Vanda Pharmaceuticals Inc.

Previous wording

•Fanapt® experienced significant growth with total prescriptions (TRx) increasing by approximately 24% and Fanapt® net product sales increasing by 27% in the second quarter of 2025 as compared to the second quarter of 2024.

Current wording

•Fanapt® experienced significant growth, with total prescriptions (TRx) increasing by 35% and Fanapt® net product sales increasing by 31% in the third quarter of 2025 as compared to the third quarter of 2024.

Previous wording

•Bysanti™ New Drug Application (NDA) for bipolar I disorder and schizophrenia is under review by the FDA with a Prescription Drug User Fee Act (PDUFA) target action date of February 21, 2026.

Current wording

•Bysanti™ NDA for bipolar I disorder and schizophrenia is under review by the FDA with a PDUFA target action date of February 21, 2026.

Previous wording

•Imsidolimab Biologics License Application (BLA) in GPP expected to be submitted to the FDA in 2025.

Current wording

•Imsidolimab Biologics License Application (BLA) in GPP expected to be submitted to the FDA in the fourth quarter of 2025.

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, 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, 2025 and 2024, we constrained the variable consideration for HETLIOZ® net product sales. The constrained revenue relates to the uncertainties of payor utilization, patient demand and chargeback and rebate amounts, including Medicaid, related to the elevated levels of inventory on hand at the specialty pharmacies.

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, 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, 2025 and 2024, we constrained the variable consideration for HETLIOZ® net product sales. The constrained revenue relates to the uncertainties of payor utilization, patient demand and chargeback and rebate amounts, including Medicaid, related to the elevated levels of inventory on hand at the specialty pharmacies.

Previous wording

•Medicare Part D rebates: Prior to January 1, 2025, the Medicare Part D prescription drug benefit required manufacturers to fund approximately 70% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs. We account for the Medicare Part D coverage gap using a point of sale model. Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits. Beginning January 1, 2025, the Medicare Part D coverage gap discount program was replaced with a new discounting program under the Inflation Reduction Act of 2022. The Medicare Part D benefit redesign is expected to result in higher discounts for our Medicare payor segment relative to the previous Medicare Part D prescription drug coverage gap discount program. Under the redesigned Medicare Part D program, applicable drugs dispensed to applicable beneficiaries will be subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase. Under the Medicare Part D benefit redesign, we are a specified manufacturer whose applicable drugs for applicable beneficiaries who are Low Income Subsidy eligible under section 1860D-14(a) of the Social Security Act will be subject to lower applicable discounts during the phase-in period.

Current wording

•Medicare Part D rebates: Prior to January 1, 2025, the Medicare Part D prescription drug benefit required manufacturers to fund approximately 70% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients for applicable drugs. We account for the Medicare Part D coverage gap using a point of sale model. Estimates for expected Medicare Part D rebates are based, in part, on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits. Beginning January 1, 2025, the Medicare Part D coverage gap discount program was replaced with a new discounting program under the Inflation Reduction Act of 2022. The Medicare Part D benefit redesign is expected to result in higher discounts for our

Previous wording

The following table summarizes sales discounts and allowance activity as of and for the six months ended June 30, 2025:

Current wording

The following table summarizes sales discounts and allowance activity as of and for the nine months ended September 30, 2025:

Previous wording

The provision of $49.4 million for rebates and chargebacks for the six months ended June 30, 2025 and its ending balance at June 30, 2025 primarily represents Medicaid rebates applicable to sales of Fanapt® and, to a lesser extent, HETLIOZ®. The provision of $20.9 million for discounts, returns and other for the six months ended June 30, 2025 primarily represents wholesaler distribution fees applicable to sales of Fanapt® and estimated product returns of Fanapt®, and co-pay assistance costs and prompt-pay discounts applicable to the sales of all of our commercial products.

Current wording

The provision of $75.4 million for rebates and chargebacks for the nine months ended September 30, 2025 and its ending balance at September 30, 2025 primarily represents Medicaid rebates applicable to sales of Fanapt® and, to a lesser extent, HETLIOZ®. The provision of $32.8 million for discounts, returns and other for the nine months ended September 30, 2025 primarily represents wholesaler distribution fees applicable to sales of Fanapt® and estimated product returns of Fanapt®, and co-pay assistance costs and prompt-pay discounts applicable to the sales of all of our commercial products.

