets and liabilities (6,558) (747) (5,811) Operating activities (15,757) 12,801 (28,558) Investing activities: Asset acquisition (4,229) (100,665) 96,436 Purchases of property and equipment (490) (383) (107) Net purchases, sales and maturities of marketable securities (12,711) 88,992 (101,703) Investing activities (17,430) (12,056) (5,374) Financing activities: Principal payments on finance leases (155) — (155) Financing activities (155) — (155) Effect of exchange rate changes on cash, cash equivalents and restricted cash (163) 47 (210) Net change in cash, cash equivalents and restricted cash $ (33,505) $ 792 $ (34,297) 81 Table of Contents Operating Activities.
Biggest changeThere can be no assurance that any additional financing required in the future will be available on acceptable terms, if at all. 80 Table of Contents Cash Flow The following table summarizes our net cash flows from operating, investing and financing activities for the years ended December 31, 2025 and 2024: Year Ended December 31, (in thousands) 2025 2024 Net Change Net cash provided by (used in): Operating activities: Net loss $ (220,474) $ (18,900) $ (201,574) Non-cash charges 102,724 9,701 93,023 Net change in operating assets and liabilities 8,308 (6,558) 14,866 Operating activities (109,442) (15,757) (93,685) Investing activities: Asset acquisition — (4,229) 4,229 Purchases of property and equipment (998) (490) (508) Net purchases, sales and maturities of marketable securities 95,858 (12,711) 108,569 Investing activities 94,860 (17,430) 112,290 Financing activities: Principal payments on finance leases (1,991) (155) (1,836) Tax obligations paid in connection with settlement of restricted stock units (915) — (915) Financing activities (2,906) (155) (2,751) Effect of exchange rate changes on cash, cash equivalents and restricted cash 23 (163) 186 Net change in cash, cash equivalents and restricted cash $ (17,465) $ (33,505) $ 16,040 Operating Activities.
We assess the need for a valuation allowance against our deferred tax assets each quarter through the review of all available positive and negative evidence. Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized.
We assess the need for a valuation allowance against our deferred tax assets each quarter through the review of all available positive and negative evidence. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized.
We recognize revenue when control of the product is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those product sales, which is typically once the product physically arrives at the customer. Sales tax, value-added taxes and usage-based taxes are excluded from revenues.
We recognize revenue when control of the product is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those product sales, which is typically once the product physically arrives at the customer. Sales taxes, value-added taxes and usage-based taxes are excluded from revenues.
We expense research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments made under license agreements are capitalized.
We generally expense research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments made under license agreements are capitalized.
Uncertainties related to variable consideration are generally resolved in the quarter subsequent to period end, with the exception of Medicaid rebates, which are dependent upon the timing of when states submit reimbursement claims, Medicare inflationary rebates, which are expected to be billed on an annual basis beginning in 2025, and product returns that are resolved during the product expiry period specified in the customer contract.
Uncertainties related to variable consideration are generally resolved in the quarter subsequent to period end, with the exception of Medicaid rebates, which are dependent upon the timing of when states submit reimbursement claims, Medicare inflationary rebates, which are billed on an annual basis beginning in 2025, and product returns that are resolved during the product expiry period specified in the customer contract.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
We consider several factors in the estimation process, including expiration dates of product shipped to customers, inventory levels within the distribution channel, product shelf life, historical return activity, including 75 Table of Contents activity for product sold for which the return period has past, prescription trends and other relevant factors. We do not expect returned products to be resalable.
We consider several factors in the estimation process, including expiration dates of product shipped to customers, inventory levels within the distribution channel, product shelf life, historical return activity, including activity for product sold for which the return period has past, prescription trends and other relevant factors. We do not expect returned products to be resalable.
When we determine that the carrying value of our intangible assets may not be recoverable based upon the existence of one or more of the indicators of impairment, we measure any impairment based on the amount that carrying value exceeds fair value.
When we determine that the carrying value of our intangible assets may not be recoverable based upon the existence of one or more of the indicators of impairment, we measure any impairment based on the amount that carrying value exceeds fair value. Income taxes.
Our assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment.
Our assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of 76 Table of Contents progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment.
We expect that these direct customers will earn prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. • Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program as well as contracted rebate programs with other payors, including the Medicare Part D inflationary rebate effective October 1, 2022.
We expect that these direct customers will earn prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. • Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program as well as contracted rebate programs with other payors, including the Medicare Part D inflationary rebate.
Many of our research and development costs are not attributable to any individual project because we share resources across several 79 Table of Contents development projects. We record indirect costs that support a number of our research and development activities in the aggregate, including stock-based compensation.
Many of our research and development costs are not attributable to any individual project because we share resources across several development projects. We record indirect costs that support a number of our research and development activities in the aggregate, including stock-based compensation.
