Vanda Pharmaceuticals Inc.

Previous wording

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

Current wording

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

Previous wording

•Fanapt® saw continued strong momentum in Q2 2026, with total prescriptions (TRx) up 31% and new-to-brand prescriptions (NBRx) up 32% versus Q2 2025. Since commercial expansion following the approval of bipolar disorder, Fanapt® has seen significant growth, with TRx up 62% and NBRx up 300% versus Q2 2024.

Current wording

•Fanapt® saw continued strong momentum in Q3 2026, with total prescriptions (TRx) up 25% and new-to-brand prescriptions (NBRx) up 18% versus Q3 2025. Since commercial expansion following the approval of bipolar disorder, Fanapt® has seen significant growth, with TRx up 72% and NBRx up 306% versus Q2 2024.

Previous wording

•BYSANTITM received FDA approval for the treatment of bipolar I disorder and schizophrenia in Q1 2026 and is expected to launch in the second half of 2026. BYSANTITM is protected by data exclusivity through February 20, 2031 and multiple patents, the latest of which expires on May 31, 2044.

Current wording

•BYSANTI™ received U.S. Food and Drug Administration (FDA) approval for the treatment of bipolar I disorder and schizophrenia in Q1 2026 and is expected to launch in Q4 2026. BYSANTI™ is protected by data exclusivity through February 20, 2031 and multiple patents, the latest of which expires on May 31, 2044.

Previous wording

•The Biologics License Application (BLA) for Quimilza TM in GPP is under review by the FDA with a Prescription Drug User Fee Act (PDUFA) target action date of December 12, 2026. The results of the pivotal clinical study were published in the April 28, 2026 issue of the New England Journal of Medicine (NEJM) Evidence.

Current wording

•The Biologics License Application (BLA) for Quimilza™ in Generalized Pustular Psoriasis (GPP) is under review by the FDA with a Prescription Drug User Fee Act (PDUFA) target action date of December 12, 2026. The results of the pivotal clinical study were published in the April 28, 2026 issue of the New England Journal of Medicine (NEJM) Evidence.

Previous wording

◦The Phase III study of BYSANTITM as a once-daily adjunctive treatment for major depressive disorder (MDD), with results expected in the first half of 2027.

Current wording

•The Phase III study of BYSANTI™ as a once-daily adjunctive treatment for major depressive disorder (MDD) is ongoing, with results expected in the first half of 2027. The study is enrolling patients in 54 sites in the U.S. and Europe and has enrolled 55% of the 500 patient enrollment target. The primary endpoint of the study is the change from baseline to week 6 of the Montgomery-Asberg Depression Rating Scale (MADRS) comparing milsaperidone and placebo. Secondary endpoints include Clinical Global Impression – Severity (CGI-S) and Clinical Global Impression – Change (CGI-C).

Previous wording

◦The Phase III study of VQW-765 in the treatment of adults with social anxiety disorder, with results expected in 2026.

Current wording

•In October 2026, we announced that our Phase III study of VQW-765 in adults with social anxiety disorder did not meet its primary endpoint or a key secondary endpoint. Consistent with prior studies, VQW-765 was safe and well tolerated, and the program is on hold pending further analysis of the full dataset.

Previous wording

•We continue to progress the FDA formal hearing regarding HETLIOZ® for the treatment of jet lag disorder. The proceeding, a rare administrative hearing process granted after the D.C. Circuit set aside the FDA’s prior refusal to approve the application, is advancing according to schedule and is expected to culminate in a five-day hearing before the Administrative Law Judge in December 2026.

Current wording

•We continue to progress the FDA formal hearing regarding HETLIOZ® for the treatment of jet lag disorder. The proceeding, a rare administrative hearing process granted after the D.C. Circuit set aside the FDA’s prior refusal to approve the application, is advancing according to schedule and is expected to culminate in a five-day hearing before the Administrative Law Judge from December 14, 2026 to December 18, 2026.

