Harmony Biosciences Holdings, Inc.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, statements about:

Previous wording

At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases. To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive.

Current wording

At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases. To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive. Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc.

Previous wording

Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication. In January 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) and in March 2023, the EMA granted approval for the marketing authorization of WAKIX for the treatment of narcolepsy with or without cataplexy in children six and older. Based on the data from the positive Phase 3 trial conducted by Bioprojet, we submitted an sNDA for pediatric narcolepsy in December 2023. In June 2024, we announced that the FDA approved our sNDA for WAKIX for the treatment of EDS in pediatric patients six years of age and older with narcolepsy. In addition, in June 2024, the FDA did not approve our sNDA seeking to expand the WAKIX label for the treatment of pediatric patients with cataplexy. In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which is planned for the second quarter of 2025.

Current wording

Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication. In January 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) and in March 2023, the EMA granted approval for the marketing authorization of WAKIX for the treatment of narcolepsy with or without cataplexy in children six and older. Based on the data from the positive Phase 3 trial conducted by Bioprojet, we submitted an sNDA for pediatric narcolepsy in December 2023. In June 2024, we announced that the FDA approved our sNDA for WAKIX for the treatment of EDS in pediatric patients six years of age and older with narcolepsy. In addition, in June 2024, the FDA did not approve our sNDA seeking to expand the WAKIX label for the treatment of pediatric patients with cataplexy. In October

Previous wording

We are expanding our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs. We are targeting assets that will allow us to further leverage the expertise and infrastructure that we have successfully built at Harmony so we can optimize the benefit of internal synergies. Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties. We have made progress in the development of two new formulations of pitolisant: Pitolisant GR and Pitolisant HD. Both formulations entered clinical studies in the fourth quarter of 2023. We received data from the Pitolisant GR pilot bioequivalence study, which supports further development of Pitolisant GR. We initiated the pivotal bioequivalence study in the first quarter of 2025 and anticipate the topline data readout in the third quarter of 2025. Our anticipated PDUFA date for Pitolisant GR is in 2026. We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials. Preparations are ongoing to initiate Phase 3 registrational trials in narcolepsy and

Current wording

We have expanded our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs. We target assets that will allow us to further leverage the expertise and infrastructure that we have successfully built at Harmony so we can optimize the benefit of internal synergies. Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties. We have made progress in the development of two new formulations of pitolisant: Pitolisant GR and Pitolisant HD. Both formulations entered clinical studies in the fourth quarter of 2023. We received data from the Pitolisant GR pilot bioequivalence study, which supports further development of Pitolisant GR. We initiated the pivotal bioequivalence study in the first quarter of 2025 and anticipate the topline data readout in the fourth quarter of 2025. Our anticipated PDUFA date for Pitolisant GR is in 2026. We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials. Preparations are ongoing to initiate Phase 3 registrational trials in narcolepsy and idiopathic hypersomnia (“IH”) in the fourth quarter of 2025. Our anticipated PDUFA date for the Pitolisant HD narcolepsy and IH programs is in 2028. A phase 1b study was conducted to evaluate the safety and tolerability of pitolisant at repeat doses of up to 180mg and the initial results are consistent with the known safety profile of pitolisant and support advancement of the Pitolisant HD development program. Utility patents have been filed for Pitolisant GR and Pitolisant HD, with the potential for patent protection to the mid-2040’s.

Previous wording

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP1.15205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, we have obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of BP1.15205. We believe the pre-clinical data from BP1.15205 is promising and we plan to file an investigational medicinal product dossier (“IMPD”) with the EMA in mid-2025 and begin first-in-human studies in the second half of 2025.

Current wording

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP1.15205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, we obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of BP1.15205. In June 2025, we announced positive pre-clinical data demonstrating significant wake-promoting and cataplexy-suppressing effects in a standard transgenic mouse model of narcolepsy type 1, and presented safety data from the three month GLP toxicity studies in two different species. We plan to file an investigational medicinal product dossier (“IMPD”) with the EMA and begin first-in-human studies in the second half of 2025 with topline data anticipated in 2026.

Previous wording

In August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor type 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc. We acquired full development and commercialization rights for HBS-102 globally, but we have provided an indication-limited grant-back license to ConSynance for the development and commercialization of the Compound in Greater China. We conducted a preclinical PoC study to assess the effect of HBS-102 on hyperphagia, weight gain and other metabolic parameters in a mouse model of PWS. The final report was received during the third quarter of 2024 and the results are consistent with the expected results. In addition, a 13-week toxicology study has been completed, and the preliminary results are encouraging.