Third-party royalty costs were 6% of Fanapt ® net product sales and 5% of HETLIOZ ® net product sales in Germany. Third-party royalty costs on HETLIOZ ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024. There were no-third party royalty costs on net sales of PONVORY ® .
Third-party royalty costs were 6% of Fanapt ® net product sales and 5% of HETLIOZ ® net product sales in Germany. Third-party royalty costs on HETLIOZ ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024.
Under the redesigned Medicare Part D program, applicable drugs dispensed to applicable beneficiaries will be subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase.
Under the redesigned Medicare Part D program, applicable drugs dispensed to applicable beneficiaries are subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase.
Our ability to generate meaningful product sales and achieve profitability largely depends on our level of success in commercializing Fanapt ® and HETLIOZ ® in the U.S. and Europe and PONVORY ® in the U.S and Canada, on our ability, alone or with others, to complete the development of our products and to obtain the regulatory approvals for and to manufacture, market and sell our products.
Our ability to generate meaningful product sales and achieve profitability largely depends on our level of success in commercializing Fanapt ® in the United States (U.S.), HETLIOZ ® in the U.S. and Europe, PONVORY ® in the U.S. and NEREUS TM in the U.S., on our ability, alone or with others, to complete the development of our products and to obtain the regulatory approvals for and manufacture, market and sell our products.
The allowances for rebates are based on statutory or contracted discount rates and estimated patient utilization. • Chargebacks: Chargebacks are discounts that occur when contracted indirect customers purchase directly from wholesalers, specialty pharmacies and specialty distributors.
The allowances for rebates are based on statutory or contracted discount rates and estimated patient utilization. 74 Table of Contents • Chargebacks: Chargebacks are discounts that occur when contracted indirect customers purchase directly from wholesalers, specialty pharmacies and specialty distributors.
The wholesaler, specialty pharmacy or specialty distributor, in turn, charges back the difference between the price initially paid by the wholesaler, specialty pharmacy or specialty distributor and the discounted price paid to the wholesaler, specialty pharmacy or specialty distributor by the contracted customer. • Medicare Part D rebates: The Medicare Part D prescription drug benefit requires manufacturers to fund approximately 70% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs.
The wholesaler, specialty pharmacy or specialty distributor, in turn, charges back the difference between the price initially paid by the wholesaler, specialty pharmacy or specialty distributor and the discounted price paid to the wholesaler, specialty pharmacy or specialty distributor by the contracted customer. • Medicare Part D rebates: Prior to January 1, 2025, the Medicare Part D prescription drug benefit required manufacturers to fund approximately 70% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs.
The increase to net product sales was attributable to an increase in price net of deductions and volume. We initiated the commercial launch of Fanapt ® for bipolar I disorder in adults in the third quarter of 2024.
The increase to net product sales was primarily attributable to an increase in volume. We initiated the commercial launch of Fanapt ® for bipolar I disorder in adults in the third quarter of 2024.
This discussion and analysis generally addresses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This discussion and analysis generally addresses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt ® in bipolar disorder and PONVORY ® in RMS, as well as legal and other corporate activities.
The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt ® in bipolar disorder and PONVORY ® in RMS.
Our commercial portfolio is currently comprised of three products: Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease.
Our commercial portfolio is currently comprised of four products: Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease and NEREUS TM for the prevention of vomiting induced by motion (collectively, our commercial products).
Our marketable securities consist of investments in government-sponsored and corporate enterprises and commercial paper. Our liquidity resources as of December 31, 2024 and 2023 are summarized as follows: (in thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 102,316 $ 135,821 Marketable securities: U.S.
Our marketable securities consist of investments in government-sponsored and corporate enterprises and commercial paper. Our liquidity resources as of December 31, 2025 and 2024 are summarized as follows: (in thousands) December 31, 2025 December 31, 2024 Cash and cash equivalents $ 84,851 $ 102,316 Marketable securities: U.S.
Based on our current operating plans, which include costs and expenses in connection with our U.S. commercial activities, continued clinical development of tradipitant and our other products, pursuit of regulatory approval of tradipitant, pursuit of further regulatory approvals for our currently approved products, and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months.
Based on our current operating plans, which include costs and expenses in connection with our U.S. commercial activities, including the commercial launch of NEREUS TM for the prevention of vomiting induced by motion, continued clinical development of NEREUS TM , Bysanti TM and our other products, pursuit of regulatory approval of Bysanti TM and imsidolimab, pursuit of further regulatory approvals for our currently approved products and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months.
Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, the magnitude of our discovery, preclinical and clinical development programs, and potential costs to acquire or license the rights to additional products.
Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including a regulatory approval of Bysanti TM and imsidolimab, our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, including the commercial launch of NEREUS TM , the magnitude of our discovery, preclinical and clinical development programs, and potential costs to acquire or license the rights to additional products.