Previous wording

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. 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, if any, which are estimated using historical activity and, where available, actual and pending prescriptions for which we have validated the insurance benefits. Variable consideration may be constrained and is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts. 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. During the six months ended June 30, 2026, we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Current wording

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. 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, if any, which are estimated using historical activity and, where available, actual and pending prescriptions for which we have validated the insurance benefits. Variable consideration may be constrained and is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts. 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. During the nine months ended September 30, 2026, we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Previous wording

The following table summarizes sales discounts and allowance activity as of and for the six months ended June 30, 2026:

Current wording

The following table summarizes sales discounts and allowance activity as of and for the nine months ended September 30, 2026:

Previous wording

The provision of $64.1 million for rebates and chargebacks for the six months ended June 30, 2026 and its ending balance at June 30, 2026 primarily represent Medicaid rebates. The provision of $36.1 million for discounts, returns and other for the six months ended June 30, 2026 and its ending balance at June 30, 2026 primarily represents service fees, estimated product returns, co-pay assistance costs and prompt-pay discounts. NEREUSTM became commercially available in the U.S. in May 2026. The increase in the balance of discounts, returns and other as of June 30, 2026 relative to December 31, 2025 was primarily due to provisions for constrained revenue for the initial stocking of NEREUSTM by wholesalers.

Current wording

The provision of $97.0 million for rebates and chargebacks for the nine months ended September 30, 2026 and its ending balance at September 30, 2026 primarily represent Medicaid rebates. The provision of $47.2 million for discounts, returns and other for the nine months ended September 30, 2026 and its ending balance at September 30, 2026 primarily represents service fees, estimated product returns, co-pay assistance costs and prompt-pay discounts. NEREUSTM became commercially available in the U.S. in May 2026. The increase in the balance of discounts, returns and other as of September 30, 2026 relative to December 31, 2025 was primarily due to provisions for constrained revenue for the initial stocking of NEREUSTM by wholesalers.

Previous wording

Income taxes. 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. The analysis is highly dependent upon historical and projected pretax income. 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, NEREUSTM in the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved in February 2026, 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. 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 have concluded that it is not more likely than not that substantially all of our deferred tax assets are realizable in future periods and maintained a valuation allowance against all net deferred tax assets as of June 30, 2026 and December 31, 2025. The valuation allowance was recorded in the fourth quarter of 2025, resulting in a non-cash income tax expense of $113.7 million for the year ended December 31, 2025. 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. A future reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction. The potential timing and amount of any future valuation allowance release has yet to be determined and requires an analysis that is highly dependent upon historical and future projected earnings, among other factors. Any such adjustment could have a material impact on our financial position and results of operations.

Current wording

Income taxes. 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. The analysis is highly dependent upon historical and projected pretax income. Projected pretax income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt® for the acute treatment of manic or mixed episodes associated with bipolar I disorder, PONVORY® in RMS, NEREUSTM in the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved in February 2026, 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. 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 have concluded that it is not more likely than not that substantially all of our deferred tax assets are realizable in future periods and maintained a valuation allowance against all net deferred tax assets as of September 30, 2026 and December 31, 2025. The valuation allowance was recorded in the fourth quarter of 2025, resulting in a non-cash income tax expense of $113.7 million for the year ended December 31, 2025. 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. A future reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction. The potential timing and amount of any future valuation allowance release has yet to be determined and requires an analysis that is highly dependent upon historical and future projected earnings, among other factors. Any such adjustment could have a material impact on our financial position and results of operations.

Previous wording

Revenues. Total revenues decreased by $2.1 million, or 4%, to $50.5 million for the three months ended June 30, 2026 compared to $52.6 million for the three months ended June 30, 2025. Revenue from net product sales was as follows:

Current wording

Revenues. Total revenues increased by $13.6 million, or 24%, to $69.8 million for the three months ended September 30, 2026 compared to $56.3 million for the three months ended September 30, 2025. Revenue from net product sales was as follows:

Previous wording

Fanapt® net product sales increased by $12.7 million, or 24%, to $65.5 million for the six months ended June 30, 2026 compared to $52.8 million for the six months ended June 30, 2025. The increase to net product sales was primarily attributable to an increase in volume, partially offset by a decrease in price net of deductions. An amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025.