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 tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The analysis is highly dependent upon historical and projected pretax income. In 2024, we generated our first full year pretax loss since 2017, largely due to expenditures on the commercial launches of Fanapt® in bipolar I disorder and PONVORY® in RMS. Projected taxable income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt® in bipolar I disorder and PONVORY® in RMS and HETLIOZ® generic competition, commercial and research and development activities, and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors. Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. As of June 30, 2025, after considering all available positive and negative evidence, we concluded, consistent with prior periods, that it was more likely than not that substantially all of our deferred tax assets in the U.S. are realizable in future periods. We maintain a valuation allowance against certain state net deferred tax assets. If our results are not in line with our projections or if our projections change, the conclusion about the appropriateness of the valuation allowance could change in a future period. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change. Any such adjustment could have a material impact on our 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 tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The analysis is highly dependent upon historical and projected pretax income. In 2024, we generated our first full year pretax loss since 2017, largely due to expenditures on the commercial launches of Fanapt® in bipolar I disorder and PONVORY® in RMS. Projected taxable income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt® in bipolar I disorder and PONVORY® in RMS and HETLIOZ® generic competition, commercial and research and development activities, and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors. As of September 30, 2025, after considering all available positive and negative evidence, we concluded, consistent with prior periods, that it was more likely than not that substantially all of our deferred tax assets in the U.S. are realizable in future periods. We maintain a valuation allowance against certain state net deferred tax assets. If our results are not in line with our projections or if our projections change, 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. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change. Any such adjustment could have a material impact on our results of operations.

Previous wording

We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, including activities related to Fanapt® for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults, which was approved in April 2024, PONVORY® for the treatment of RMS, the impact of the Medicare Part D benefit redesign effective January 1, 2025 under the Inflation Reduction Act of 2022, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property. See Note 14, Legal Matters, to the condensed consolidated financial statements included in Part I of this Quarterly Report for information on material legal matters.

Current wording

We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, including activities related to Fanapt® for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults, which was approved in April 2024, and PONVORY® for the treatment of RMS, the impact of the Medicare Part D benefit redesign effective January 1, 2025 under the

Previous wording

Revenues. Total revenues increased by $2.1 million, or 4%, to $52.6 million for the three months ended June 30, 2025 compared to $50.5 million for the three months ended June 30, 2024. Revenues may decline in future periods, potentially significantly, as a result of the Medicare Part D program benefit redesign. Revenue from net product sales was as follows:

Current wording

Revenues. Total revenues increased by $8.6 million, or 18%, to $56.3 million for the three months ended September 30, 2025 compared to $47.7 million for the three months ended September 30, 2024. Revenues may decline in future periods, potentially significantly, as a result of the Medicare Part D program benefit redesign. Revenue from net product sales was as follows:

Previous wording

Fanapt® net product sales increased by $6.1 million, or 27%, to $29.3 million for the three months ended June 30, 2025 compared to $23.2 million for the three months ended June 30, 2024. The increase to net product sales was attributable to an increase in volume. We initiated the commercial launch of Fanapt® for bipolar I disorder in adults in the third quarter of 2024.

Current wording

Fanapt® net product sales increased by $7.3 million, or 31%, to $31.2 million for the three months ended September 30, 2025 compared to $23.9 million for the three months ended September 30, 2024. The increase to net product sales was attributable to an increase in volume, partially offset by a decrease in price net of deductions. We initiated the commercial launch of Fanapt® for bipolar I disorder in adults in the third quarter of 2024.

Previous wording

HETLIOZ® net product sales decreased by $2.5 million, or 13%, to $16.2 million for the three months ended June 30, 2025 compared to $18.7 million for the three months ended June 30, 2024. The decrease to net product sales was attributable to a decrease in volume and price net of deductions. Our HETLIOZ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023. During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024 and 2025. Going forward, HETLIOZ® net product sales may reflect lower unit sales as a result of the reduction of elevated levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. We constrained HETLIOZ® net product sales for the three months ended June 30, 2025 and 2024 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the three months ended June 30, 2025 and 2024 related to changes in estimates on revenue constrained during prior periods was $0.8 million and $0.7 million, respectively. HETLIOZ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Current wording

HETLIOZ® net product sales increased by $0.1 million, or 1%, to $18.0 million for the three months ended September 30, 2025 compared to $17.9 million for the three months ended September 30, 2024. The increase to net product sales was attributable to an increase in volume, partially offset by a decrease in price net of deductions. Our HETLIOZ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023. During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024 and 2025. Going forward, HETLIOZ® net product sales may reflect lower unit sales as a result of the reduction of elevated levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. We constrained HETLIOZ® net product sales for the three months ended September 30, 2025 and 2024 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the three months ended September 30, 2025 and 2024 related to changes in estimates on revenue constrained during prior periods was $1.2 million and $0.8 million, respectively. HETLIOZ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Previous wording

PONVORY® net product sales decreased by $1.5 million, or 18%, to $7.1 million for the three months ended June 30, 2025 compared to $8.6 million for the three months ended June 30, 2024. The decrease in net product sales was attributable to a decrease in price net of deductions, partially offset by an increase in volume. We initiated the commercial launch of PONVORY® in RMS in the third quarter of 2024.