In addition, we have a number of drugs and/or indications for current products in development, including: • Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia; • Bysanti TM (milsaperidone), the active metabolite of Fanapt ® (iloperidone), for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD); • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24; • PONVORY ® (ponesimod) for the treatment of psoriasis and ulcerative colitis; • Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis; • Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP); • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis and hematologic malignancies and with potential use as a treatment for several oncology indications; • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera; • VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders; and • Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy. 72 Table of Contents Operational Highlights Fanapt ® • Fanapt ® was approved in the second quarter of 2024 for the acute treatment of bipolar I disorder.
In addition, we have a number of drugs and/or additional indications for current products in development, including: • Fanapt ® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia and hypertension; • Bysanti TM (milsaperidone), the active metabolite of Fanapt ® , for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD); • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24; • PONVORY ® (ponesimod) for the treatment of psoriasis and ulcerative colitis; • NEREUS TM (tradipitant) for the prevention of vomiting induced by GLP-1 receptor agonists, the treatment of gastroparesis and the treatment of atopic dermatitis; • Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP); • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and onychomycosis and with potential use as a treatment for several oncology indications; • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera; • VQW-765, a small molecule alpha-7 nicotinic acetylcholine receptor partial agonist, for the treatment of social/performance anxiety and psychiatric disorders; and • Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy. 72 Table of Contents Operational Highlights Key Operational Highlights – Commercial • Fanapt ® experienced significant growth, with total prescriptions (TRx) increasing by 36% and Fanapt ® net product sales increasing by 25% in the fourth quarter of 2025 as compared to the fourth quarter of 2024.
We also have long-term contractual obligations related to our leases and license agreements. See Note 8, Leases , and Note 11, Commitments and Contingencies , respectively, to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about these commitments. We do not have any off-balance sheet arrangements.
See Note 8, Leases , and Note 11, Commitments and Contingencies , respectively, to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about these commitments. We do not have any off-balance sheet arrangements.
Revenues and accounts receivable are concentrated with these customers. Outside the U.S., we have a distribution agreement for the commercialization of Fanapt ® in Israel and sell HETLIOZ ® in Germany. Receivables are carried at transaction price, net of allowance for credit losses.
Revenues and accounts receivable are concentrated with these customers. Outside the U.S., we have a distribution agreement for the commercialization of Fanapt ® in Israel and sell HETLIOZ ® in Germany. Receivables are carried at transaction price paid by the wholesalers, specialty pharmacies and specialty distributors, net of estimated prompt-pay discounts and allowance for credit losses.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the 73 Table of Contents basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources.
Our inventory balance consisted of $2.0 million of Fanapt ® product, $7.3 million of HETLIOZ ® product and $0.2 million of PONVORY ® product as of December 31, 2024. Our inventory balance consisted of $3.0 million of Fanapt ® product and $7.2 million of HETLIOZ ® product as of December 31, 2023. Research and development expenses.
Our inventory balance consisted of $2.1 million of Fanapt ® product, $7.8 million of HETLIOZ ® product and $0.3 million of PONVORY ® product as of December 31, 2025. Our inventory balance consisted of $2.0 million of Fanapt ® product, $7.3 million of HETLIOZ ® and $0.2 million of PONVORY ® product as of December 31, 2024.
Deposits held with these institutions may exceed the amount of insurance provided on such deposits, but we do not anticipate any losses with respect to such deposits. 80 Table of Contents In the normal course of our business, we regularly enter into agreements with third-party vendors under fee service arrangements which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured but not paid for through the effective date of termination and other costs incurred by our contractors in closing out work in progress as of the effective date of termination.
In the normal course of our business, we regularly enter into agreements with third-party vendors under fee service arrangements which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured but not paid for through the effective date of termination and other costs incurred by our contractors in closing out work in progress as of the effective date of termination and certain commitments for marketing activities.
Results of Operations We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, including activities related to Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults which was approved in April 2024 and 77 Table of Contents acquired rights to PONVORY ® in the U.S. and Canada in December 2023, the impact of the Medicare Part D benefit redesign effective January 1, 2025 under the Inflation Reduction Act of 2022, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property.
Results of Operations We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, including activities related to Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults, PONVORY ® for the treatment of RMS and NEREUS TM for the prevention of vomiting induced by motion, which was approved in December 2025, the impact of regulatory changes to the pharmaceutical industry such as the Medicare Part D provisions of the Inflation Reduction Act of 2022, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property.
Any such adjustment could have a material impact on our results of operations. Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information on recent accounting pronouncements.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information on recent accounting pronouncements.
Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
Any such adjustment could have a material impact on our financial position and results of operations. Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
Projected taxable income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt ® in bipolar I disorder and PONVORY ® in RMS and HETLIOZ ® generic competition, commercial and research and development activities, and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors.