Current wording

Fanapt® net product sales increased by $7.5 million, or 24%, to $38.8 million for the three months ended September 30, 2026 compared to $31.2 million for the three months ended September 30, 2025. The increase to net product sales was primarily attributable to an increase in volume and an increase in price net of deductions. An amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025.

Previous wording

HETLIOZ® net product sales decreased by $10.6 million, or 66%, to $5.6 million for the three months ended June 30, 2026 compared to $16.2 million for the three months ended June 30, 2025. The decrease to net product sales was attributable to a decrease in volume. Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. During the second quarter of 2026, there was destocking of inventory by certain of our specialty pharmacy customers, as well as orders, totaling approximately $7.0 million in revenue, that were shipped on June 29, 2026 and arrived on July 1, 2026, both resulting in a decline in volume. These orders that did not arrive by quarter end will be recognized as revenue in the third quarter of 2026. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Current wording

HETLIOZ® net product sales increased by $3.7 million, or 21%, to $21.7 million for the three months ended September 30, 2026 compared to $18.0 million for the three months ended September 30, 2025. The increase to net product sales was attributable to an increase in volume. The volume in the third quarter of 2026 includes the recognition of revenue totaling approximately $7.0 million for orders that were shipped on June 29, 2026 and arrived on July 1, 2026, which is the point at which control is transferred to the customer. Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Previous wording

PONVORY® net product sales increased by $1.4 million, or 11%, to $14.1 million for the six months ended June 30, 2026 compared to $12.7 million for the six months ended June 30, 2025. An amount of variable consideration related to PONVORY® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2024.

Current wording

PONVORY® net product sales increased by $0.7 million, or 10%, to $7.7 million for the three months ended September 30, 2026 compared to $7.0 million for the three months ended September 30, 2025. An amount of variable consideration related to PONVORY® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2024.

Previous wording

NEREUSTM became commercially available in the U.S. in May 2026. NEREUSTM net product sales were $1.0 million for the six months ended June 30, 2026. During the six months ended June 30, 2026, there was an initial stocking of NEREUSTM by wholesalers and we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Current wording

NEREUSTM became commercially available in the U.S. in May 2026. NEREUSTM net product sales were $1.6 million for the three months ended September 30, 2026. During the three months ended June 30, 2026, there was an initial stocking of NEREUSTM by wholesalers and we constrained NEREUSTM net product sales. We continued to constrain revenue during the three months ended September 30, 2026. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Previous wording

Cost of goods sold. Cost of goods sold increased by $0.8 million, or 30%, to $3.6 million for the three months ended June 30, 2026 compared to $2.7 million for the three months ended June 30, 2025. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.

Current wording

Cost of goods sold. Cost of goods sold increased by $1.2 million, or 41%, to $4.2 million for the three months ended September 30, 2026 compared to $3.0 million for the three months ended September 30, 2025. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.

Previous wording

We evaluate the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life and build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage and generic competition. Our inventory balance consisted of $7.1 million of HETLIOZ® product and $3.1 million of other products as of June 30, 2026. Our inventory balance consisted of $7.8 million of HETLIOZ® product and $3.2 million of other products as of December 31, 2025. Net product sales during the three months ended June 30, 2026 was derived from zero-cost inventory related to inventory manufactured prior to when FDA approval of NEREUSTM was determined to be probable, which was previously expensed as research and development expense. For the three months ended June 30, 2026, the increase to cost of goods sold would not have been material if we included zero-cost inventory. As of June 30, 2026, the remaining zero-cost inventory that was previously expensed was $5.0 million, which consisted of work-in-process.