Current wording

In August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor type 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc. We acquired full development and commercialization rights for HBS-102 globally, but we have provided an indication-limited grant-back license to ConSynance for the development and commercialization of the Compound in Greater China. We conducted a preclinical PoC study to assess the effect of HBS-102 on hyperphagia, weight gain and other metabolic parameters in a mouse model of PWS. The final report was received during the third quarter of 2024. In addition, a 13-week toxicology study has been completed. The results from these preclinical studies are encouraging.

Previous wording

In October 2023, we acquired Zynerba Pharmaceuticals, Inc. (“Zynerba”), adding global rights to develop, manufacture and commercialize ZYN002, which is a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery. Transdermal delivery is thought to provide better gastrointestinal tolerability and minimize the potential for drug interactions or impacts on liver function tests by avoiding first-pass metabolism in the liver. The most common adverse effect observed in clinical studies has been application site pain, which has occurred in less than 7% of patients. ZYN002 is currently in a Phase 3 registrational trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”), which was designed to confirm the positive findings from the prespecified analysis of the primary outcome in the subgroup of patients with complete methylation from the CONNECT study conducted by Zynerba. We believe the total addressable market for ZYN002 among patients with FXS is approximately 25,000 people based on an estimated current FXS prevalence of up to 87,000 cases and up to 40,000 diagnosed FXS cases. We have completed recruitment in our ZYN002 Phase 3 registrational trial and topline data is on track for the third quarter of 2025. ZYN002 has patent protection for the treatment of FXS until 2038. Based on the positive proof-of-concept (“PoC”) study data obtained by Zynerba in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025 in 22q deletion syndrome, pending positive data from the REFCONNECT study.

Current wording

In October 2023, we acquired Zynerba Pharmaceuticals, Inc. (“Zynerba”), adding global rights to develop, manufacture and commercialize ZYN002, which is a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery. Transdermal delivery provides better gastrointestinal tolerability and minimize the potential for drug interactions or impacts on liver function tests by avoiding first-pass metabolism in the liver. The most common adverse effect observed in clinical studies has been application site pain, which has occurred in less than 7% of patients. ZYN002 is currently working toward completion of a Phase 3 registrational trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”), which was designed to confirm the positive findings from the prespecified analysis of the primary outcome in the subgroup of patients with complete methylation from the Phase 2/3 CONNECT study conducted by Zynerba. We believe the total addressable market for ZYN002 among patients with FXS is approximately 25,000 people based on an estimated current FXS prevalence of up to 87,000 cases and up to 40,000 diagnosed FXS cases. We have completed enrollment in our ZYN002 Phase 3 registrational trial and topline data is on track for the third quarter of 2025. ZYN002 has patent protection for the treatment of FXS until 2038. Based on the positive proof-of-concept (“PoC”) study data obtained by Zynerba in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025 in 22q deletion syndrome, pending positive data from the RECONNECT study.

Previous wording

In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc. (“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”). As a result, we now have an exclusive license relating to the use of EPX-100 for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”). Patients with both conditions often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy. As such, there is a recognized need for improved treatment options for both conditions. We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and

Current wording

In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc. (“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”). As a result, we now have an exclusive license relating to the use of EPX-100 for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”). Patients with both conditions often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy. As such, there is a recognized need for improved treatment options for both conditions. We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases. We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases. EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of both DS and LGS. EPX-100 is currently in two Phase 3 registrational clinical trials, one for each of DS (the ARGUS Study) and LGS (the LIGHTHOUSE Study).

Previous wording

As of March 31, 2025, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) and approximately 5,000 HCPs who do not participate in the oxybate REMS programs. The average number of patients on WAKIX for the three months ended March 31, 2025, was approximately 7,200, with approximately 7,300 patients on WAKIX as of March 31, 2025. Additionally, as of March 31, 2025, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Current wording

We have continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. As of June 30, 2025, there are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) and approximately 5,000 HCPs who do not participate in the oxybate REMS programs. The average number of patients on WAKIX for the three months ended June 30, 2025, was approximately 7,600. Additionally, as of June 30, 2025, we have formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Previous wording

Netproduct revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts. Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different patient segments and/or changes in our estimates.