Projected pretax income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt ® in bipolar I disorder, PONVORY ® in RMS and NEREUS TM in the prevention of vomiting induced by motion, which was approved on December 30, 2025, and HETLIOZ ® generic competition, as well as commercial and research and development activities, including spend on our commercial launches and late-stage clinical activities, and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors.
Research and development expenses decreased by $2.4 million, or 3%, to $74.4 million for the year ended December 31, 2024 compared to $76.8 million for the year ended December 31, 2023.
Research and development expenses. Research and development expenses increased by $34.8 million, or 47%, to $109.3 million for the year ended December 31, 2025 compared to $74.4 million for the year ended December 31, 2024.
Cost of goods sold decreased by $3.5 million, or 24%, to $11.3 million for the year ended December 31, 2024 compared to $14.8 million for the year ended December 31, 2023. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.
Cost of goods sold increased by $1.7 million, or 15%, to $13.0 million for the year ended December 31, 2025 compared to $11.3 million for the year ended December 31, 2024. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.
Allowances for rebates, chargebacks and co-pay assistance are based upon the insurance benefits of the end customer, which are estimated using historical activity and, where available, actual and pending prescriptions for which we have validated the insurance benefits.
Where appropriate, our estimates of variable consideration included in the transaction price consider a range of possible outcomes. Allowances for rebates, chargebacks and co-pay assistance are based upon the insurance benefits of the end customer, which are estimated using historical activity and, where available, actual and pending prescriptions for which we have validated the insurance benefits.
We expect to incur significant research and development expenses as we continue to develop our products. In addition, we expect to incur licensing costs in the future that could be substantial, as we continue our efforts to expand our product pipeline. Selling, general and administrative expenses.
We expect to incur significant research and development expenses as we continue to develop our products and continue our efforts to expand our product pipeline. Selling, general and administrative expenses.
Selling, general and administrative expenses increased by $33.5 million, or 30%, to $146.4 million for the year ended December 31, 2024 compared to $112.9 million for the year ended December 31, 2023.
Selling, general and administrative expenses increased by $91.5 million, or 63%, to $238.0 million for the year ended December 31, 2025 compared to $146.4 million for the year ended December 31, 2024.
Our non-cancellable purchase commitments for agreements longer than one year primarily relate to commitments for data services. Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement that are within our control.
Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement that are within our control. We also have long-term contractual obligations related to our leases and license agreements.
Cash flows used in operating activities during the year ended December 31, 2024 were $15.8 million, a decrease of $28.6 million compared to cash provided by operating activities of $12.8 million during the year ended December 31, 2023.
Cash flows used in operating activities during the year ended December 31, 2025 were $109.4 million, a decrease of $93.7 million compared to $15.8 million during the year ended December 31, 2024.
If we are unable to obtain additional financing, we may be required to reduce the scope of our future activities, which could harm our business, financial condition and operating results. There can be no assurance that any additional financing required in the future will be available on acceptable terms, if at all.
If we are unable to obtain additional financing, we may be required to reduce the scope of our future activities, which could harm our business, financial condition and operating results.
A summary of our significant accounting policies appears in the notes to our audited consolidated financial statements for the year ended December 31, 2024 included in this Annual Report.
Actual results may differ from these estimates under different assumptions or conditions. A summary of our significant accounting policies appears in the notes to our audited consolidated financial statements for the year ended December 31, 2025 included in this Annual Report.
Treasury and government agencies 227,830 185,115 Corporate debt 44,497 67,328 Total marketable securities 272,327 252,443 Total cash, cash equivalents and marketable securities $ 374,643 $ 388,264 As of December 31, 2024, we maintained all of our cash, cash equivalents and marketable securities in two financial institutions.
Treasury and government agencies 153,735 227,830 Corporate debt 25,261 44,497 Total marketable securities 178,996 272,327 Total cash, cash equivalents and marketable securities $ 263,847 $ 374,643 As of December 31, 2025, we maintained all of our cash, cash equivalents and marketable securities in two financial institutions.
The following table summarizes sales discounts and allowance activity as of and for the years ended December 31, 2024, 2023 and 2022: (in thousands) Rebates & Chargebacks Discounts, Returns and Other Total Balances at December 31, 2021 31,854 9,601 41,455 Provision related to current period sales 92,109 30,636 122,745 Adjustments for prior period sales (2,647) 1,396 (1,251) Credits/payments made (83,857) (31,609) (115,466) Balances at December 31, 2022 37,459 10,024 47,483 Provision related to current period sales 85,916 28,488 114,404 Adjustments for prior period sales (267) 276 9 Credits/payments made (82,957) (28,361) (111,318) Balances at December 31, 2023 40,151 10,427 50,578 Provision related to current period sales 82,233 33,449 115,682 Adjustments for prior period sales (3,246) 3 (3,243) Credits/payments made (69,199) (31,488) (100,687) Balances at December 31, 2024 $ 49,939 $ 12,391 $ 62,330 The provision for rebates and chargebacks of $82.2 million and $85.9 million for the years ended December 31, 2024 and 2023, respectively, and their ending balances at December 31, 2024 and 2023, primarily represent Medicaid rebates.