Current wording

We evaluate the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life and build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage and generic competition. Our inventory balance consisted of $6.6 million of HETLIOZ® product and $3.1 million of other products as of September 30, 2026. Our inventory balance consisted of $7.8 million of HETLIOZ® product and $3.2 million of other products as of December 31, 2025. Net product sales during the three months ended September 30, 2026 was derived from zero-cost inventory related to inventory manufactured prior to when FDA approval of NEREUSTM was determined to be probable, which was previously expensed as research and development expense. For the three months ended September 30, 2026, the increase to cost of goods sold would not have been material if we included zero-cost inventory. As of September 30, 2026, the remaining zero-cost inventory that was previously expensed was $5.0 million, which consisted of work-in-process.

Previous wording

Research and development expenses. Research and development expenses increased by $15.0 million, or 68%, to $37.0 million for the three months ended June 30, 2026 compared to $22.0 million for the three months ended June 30, 2025. The increase was primarily due to higher expenses on our VQW-765 and various of our other development programs.

Current wording

Research and development expenses. Research and development expenses increased by $5.1 million, or 22%, to $27.6 million for the three months ended September 30, 2026 compared to $22.6 million for the three months ended September 30, 2025. The increase was primarily due to higher expenses on our various development programs.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $7.2 million, or 11%, to $71.8 million for the three months ended June 30, 2026 compared to $64.6 million for the three months ended June 30, 2025. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on our continued commercialization efforts for our products, including the U.S. commercial launch of NEREUSTM initiated in May 2026 and the expansion of our sales force during 2025.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses decreased by $0.7 million, or 1%, to $59.6 million for the three months ended September 30, 2026 compared to $60.3 million for the three months ended September 30, 2025. The decrease in selling, general and administrative expenses was primarily the result of a decrease in legal and other corporate activities, partially offset by an increase in spending on our continued commercialization efforts for our products, including the U.S. commercial launch of NEREUSTM initiated in May 2026.

Previous wording

Other income, net. Other income, net was $1.4 million for the three months ended June 30, 2026 compared to $3.6 million for the three months ended June 30, 2025. Other income primarily consists of investment income on our marketable securities.

Current wording

Other income, net. Other income, net was $1.1 million for the three months ended September 30, 2026 compared to $2.9 million for the three months ended September 30, 2025. Other income primarily consists of investment income on our marketable securities.

Previous wording

Provision (benefit) for income taxes. We recorded an income tax provision of $0.1 million and a benefit for income taxes of $7.7 million for the three months ended June 30, 2026 and 2025, respectively. The income tax provision for the three months ended June 30, 2026 was driven by discrete income tax expense of $0.1 million. The income tax benefit for the three months ended June 30, 2025 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.4 million.

Current wording

Provision (benefit) for income taxes. We recorded an income tax provision of $0.2 million and a benefit for income taxes of $5.8 million for the three months ended September 30, 2026 and 2025, respectively. The income tax provision for the three months ended September 30, 2026 was driven by discrete income tax expense of $0.1 million. The income tax benefit for the three months ended September 30, 2025 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.1 million.

Previous wording

Revenues. Total revenues decreased by $0.4 million to $102.2 million for the six months ended June 30, 2026 compared to $102.6 million for the six months ended June 30, 2025. Revenues were as follows:

Current wording

Revenues. Total revenues increased by $13.2 million, or 8%, to $172.1 million for the nine months ended September 30, 2026 compared to $158.9 million for the nine months ended September 30, 2025. Revenues were as follows:

Previous wording

Fanapt® net product sales increased by $6.7 million, or 23%, to $36.0 million for the three months ended June 30, 2026 compared to $29.3 million for the three months ended June 30, 2025. The increase to net product sales was primarily attributable to an increase in volume. An amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025.

Current wording

Fanapt® net product sales increased by $20.2 million, or 24%, to $104.3 million for the nine months ended September 30, 2026 compared to $84.1 million for the nine months ended September 30, 2025. The increase to net product sales was primarily attributable to an increase in volume. An amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025.