Current wording

Netproduct revenue includes revenue from product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts. Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different patient segments and/or changes in our estimates.

Previous wording

Theshelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be January 2027. We regularly review our inventory levels and expect write-offs from time to time. We will continue to assess inventory levels in future periods as demand for WAKIX and the rate of inventory turnover evolves. We currently have adequate supply of WAKIX to cover demand into the first quarter of 2027, with additional API on-hand inventory to support at least two years beyond this time frame.

Current wording

Theshelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be January 2027. We regularly review our inventory levels and expect write-offs from time to time. We will continue to assess inventory levels in future periods as demand for WAKIX and the rate of inventory turnover evolves. We currently have adequate supply of WAKIX to cover demand into the second quarter of 2027, with additional API on-hand inventory to support at least two years beyond this time frame.

Previous wording

leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant. In addition, our MSLs support our market access team with the presentation of clinical data to payors upon request and our clinical development team to identify potential clinical trial sites. Research and development costs are expensed as incurred. We have significantly increased our research and development efforts as we advance our clinical programs and add product candidates to expand our pipeline. Research and development expenses also include:

Current wording

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with PWS and DM1 and the development of our product candidates ZYN002, EPX-100, EPX-200 Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102. We also incur research and development expenses related to our team of Medical Science Liaisons (“MSLs”) who interact with key opinion leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant. In addition, our MSLs support our market access team with the presentation of clinical data to payors upon request and our clinical development team to identify potential clinical trial sites. Research and development costs are expensed as incurred. We have significantly increased our research and development efforts as we advance our clinical programs and add product candidates to expand our pipeline. Research and development expenses also include:

Previous wording

General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments. General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting, insurance and consulting fees.

Current wording

General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments. General and administrative expenses also consist of office leases, legal fees, including ANDA litigation expenses, and professional fees, including tax and accounting, insurance and consulting fees.

Previous wording

We are party to a right-of-use agreement with Paragon Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. For the three months ended March 31, 2025, we paid fees of $0.1 million pursuant to this agreement.

Current wording

We are party to a right-of-use agreement with Paragon Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. Additionally, we received consulting services from Paragon. We paid fees of $0.2 million and $0.3 million to Paragon related to rent and consulting services for the three and six months ended June 30, 2025, respectively.

Previous wording

Net product revenue increased by $30.1 million, or 19.5%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase for the three months ended March 31, 2025, was primarily due to a 17% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates of approximately 4%. The price increase occurred in January 2025.

Current wording

Net product revenue increased by $27.7 million, or 16.0%, for the three months ended June 30, 2025, and increased by $57.8 million, or 17.7%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increase for the three months ended June 30, 2025, was primarily due to a 10.0% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates of approximately 1.0%. The increase for the six months ended June 30, 2025, was primarily due to a 13.2% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates and co-pay assistance of approximately 2.0%. The price increase occurred in January 2025.

Previous wording

Cost of product sales increased by $4.5 million, or 16.4%, for the three months ended March 31, 2025, compared to the same period in 2024. Cost of product sales as a percentage of net product revenue was 17.3% for the three months ended March 31, 2025, compared to 17.8% for the three months ended March 31, 2024. The increase in cost of product sales was primarily due to the increase in sales of WAKIX.

Current wording

Cost of product sales increased by $6.0 million, or 18.7%, for the three months ended June 30, 2025, and increased by $10.5 million, or 17.6%, for the six months ended June 30, 2025, compared to the same period in 2024. Cost of product sales as a percentage of net product revenue was 19.0% and 18.2% for the three and six months ended June 30, 2025, respectively, compared to 18.6% and 18.2% for the three and six months ended June 30, 2024, respectively. The increase in cost of product sales was primarily due to higher royalties as a result of the increase in net product revenue of WAKIX.

Previous wording

Research and development expenses increased by $12.4 million, or 55.7%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase for the three months ended March 31, 2025 was primarily driven by a$6.5 million increase in research and development expenses for the recently acquired product candidate, EPX-100, a combined $5.8 million increase in research and development expenses for ZYN002 and Pitolisant GR and HD as we ramp up development and manufacturing, a $2.1 million increase in personnel costs associated with higher headcount, a $0.9 million increase in stock compensation associated with new awards, and a $0.6 million increase in other research and development, primarily due to preclinical work related to BP1.1520, partially offset by a $3.7 million decrease in clinical development associated with pitolisant, driven by a decrease for the IH indication.