There was no right of return asset as of December 31, 2025 or 2024. 75 Table of Contents The following table summarizes sales discounts and allowance activity as of and for the years ended December 31, 2025, 2024 and 2023: (in thousands) Rebates & Chargebacks Discounts, Returns and Other Total Balances at December 31, 2022 37,459 10,024 47,483 Provision related to current period sales 85,916 28,488 114,404 Adjustments for prior period sales (267) 276 9 Credits/payments made (82,957) (28,361) (111,318) Balances at December 31, 2023 40,151 10,427 50,578 Provision related to current period sales 82,233 33,449 115,682 Adjustments for prior period sales (3,246) 3 (3,243) Credits/payments made (69,199) (31,488) (100,687) Balances at December 31, 2024 49,939 12,391 62,330 Provision related to current period sales 104,711 42,480 147,191 Adjustments for prior period sales (4,881) (619) (5,500) Credits/payments made (86,413) (39,543) (125,956) Balances at December 31, 2025 $ 63,356 $ 14,709 $ 78,065 The provision of $104.7 million and $82.2 million for rebates and chargebacks for the years ended December 31, 2025 and 2024, respectively, and their ending balances at December 31, 2025 and 2024, primarily represent Medicaid rebates.
Our product sales are recorded net of applicable product revenue allowances for which reserves are established and include discounts, rebates, chargebacks, service fees, co-pay assistance and product returns that are applicable for various government and commercial payors. Where appropriate, our estimates of variable consideration included in the transaction price consider a range of possible outcomes.
The transaction price is determined based upon the consideration to which we will be entitled in exchange for transferring product to the customer. Our product sales are recorded net of applicable product revenue allowances for which reserves are established and include discounts, rebates, chargebacks, service fees, co-pay assistance and product returns that are applicable for various government and commercial payors.
Because billing for services often lags delivery of service by a substantial amount of time, we are often required to estimate a significant portion of our accrued clinical expenses.
Clinical trials are inherently complex, often involve multiple service providers and can include payments made to investigator physicians at study sites. Because billing for services often lags delivery of service by a substantial amount of time, we are often required to estimate a significant portion of our accrued clinical expenses.
Year Ended December 31, (in thousands) 2024 2023 Direct project costs (1) Fanapt ® $ 9,401 $ 11,306 Milsaperidone 6,872 6,186 HETLIOZ ® 10,528 8,978 PONVORY ® 5,300 839 Tradipitant 23,608 32,781 CFTR 6,344 1,490 VTR-297 2,642 1,595 VQW-765 743 988 Other 1,272 4,844 Total direct project costs 66,710 69,007 Indirect project costs (1) Stock-based compensation 2,960 3,323 Other indirect overhead 4,761 4,493 Total indirect project costs 7,721 7,816 Total research and development expense $ 74,431 $ 76,823 (1) We record direct costs, including personnel costs and related benefits, on a project-by-project basis.
Year Ended December 31, (in thousands) 2025 2024 Direct project costs (1) Fanapt ® $ 17,352 $ 9,401 Bysanti TM 12,275 6,872 HETLIOZ ® 12,560 10,528 PONVORY ® 8,348 5,300 NEREUS TM 16,429 23,608 Imsidolimab 16,287 — VTR-297 3,554 2,642 CFTR 9,290 6,344 VQW-765 3,565 743 Other 1,938 1,272 Total direct project costs 101,598 66,710 Indirect project costs (1) Stock-based compensation 2,367 2,960 Other indirect overhead 5,306 4,761 Total indirect project costs 7,673 7,721 Total research and development expense $ 109,271 $ 74,431 (1) We record direct costs, including personnel costs and related benefits, on a project-by-project basis.
Due to increased inventory stocking at specialty pharmacy customers of HETLIOZ ® in 2024 and 2023, the time it takes to resolve these uncertainties could be longer than we have historically experienced. We currently record sales allowances for the following: • Prompt-pay: Wholesalers, specialty pharmacies and specialty distributors, our direct customers, are generally offered discounts for prompt payment.
Furthermore, inventory stocking of HETLIOZ ® at specialty pharmacy customers since the entrance of generic competition in early 2023 has resulted in longer periods to resolve these uncertainties related to variable consideration. We currently record sales allowances for the following: • Prompt-pay: Wholesalers, specialty pharmacies and specialty distributors, our direct customers, are generally offered discounts for prompt payment.