Previous wording

HETLIOZ® net product sales decreased by $15.5 million, or 42%, to $21.5 million for the six months ended June 30, 2026 compared to $37.1 million for the six months ended June 30, 2025. The decrease to net product sales was attributable to a decrease in volume. Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. During the second quarter of 2026, there was destocking of inventory by certain of our specialty pharmacy customers, as well as orders, totaling approximately $7.0 million in revenue, that were shipped on June 29, 2026 and arrived on July 1, 2026, both resulting in a decline in volume. These orders that did not arrive by quarter end will be recognized as revenue in the third quarter of 2026. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Current wording

HETLIOZ® net product sales decreased by $11.8 million, or 21%, to $43.2 million for the nine months ended September 30, 2026 compared to $55.0 million for the nine months ended September 30, 2025. The decrease to net product sales was attributable to a decrease in volume. Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Previous wording

NEREUSTM became commercially available in the U.S. in May 2026. NEREUSTM net product sales were $1.0 million for the three months ended June 30, 2026. During the three months ended June 30, 2026, there was an initial stocking of NEREUSTM by wholesalers and we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Current wording

NEREUSTM became commercially available in the U.S. in May 2026. NEREUSTM net product sales were $2.6 million for the nine months ended September 30, 2026. During the nine months ended September 30, 2026, there was an initial stocking of NEREUSTM by wholesalers and we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Previous wording

Cost of goods sold. Cost of goods sold increased by $0.5 million, or 7%, to $6.7 million for the six months ended June 30, 2026 compared to $6.3 million for the six months ended June 30, 2025. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.

Current wording

Cost of goods sold. Cost of goods sold increased by $1.7 million, or 18%, to $10.9 million for the nine months ended September 30, 2026 compared to $9.2 million for the nine months ended September 30, 2025. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.

Previous wording

We evaluate the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life and build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage, and generic competition. Our inventory balance consisted of $7.1 million of HETLIOZ® product and $3.1 million of other products as of June 30, 2026. Our inventory balance consisted of $7.8 million of HETLIOZ® product and $3.2 million of other products as of December 31, 2025. Net product sales during the six months ended June 30, 2026 was derived from zero-cost inventory related to inventory manufactured prior to when FDA approval of NEREUSTM was determined to be probable, which was previously expensed as research and development expense. For the six months ended June 30, 2026, the increase to cost of goods sold would not have been material if we included zero-cost inventory. As of June 30, 2026, the remaining zero-cost inventory that was previously expensed was $5.0 million, which consisted of work-in-process.

Current wording

We evaluate the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life and build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage, and generic competition. Our inventory balance consisted of $6.6 million of HETLIOZ® product and $3.1 million of other products as of September 30, 2026. Our inventory balance consisted of $7.8 million of HETLIOZ® product and $3.2 million of other products as of December 31, 2025. Net product sales during the nine months ended September 30, 2026 was derived from zero-cost inventory related to inventory manufactured prior to when FDA approval of NEREUSTM was determined to be probable, which was previously expensed as research and development expense. For the nine months ended September 30, 2026, the increase to cost of goods sold would not have been material if we included zero-cost inventory. As of September 30, 2026, the remaining zero-cost inventory that was previously expensed was $5.0 million, which consisted of work-in-process.

Previous wording

Research and development expenses. Research and development expenses increased by $7.7 million, or 13%, to $65.4 million for the six months ended June 30, 2026 compared to $57.7 million for the six months ended June 30, 2025. The increase was primarily due to an increase in expenses for our VQW-765, Fanapt® and various of our other development programs, partially offset by lower expenses on our Quimilza TM program. Research and development expenses for the six months ended June 30, 2025 included an upfront payment to AnaptysBio, Inc. for the exclusive, global license to develop, manufacture, and commercialize Quimilza TM and drug supply.

Current wording

Research and development expenses. Research and development expenses increased by $12.7 million, or 16%, to $93.0 million for the nine months ended September 30, 2026 compared to $80.3 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in expenses for our VQW-765, BYSANTITM, and various other development programs, partially offset by lower expenses on our Quimilza TM program. Research and development expenses for the nine months ended September 30, 2025 included an upfront payment to AnaptysBio, Inc. for the exclusive, global license to develop, manufacture, and commercialize Quimilza TM and drug supply.