Current wording

PONVORY® net product sales increased by $1.2 million, or 20%, to $7.0 million for the three months ended September 30, 2025 compared to $5.9 million for the three months ended September 30, 2024. The increase in net product sales was attributable to an increase in volume. We initiated the commercial launch of PONVORY® in RMS in the third quarter of 2024.

Previous wording

Cost of goods sold. Cost of goods sold was $2.7 million for the three months ended June 30, 2025 and 2024. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs. Third-party royalty costs were 6% of Fanapt® net product sales and 5% of HETLIOZ® net product sales in Germany. Third-party royalty costs on HETLIOZ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024. There are no-third party royalty costs on net sales of PONVORY®. 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 $2.1 million of Fanapt® product, $7.9 million of HETLIOZ® product and $0.4 million of PONVORY® product as of June 30, 2025.

Current wording

Cost of goods sold. Cost of goods sold increased by $0.4 million, or 16%, to $3.0 million for the three months ended September 30, 2025 compared to $2.6 million for the three months ended September 30, 2024. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs. Third-party royalty costs were 6% of Fanapt® net product sales and 5% of HETLIOZ® net product sales in Germany. Third-party royalty costs on HETLIOZ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024. Third-party royalty costs on HETLIOZ® net product sales in Germany will end in October 2026. There are no third-party royalty costs on net sales of PONVORY®. 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 $1.7 million of Fanapt® product, $8.0 million of HETLIOZ® product and $0.3 million of PONVORY® product as of September 30, 2025.

Previous wording

Research and development expenses. Research and development expenses increased by $5.3 million, or 32%, to $22.0 million for the three months ended June 30, 2025 compared to $16.7 million for the three months ended June 30, 2024. The increase was primarily due to an increase in expenses associated with our Fanapt®, Bysanti TM and HETLIOZ® development programs, partially offset by a decrease in expenses associated with our tradipitant development program.

Current wording

Research and development expenses. Research and development expenses increased by $5.8 million, or 34%, to $22.6 million for the three months ended September 30, 2025 compared to $16.8 million for the three months ended September 30, 2024. The increase was primarily due to an increase in expenses across many different development programs, including our Fanapt® development program.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $25.1 million, or 64%, to $64.6 million for the three months ended June 30, 2025 compared to $39.5 million for the three months ended June 30, 2024. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS. During 2024, we commenced a host of commercial activities as part of our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. A direct-to-consumer campaign that started in the first quarter of 2025 continued in the second quarter of 2025, elevating brand awareness of the company and the key products Fanapt® and PONVORY®. Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $22.7 million, or 60%, to $60.3 million for the three months ended September 30, 2025 compared to $37.6 million for the three months ended September 30, 2024. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS. During 2024, we commenced a host of commercial activities as part of our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. A direct-to-consumer campaign that started in the first quarter of 2025 continued in the second and third quarters of 2025, elevating brand awareness of the company and the key products Fanapt® and PONVORY®. Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches.

Previous wording

Other income. Other income was $3.6 million for the three months ended June 30, 2025 compared to $4.6 million for the three months ended June 30, 2024. Other income primarily consists of investment income on our marketable securities.

Current wording

Other income. Other income was $2.9 million for the three months ended September 30, 2025 compared to $4.8 million for the three months ended September 30, 2024. Other income primarily consists of investment income on our marketable securities.

Previous wording

Benefit for income taxes. An income tax benefit of $7.7 million and $1.0 million was recorded for the three months ended June 30, 2025 and 2024, respectively. The income tax benefit for each of the three months ended June 30, 2025 and 2024 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.4 million and $0.2 million, respectively.

Current wording

Benefit for income taxes. An income tax benefit of $5.8 million and $0.9 million was recorded for the three months ended September 30, 2025 and 2024, respectively. The income tax benefit for each of the three months ended September 30, 2025 and 2024 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.1 million and $0.2 million, respectively.

Previous wording

Revenues. Total revenues increased by $4.7 million, or 5%, to $102.6 million for the six months ended June 30, 2025 compared to $97.9 million for the six months ended June 30, 2024. Revenues were as follows:

Current wording

Revenues. Total revenues increased by $13.3 million, or 9%, to $158.9 million for the nine months ended September 30, 2025 compared to $145.6 million for the nine months ended September 30, 2024. Revenues were as follows:

Previous wording

Fanapt® net product sales increased by $9.1 million, or 21%, to $52.8 million for the six months ended June 30, 2025 compared to $43.7 million for the six months ended June 30, 2024. The increase to net product sales was attributable to an increase in volume. We initiated the commercial launch of Fanapt® for bipolar I disorder in adults in the third quarter of 2024.