Cash flows used in investing activities during the year ended December 31, 2024 were $17.4 million, a decrease in cash of $5.4 million compared to $12.1 million during the year ended December 31, 2023. Financing Activities. Financing activities include principal payments for our finance lease liabilities and exercise of stock options.
Cash flows used in financing activities during the year ended December 31, 2025 were $2.9 million, a decrease of $2.8 million compared to $0.2 million during the year ended December 31, 2024. Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units.
HETLIOZ ® net product sales decreased by $23.5 million, or 23%, to $76.7 million for the year ended December 31, 2024 compared to $100.2 million for the year ended December 31, 2023.
HETLIOZ ® net product sales decreased by $5.2 million, or 7%, to $71.4 million for the year ended December 31, 2025 compared to $76.7 million for the year ended December 31, 2024. The decrease to net product sales was attributable to a decrease in volume and price, net of deductions.
Reserves for variable consideration are classified as product revenue allowances on the Consolidated Balance Sheets, with the exception of prompt-pay discounts, which are classified as reductions of accounts receivable.
If actual results in the future vary from our estimates, we adjust our estimate in the period identified, which would affect net product sales in the period such variances become known. Reserves for variable consideration are classified as product revenue allowances on the Consolidated Balance Sheets, with the exception of prompt-pay discounts, which are classified as reductions of accounts receivable.
Beginning January 1, 2025, the Medicare Part D coverage gap discount program was replaced with a new discounting program under the Inflation Reduction Act of 2022. The Medicare Part D benefit redesign is expected to result in higher discounts for our Medicare payor segment relative to the current Medicare Part D prescription drug coverage gap discount program.
We accounted for the Medicare Part D coverage gap using a point of sale model. Beginning January 1, 2025, the Medicare Part D coverage gap discount program was replaced with a new discounting program under the Inflation Reduction Act of 2022.
The provision for discounts, returns and other of $33.4 million and $28.5 million for the years ended December 31, 2024 and 2023, primarily represents wholesaler distribution fees applicable to sales of Fanapt ® and estimated product returns of Fanapt ® , and co-pay assistance costs and prompt pay discounts applicable to the sales of all of our commercial products.
The provision of $42.5 million and $33.4 million for discounts, returns and other for the years ended December 31, 2025 and 2024, and their ending balances at December 31, 2025 and 2024, primarily represent service fees, estimated product returns, co-pay assistance costs and prompt pay discounts. Stock-based compensation.
Revenue from net product sales were as follows: Year Ended December 31, (in thousands) 2024 2023 Net Change Percent Fanapt ® net product sales $ 94,297 $ 90,873 $ 3,424 4 % HETLIOZ ® net product sales 76,675 100,167 (23,492) (23) % PONVORY ® net product sales 27,800 1,600 26,200 1638 % Total net product sales $ 198,772 $ 192,640 $ 6,132 3 % Fanapt ® net product sales increased by $3.4 million, or 4%, to $94.3 million for the year ended December 31, 2024 compared to $90.9 million for the year ended December 31, 2023.
Revenue from net product sales was as follows: Year Ended December 31, (in thousands) 2025 2024 Net Change Percent Fanapt ® net product sales $ 117,302 $ 94,297 $ 23,005 24 % HETLIOZ ® net product sales 71,431 76,675 (5,244) (7) % PONVORY ® net product sales 27,372 27,800 (428) (2) % Total net product sales $ 216,105 $ 198,772 $ 17,333 9 % Fanapt ® net product sales increased by $23.0 million, or 24%, to $117.3 million for the year ended December 31, 2025 compared to $94.3 million for the year ended December 31, 2024.
Manufacturers may be eligible for phase-in of discounts, such as for applicable beneficiaries who are Low Income Subsidy (LIS) eligible under section 1860D-14(a) of the Social Security Act.
Under the Medicare Part D benefit redesign, we are a specified manufacturer whose applicable drugs for applicable beneficiaries who are Low Income Subsidy eligible under section 1860D-14(a) of the Social Security Act are subject to lower applicable discounts during the phase-in period.
Other income primarily consists of investment income on our marketable securities. Provision for income taxes. We recorded an income tax benefit of $4.0 million and provision for income taxes of $3.8 million for the years ended December 31, 2024 and 2023, respectively.
We recorded an income tax provision of $81.8 million and a benefit for income taxes of $4.0 million for the years ended December 31, 2025 and 2024, respectively. The income tax expense as of December 31, 2025 was primarily due to the recording of a valuation allowance against all of our deferred tax assets.
Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with our research and development efforts and has no alternative future use. 76 Table of Contents Clinical trials are inherently complex, often involve multiple service providers and can include payments made to investigator physicians at study sites.
Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with our research and development efforts and has no alternative future use.
As of December 31, 2024, after considering all available positive and negative evidence, we concluded, consistent with prior periods, that it was more likely than not that substantially all of our deferred tax assets in the U.S. are realizable in future periods. We maintain a valuation allowance against certain state net deferred tax assets.