Previous wording

The following table summarizes the costs of our product development initiatives for the six months ended June 30, 2026 and 2025:

Current wording

The following table summarizes the costs of our product development initiatives for the nine months ended September 30, 2026 and 2025:

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $25.5 million, or 22%, to $140.2 million for the six months ended June 30, 2026 compared to $114.7 million for the six months ended June 30, 2025. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on our continued commercialization efforts for our commercial launches of our products, including the U.S. commercial launch of NEREUSTM initiated in May 2026 and the expansion of our sales force during 2025.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $24.8 million, or 14%, to $199.8 million for the nine months ended September 30, 2026 compared to $175.0 million for the nine months ended September 30, 2025. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on our continued commercialization efforts for our commercial launches of our products, including the U.S. commercial launch of NEREUSTM initiated in May 2026 and the expansion of our sales force during 2025.

Previous wording

Intangible asset amortization. Intangible asset amortization was $4.0 million and $3.5 million for the six months ended June 30, 2026 and 2025, respectively. Intangible asset amortization increased in 2026 due to the amortization of the NEREUSTM intangible asset, which was capitalized in December 2025.

Current wording

Intangible asset amortization. Intangible asset amortization was $6.0 million and $5.3 million for the nine months ended September 30, 2026 and 2025, respectively. Intangible asset amortization increased in 2026 due to the amortization of the NEREUSTM intangible asset, which was capitalized in December 2025.

Previous wording

Other income, net. Other income, net was $3.2 million for the six months ended June 30, 2026 compared to $7.3 million for the six months ended June 30, 2025. Other income primarily consists of investment income on our marketable securities.

Current wording

Other income, net. Other income, net was $4.4 million for the nine months ended September 30, 2026 compared to $10.2 million for the nine months ended September 30, 2025. Other income primarily consists of investment income on our marketable securities.

Previous wording

Provision (benefit) for income taxes. We recorded an income tax provision of $0.3 million and a benefit for income taxes of $15.6 million for the six months ended June 30, 2026 and 2025, respectively. The income tax provision for the six months ended June 30, 2026 was driven by discrete income tax expense of $0.2 million. The income tax benefit for the six months ended June 30, 2025 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.8 million.

Current wording

Provision (benefit) for income taxes. We recorded an income tax provision of $0.4 million and a benefit for income taxes of $21.4 million for the nine months ended September 30, 2026 and 2025, respectively. The income tax provision for the nine months ended September 30, 2026 was driven by discrete income tax expense of $0.4 million. The income tax benefit for the nine months ended September 30, 2025 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.9 million.

Previous wording

As of June 30, 2026, our total cash and cash equivalents and marketable securities were $170.0 million compared to $263.8 million at December 31, 2025. Our cash and cash equivalents are deposits in operating accounts and highly liquid investments with an original maturity of 90 days or less at date of purchase and consist of investments in money market funds with commercial banks and financial institutions and commercial paper of high-quality corporate issuers. Our marketable securities consist of investments in government-sponsored and corporate enterprises and commercial paper.

Current wording

As of September 30, 2026, our total cash and cash equivalents and marketable securities were $140.5 million compared to $263.8 million at December 31, 2025. Our cash and cash equivalents are deposits in operating accounts and highly liquid investments with an original maturity of 90 days or less at date of purchase and consist of investments in money market funds with commercial banks and financial institutions and commercial paper of high-quality corporate issuers. Our marketable securities consist of investments in government-sponsored and corporate enterprises and commercial paper.

Previous wording

Based on our current operating plans, which include continued investment in support of our commercial products, including the ongoing commercial launch of NEREUSTM for the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and the upcoming commercial launch of BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, continued clinical development of our commercial and other products, pursuit of regulatory approval of Quimilza TM, 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 as of the date the financial statements were issued. Our activities will necessitate significant working capital through 2026 and beyond, and 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, including the commercial launches of NEREUSTM and BYSANTITM, a regulatory approval of Quimilza TM, the magnitude of our discovery, preclinical and clinical development programs and potential costs to acquire or license the rights to additional products.