Current wording

Research and development expenses decreased by $13.4 million, or 21.1%, for the three months ended June 30, 2025, and decreased by $1.1 million, or 1.3%, for the six months ended June 30, 2025, compared to the same periods in 2024. The decrease for the three months ended June 30, 2025 was primarily driven by $42.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement ($25.5 million) and the acquisition of Epygenix ($17.1 million) that occurred during the three months ended June 30, 2024, anda $0.9 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for the IH indication, partially offset by $15.0 million in IPR&D charges related to the CiRC Agreement during the three months ended June 30, 2025, a combined $11.1 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we ramped up clinical trials and manufacturing, a $2.7 million increase in personnel costs associated with higher headcount, a $0.5 million increase in stock compensation associated with new equity awards and $0.9 million in other research and development expenses.

Previous wording

Sales and marketing expenses increased by $3.5 million, or 12.8%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase for the three months ended March 31, 2025, was primarily due to a $1.9 million increase in patient engagement and marketing activities, a $0.7 million increase in personnel costs and a $0.7 million increase in stock compensation expense. The increase in patient engagement and marketing activities was driven by our continued growth of WAKIX and the increase in personnel costs and stock compensation for the three months ended March 31, 2025, was related to costs associated with the separation of an executive of the Company.

Current wording

Sales and marketing expenses increased by $1.6 million, or 5.5%, for the three months ended June 30, 2025, and increased by $5.0 million, or 9.0%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increase for the three months ended June 30, 2025, was primarily due to a $1.0 million increase in patient engagement and marketing activities and a $0.9 million increase in personnel costs offset by a $0.4 million decrease in stock compensation expense. The increase for the six months ended June 30, 2025, was primarily due to a $2.9 million increase in patient engagement and marketing activities, a $1.8 million increase in personnel costs and a $0.3 million increase in stock compensation expense. The increase in patient engagement and marketing activities for both comparable periods was driven by our continued growth of WAKIX and the increase in personnel costs and stock compensation was related to costs associated with the separation of an executive of the Company.

Previous wording

General and administrative expenses increased by $5.6 million, or 21.7%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase in the three months ended March 31, 2025, was primarily due to a $4.5 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.4 million increase in stock compensation associated with new awards, and a $0.7 million increase in personnel costs associated with higher headcount.

Current wording

General and administrative expenses increased by $6.7 million, or 24.6%, for the three months ended June 30, 2025, and increased by $12.3 million, or 23.2%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increase in the three months ended June 30, 2025, was primarily due to a $6.1 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.5 million increase in stock compensation associated with new equity awards, and a $0.1 million increase in personnel costs associated with higher headcount. The increase in the six months ended June 30, 2025, was primarily due to a $10.6 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.8 million increase in stock compensation associated with new equity awards, and a $0.8 million increase in personnel costs associated with higher headcount.

Previous wording

Interest expense decreased by $0.7 million, or 15.4%, for the three months ended March 31, 2025, compared to the same period in 2024. The decrease for the three months ended March 31, 2025, was primarily due to lower interest rates as a result of the reduction of the Term SOFR.

Current wording

Interest expense decreased by $0.8 million, or 17.2%, for the three months ended June 30, 2025, and decreased by $1.5 million, or 16.3%, for the six months ended June 30, 2025, compared to the same periods in 2024. The decrease for the three and six months ended June 30, 2025, was primarily due to lower interest rates as a result of the reduction of the Term SOFR.

Previous wording

Interest income increased by $0.6 million, or 13.9%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase for the three months ended March 31, 2025, was primarily a result of having higher invested balances compared to the prior year.

Current wording

Interest income increased by $0.6 million, or 12.6%, for the three months ended June 30, 2025, and increased by $1.2 million, or 13.2%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increase for the three and six months ended June 30, 2025, was primarily a result of having higher invested balances compared to the prior year.

Previous wording

Income tax expense was $11.6 million, representing a 20.3% effective tax rate, for the three months ended March 31, 2025, compared to $13.5 million, representing a 26.0% effective tax rate, for the three months ended March 31, 2024. The decrease in our effective tax rate for the three months ended March 31, 2025, was primarily driven by an increase in the benefits from research and development and orphan drug credits and a decrease in state taxes. The effective tax rate of 20.3% for the three months ended March 31, 2025, included 1.1% in state income taxes, partially offset by a 2.4% benefit from credits.