In the fourth quarter of 2025, after considering all available positive and negative evidence, including but not limited to historical, current and future projected results and significant risks and uncertainties related to forecasts, we concluded that it is not more likely than not that substantially all of our deferred tax assets in the U.S. are realizable in future periods and recorded a valuation allowance against all net deferred tax assets in the U.S., resulting in a non-cash income tax expense of $113.7 million for the year ended December 31, 2025.
See Note 15, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information. Liquidity and Capital Resources As of December 31, 2024, our total cash and cash equivalents and marketable securities were $374.6 million compared to $388.3 million at December 31, 2023.
Liquidity and Capital Resources As of December 31, 2025, our total cash and cash equivalents and marketable securities were $263.8 million compared to $374.6 million at December 31, 2024.
Since we began operations, we have devoted substantially all of our resources to the in-licensing, clinical development and commercialization of our products.
This letter followed CDER’s re-review of the jet lag sNDA under our collaborative framework agreement with the FDA. We have requested that the FDA Commissioner resume hearing proceedings. Since we began operations, we have devoted substantially all of our resources to the in-licensing, clinical development and commercialization of our products.
Our income tax expense or benefit is determined by applying the statutory tax rates in jurisdictions where we operate to each period’s income before income taxes. Adjustments are made for permanent differences in taxability or deductibility of pretax items as well as for other items, such as tax credits that are generated from our research and development activities.
Adjustments are made for permanent differences in taxability or deductibility of pretax items as well as for 79 Table of Contents other items, such as tax credits that are generated from our research and development activities. See Note 15, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information.
We account for the Medicare Part D coverage gap using a point of sale model. Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits.
Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits. • Service fees: We receive sales order management, data and distribution services from certain customers, for which we are assessed fees. These fees are based on contracted terms and are known amounts.
Amortization expense increased in 2024 due to amortization on the intangible asset from the rights to PONVORY ® in the U.S. and Canada which were acquired in December 2023. Other income, net . Other income, net was $17.7 million for the year ended December 31, 2024 compared to $20.3 million for the year ended December 31, 2023.
Intangible asset amortization was $7.0 million for the year ended December 31, 2025 compared to $7.3 million for the year ended December 31, 2024. Intangible asset amortization will increase in 2026 due to the amortization of the NEREUS TM intangible asset, which was capitalized in December 2025. Other income, net .
Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates. The transaction price is determined based upon the consideration to which we will be entitled in exchange for transferring product to the customer.
Payment terms differ by customer, but are based on customary commercial terms and typically range between thirty and sixty days. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.
Year ended December 31, 2024 compared to year ended December 31, 2023 Revenues . Total revenues increased by $6.1 million, or 3%, to $198.8 million for the year ended December 31, 2024 compared to $192.6 million for the year ended December 31, 2023.
Total revenues increased by $17.3 million, or 9%, to $216.1 million for the year ended December 31, 2025 compared to $198.8 million for the year ended December 31, 2024. Revenues may decline in future periods, potentially significantly, as a result of the Medicare Part D program benefit redesign.
The decrease reflects a decrease of $21.4 million in net income, a decrease of $1.3 million in non-cash charges primarily due to an increase in deferred income taxes, partially offset by higher intangible asset amortization due to the PONVORY ® acquisition, and a decrease of $5.8 million from the net change in operating assets and liabilities.
The decrease reflects an increase of $201.6 million in net loss, an increase of $93.0 million in non-cash charges primarily due to the recording of a valuation allowance against all of our deferred tax assets and an increase of $14.9 million from the net change in operating assets and liabilities.
If our results are not in line with our projections or if our projections change, the conclusion about the appropriateness of the valuation allowance could change in a future period. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change.
If we have cumulative pretax income in future periods and if our projections indicate pretax income in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in a future period.
Selling, general and administrative expenses may increase in future periods as a result of these ongoing commercial launches, which were initiated in the third quarter of 2024. Intangible asset amortization . Intangible asset amortization was $7.3 million for the year ended December 31, 2024 compared to $2.1 million for the year ended December 31, 2023.
We initiated a direct-to-consumer campaign that started in the first quarter of 2025, elevating brand awareness of the company and the key products Fanapt ® and PONVORY ® . Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches as well as the other future commercial launches. Intangible asset amortization .
During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024.
Since the entrance of generic competition in the first quarter of 2023, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration.
Further, HETLIOZ ® net product sales will likely decline in future periods, potentially significantly, related to continued generic competition in the U.S. We constrained HETLIOZ ® net product sales for the years ended December 31, 2024 and 2023 to an amount not probable of significant revenue reversal.
HETLIOZ ® net product sales have been and may continue to be variable depending on when specialty pharmacy customers purchase again. Further, HETLIOZ ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.