Current wording

Based on our current operating plans, which include continued investment in support of our commercial products, including the ongoing commercial launch of NEREUSTM for the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and the upcoming commercial launch of BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, continued clinical development of our commercial and other products, pursuit of regulatory approval of Quimilza TM, 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 as of the date the financial statements were issued. Our activities will necessitate significant working capital through 2026 and beyond, and 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, including the commercial launches of NEREUSTM and BYSANTITM, a potential regulatory approval of Quimilza TM, the magnitude of our discovery, preclinical and clinical development programs and potential costs to acquire or license the rights to additional products.

Previous wording

The following table summarizes our net cash flows from operating, investing and financing activities for the six months ended June 30, 2026 and 2025:

Current wording

The following table summarizes our net cash flows from operating, investing and financing activities for the nine months ended September 30, 2026 and 2025:

Previous wording

Operating Activities. Cash flows used in operating activities during the six months ended June 30, 2026 were $81.3 million, an increase of $32.9 million compared to $48.4 million during the six months ended June 30, 2025. The increase reflects an increase in net loss of $54.4 million, $3.9 million from the net change in operating assets and liabilities and $17.6 million in non-cash charges primarily due to a valuation allowance against all of our deferred tax assets in 2026. The increase from net change in operating assets and liabilities was due to timing for our accounts receivable including NEREUSTM inventory stocking by wholesaler customers and HETLIOZ® destocking by certain specialty pharmacy customers during the second quarter of 2026, and product revenue allowances, including the impact of constraining NEREUSTM revenue in the second quarter of 2026.

Current wording

Operating Activities. Cash flows used in operating activities during the nine months ended September 30, 2026 were $109.7 million, an increase of $29.7 million compared to $80.0 million during the nine months ended September 30, 2025. The increase reflects an increase in net loss of $54.4 million, partially offset by a $24.7 million increase in non-cash charges, primarily due to the absence in 2026 of the deferred income tax benefit recognized in the prior-year period, and a $0.1 million unfavorable change in operating assets and liabilities. The increase from net change in operating assets and liabilities was due to the increase in product revenue allowances, including the impact of constraining NEREUSTM revenue during the nine months ended September 30, 2026, offset by timing of payments for our accounts payable and accrued liabilities and receipt of cash for accounts receivable. We generally pay approved invoices when due, with vendor terms typically ranging from 30 to 45 days.

Previous wording

Investing Activities. Cash flows provided by investing activities during the six months ended June 30, 2026 were $54.0 million, an increase of $25.4 million compared to $28.6 million during the six months ended June 30, 2025. The change in investing activities primarily reflects the net use of cash and cash equivalents and maturities of the investments in our portfolio of marketable securities. The $10.0 million milestone payment owed to Eli Lilly and Company for the FDA’s approval of NEREUSTM for the prevention of vomiting induced by motion was accrued as of December 31, 2025 and paid in 2026.

Current wording

Investing Activities. Cash flows provided by investing activities during the nine months ended September 30, 2026 were $89.3 million, an increase of $39.3 million compared to $50.0 million during the nine months ended September 30, 2025. The change in investing activities primarily reflects the net use of cash and cash equivalents and maturities of the investments in our portfolio of marketable securities. The $10.0 million milestone payment owed to Eli Lilly and Company for the FDA’s approval of NEREUSTM for the prevention of vomiting induced by motion was accrued as of December 31, 2025 and paid in 2026.

Previous wording

Financing Activities. Cash flows used in financing activities during the six months ended June 30, 2026 were $1.6 million, a decrease of $0.1 million compared to $1.7 million during the six months ended June 30, 2025. Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units.

Current wording

Financing Activities. Cash flows used in financing activities during the nine months ended September 30, 2026 were $2.5 million, an increase of $0.2 million compared to $2.3 million during the nine months ended September 30, 2025. Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units.