Current wording

Income tax expense was $9.9 million, representing a 19.9% effective tax rate, for the three months ended June 30, 2025, compared to $10.1 million, representing a 46.6% effective tax rate, for the three months ended June 30, 2024. Income tax expense was $21.5 million, representing a 20.1% effective tax rate, for the six months ended June 30, 2025, compared to $23.6 million, representing a 32.1% effective tax rate, for the six months ended June 30, 2024. The decrease in our effective tax rate for both comparable periods was primarily driven by a $17.1 million IPR&D charge related to the Epygenix acquisition recognized during the three and six months ended June 30, 2024, which was nondeductible for tax purposes, an increase in the benefits from research and development and orphan drug credits and a decrease in state taxes. The effective tax rate of 19.9% for the three months ended June 30, 2025, included 1.3% in state income taxes, offset by a 2.7% benefit from credits. The effective tax rate of 20.1% for the six months ended June 30, 2025, included 1.2% in state income taxes, offset by a 2.6% benefit from credits.

Previous wording

As of March 31, 2025, we had cash, cash equivalents, and investments of $610.2 million, outstanding debt of $177.5 million and retained earnings of $47.8 million.

Current wording

As of June 30, 2025, we had cash, cash equivalents, and investments of $672.3 million, outstanding debt of $173.8 million and retained earnings of $87.6 million.

Previous wording

The repayment schedule for the TLA Term Loan consists of $3.8 million quarterly principal payments, which commence on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028. The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.

Current wording

The repayment schedule for the TLA Term Loan consists of $3.8 million quarterly principal payments, which commenced on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028. The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.

Previous wording

In October 2023, our Board of Directors approved a share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $200,000, excluding commissions and transaction fees. The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the three months ended March 31, 2025, no shares of common stock were repurchased and cancelled by the Company under the October 2023 Repurchase Program. As of March 31, 2025, the remaining amount of common stock authorized for repurchases was $150.0 million.

Current wording

In October 2023, our Board of Directors approved a share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $200,000, excluding commissions and transaction fees. The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the three and six months ended June 30, 2025, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program. As of June 30, 2025, the remaining amount of common stock authorized for repurchases was $150.0 million.

Previous wording

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound. The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application currently anticipated in mid-2025. Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million and will also be obligated to pay up to $127.5 million upon achievement of development and regulatory milestones and up to $240.0 million upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories.

Current wording

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound. The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application submission currently anticipated in the second half of 2025. Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million and will also be obligated to pay up to $127.5 million upon achievement of development and regulatory milestones and up to $240.0 million upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories.

Previous wording

The following table sets forth a summary of our cash flows for the three months ended March 31, 2025, and 2024:

Current wording

The following table sets forth a summary of our cash flows for the six months ended June 30, 2025, and 2024:

Previous wording

Net cash provided by operating activities for the three ended March 31, 2025, primarily consisted of net income of $45.6 million adjusted for non-cash items of $12.5 million related to stock-based compensation expense, and $6.0 million related to intangible amortization and depreciation, offset by $4.3 million related to deferred tax assets. Net working capital excluding cash increased by $25.9 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and increases in accounts payable due to the timing of payments.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025, primarily consisted of net income of $85.3 million adjusted for non-cash items of $23.8 million related to stock-based compensation expense, $15.0 million related to acquired IPR&D and $11.9 million related to intangible amortization and depreciation, partially offset by $10.8 million related to deferred tax assets. Net working capital excluding cash increased by $12.4 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and an increase in accounts payable due to the timing of payments.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2025, was $2.4 million, which was primarily attributable to $19.1 million in purchases of debt securities and $0.1 million in purchases of property and equipment, partially offset by $21.6 million from maturities of investments.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025, was $17.2 million, which was primarily attributable to $43.0 million in purchases of debt securities, a $15.0 million upfront fee paid to CiRC and $0.1 million in purchases of property and equipment, partially offset by $40.9 million from maturities of investments.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025, was $0.4 million, which primarily consisted of $3.8 million in principal payments associated with the TLA Credit Agreement and $1.3 million of employee withholding tax payments related to stock-based awards, partially offset by $4.7 million in proceeds from the exercise of stock options.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025, was $3.0 million, which primarily consisted of $7.5 million in principal payments associated with the TLA Credit Agreement and $2.3 million of employee withholding tax payments related to stock-based awards, partially offset by $6.8 million in proceeds from the exercise of stock options.