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We initiated the commercial launch of Fanapt ® in this indication in the third quarter of 2024.
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Fanapt ® total prescriptions increased by 28% and Fanapt ® net product sales increased by 24% for the full year 2025 as compared to the full year 2024.
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In the fourth quarter of 2024, as compared to the fourth quarter of 2023, new patient starts, as reflected by new to brand prescriptions (NBRx), increased by over 160% and Fanapt ® net product sales increased by 18%. • We initiated a Phase III program for the long acting injectable (LAI) formulation of Fanapt ® in the fourth quarter of 2024. • We plan to initiate a study of the Fanapt ® LAI as a once-a-month injectable for the treatment of hypertension to address both treatment resistance and treatment compliance. • We submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in the fourth quarter of 2024 for Fanapt ® for bipolar I disorder and schizophrenia.
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New to brand prescriptions (NBRx) increased by 108% in the fourth quarter of 2025 as compared to the fourth quarter of 2024 and increased by 149% for the full year 2025 as compared to the full year 2024. • During 2025, our direct-to-consumer campaign, launched in the first quarter, continued to drive meaningful gains in brand awareness for us and our products, Fanapt ® and PONVORY ® .
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Bysanti TM • We expect to submit a New Drug Application (NDA) for Bysanti™ to the FDA for the treatments of acute bipolar I disorder and schizophrenia in the first quarter of 2025.
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We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships, with the goal of supporting long-term market leadership and future commercial launches. Fanapt ® performance remains the focus of our commercial initiatives and encourages us to continue to invest in this differentiated medicine, and, if approved, the franchise-extending launch of Bysanti TM .
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Exclusivity, including pending patent applications, could extend into the 2040s. • We initiated a Phase III clinical study for Bysanti™ as a once-daily adjunctive treatment for MDD in the fourth quarter of 2024. Results are expected in 2026.
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Key Operational Highlights – Regulatory & Clinical Development • The FDA has approved NEREUS TM for the prevention of vomiting induced by motion. • Bysanti TM New Drug Application (NDA) for bipolar I disorder and schizophrenia is under review by the FDA, with a Prescription Drug User Fee Act (PDUFA) target action date of February 21, 2026. • A Bysanti TM Phase III clinical study for use as a once-daily adjunctive treatment for major depressive disorder (MDD) is enrolling patients and results are expected in 2026. • We announced positive results of a clinical study of NEREUS TM in the prevention of vomiting induced by a GLP-1 analog, Wegovy ® (semaglutide).
Removed
HETLIOZ ® • We have initiated clinical programs for HETLIOZ ® in pediatric insomnia and DSPD and these programs are ongoing. • Our MAA for HETLIOZ ® and HETLIOZ LQ ® for SMS is pending with the EMA.
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A Phase III clinical program is anticipated to be initiated in the first half of 2026. • Imsidolimab Biologics License Application (BLA) in generalized pustular psoriasis (GPP) was submitted to the FDA in the fourth quarter of 2025. • A Phase III study of VQW-765 in the treatment of adults with social anxiety disorder has been initiated and study results are expected by the end of 2026. • The Phase III study of the LAI formulation of iloperidone in the treatment of schizophrenia in relapse-prevention is enrolling patients. • A clinical study of the LAI formulation of iloperidone in people with treatment-resistant hypertension is ongoing and we are enrolling patients. • On January 8, 2026, we announced that we had received a decision letter from the FDA Center for Drug Evaluation and Research (CDER) concluding that the supplemental New Drug Application (sNDA) for HETLIOZ ® for the treatment of jet lag disorder cannot be approved in the current form.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not believe that an increase in market rates would have any significant impact on the realized value of our cash equivalents and marketable securities. We are also exposed to risks related to changes in foreign currency exchange rates relating to our foreign operations. The functional currency of our international subsidiaries is the local currency.
Biggest changeOur marketable securities consist of commercial paper, corporate notes and U.S. government agency notes and have maturities of less than two years. We do not believe that an increase in market rates would have any significant impact on the realized value of our cash equivalents and marketable securities.
We deposit our cash with financial institutions that we consider to be of high credit quality and purchase marketable securities that are generally investment grade, liquid, short-term fixed income securities and money-market instruments denominated in U.S. dollars. Our marketable securities consist of commercial paper, corporate notes and U.S. government agency notes and have maturities of less than two years.
We deposit our cash with financial institutions that we consider to be of high credit quality and purchase marketable securities that are generally investment grade, liquid, short-term fixed income securities and money-market instruments 81 Table of Contents denominated in U.S. dollars.
We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our subsidiaries’ respective functional currencies.
We are also exposed to risks related to changes in foreign currency exchange rates relating to our foreign operations. The functional currency of our international subsidiaries is the local currency. We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our subsidiaries’ respective functional currencies.

Other VNDA 10-K year-over-year comparisons