Current wording

Fanapt® net product sales increased by $16.4 million, or 24%, to $84.1 million for the nine months ended September 30, 2025 compared to $67.6 million for the nine months ended September 30, 2024. The increase to net product sales was attributable to an increase in volume, partially offset by a decrease in price net of deductions. We initiated the commercial launch of Fanapt® for bipolar I disorder in adults in the third quarter of 2024.

Previous wording

HETLIOZ® net product sales decreased by $1.7 million, or 4%, to $37.1 million for the six months ended June 30, 2025 compared to $38.8 million for the six months ended June 30, 2024. The decrease to net product sales was attributable to a decrease in volume, partially offset by an increase in price net of deductions. Our HETLIOZ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023. During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024 and 2025. Going forward, HETLIOZ® net product sales may reflect lower unit sales as a result of the reduction of elevated levels at specialty pharmacy customers or may be variable depending upon when specialty pharmacy customers need to purchase again. Further, HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. The Company constrained HETLIOZ® net product sales for the six months ended June 30, 2025 and 2024 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the six months ended June 30, 2025 and 2024 related to changes in estimates on revenue constrained during prior periods was $0.8 million and $1.6 million, respectively. HETLIOZ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Current wording

HETLIOZ® net product sales decreased by $1.6 million, or 3%, to $55.0 million for the nine months ended September 30, 2025 compared to $56.6 million for the nine months ended September 30, 2024. The decrease to net product sales was attributable to a decrease in volume. Our HETLIOZ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023. During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024 and 2025. Going forward, HETLIOZ® net product sales may reflect lower unit sales as a result of the reduction of elevated levels at specialty pharmacy customers or may be variable depending upon when specialty pharmacy customers need to purchase again. Further, HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. The Company constrained HETLIOZ® net product sales for the nine months ended September 30, 2025 and 2024 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the nine months ended September 30, 2025 and 2024 related to changes in estimates on revenue constrained during prior periods was $0.8 million and $1.4 million, respectively. HETLIOZ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Previous wording

PONVORY® net product sales decreased by $2.7 million, or 18%, to $12.7 million for the six months ended June 30, 2025 compared to $15.4 million for the six months ended June 30, 2024. The decrease in net product sales was attributable to a decrease in volume and price net of deductions. We initiated the commercial launch of PONVORY® in RMS in the third quarter of 2024. 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 decreased by $1.5 million, or 7%, to $19.8 million for the nine months ended September 30, 2025 compared to $21.3 million for the nine months ended September 30, 2024. The decrease in net product sales was attributable to a decrease in price net of deductions. We initiated the commercial launch of PONVORY® in RMS in the third quarter of 2024. 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

Cost of goods sold. Cost of goods sold increased by $0.1 million, or 1%, to $6.3 million for the six months ended June 30, 2025 compared to $6.2 million for the six months ended June 30, 2024. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs. Third-party royalty costs were 6% of Fanapt® net product sales and 5% of HETLIOZ® net product sales in Germany. Third-party royalty costs on HETLIOZ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024. 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 $2.1 million of Fanapt® product, $7.9 million of HETLIOZ® product and $0.4 million of PONVORY® product as of June 30, 2025.

Current wording

Cost of goods sold. Cost of goods sold increased by $0.5 million, or 6%, to $9.2 million for the nine months ended September 30, 2025 compared to $8.7 million for the nine months ended September 30, 2024. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs. Third-party royalty costs were 6% of Fanapt® net product sales and 5% of HETLIOZ® net product sales in Germany. Third-party royalty costs on HETLIOZ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and ended in April 2024. Third-party royalty costs on HETLIOZ® net product sales in Germany will end in October 2026. There are no third-party royalty costs on net sales of PONVORY®. 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 $1.7 million of Fanapt® product, $8.0 million of HETLIOZ® product and $0.3 million of PONVORY® product as of September 30, 2025.

Previous wording

Research and development expenses. Research and development expenses increased by $19.9 million, or 53%, to $57.7 million for the six months ended June 30, 2025 compared to $37.8 million for the six months ended June 30, 2024. The increase in research and development expenses was primarily due to an upfront payment to AnaptysBio, Inc. for the exclusive, global license to develop, manufacture, and commercialize imsidolimab and drug supply as well as an increase in expenses for our Bysanti TM, Fanapt® and HETLIOZ® development programs, partially offset by a decrease in expenses for our tradipitant development program.

Current wording

Research and development expenses. Research and development expenses increased by $25.7 million, or 47%, to $80.3 million for the nine months ended September 30, 2025 compared to $54.6 million for the nine months ended September 30, 2024. The increase in research and development expenses was primarily due to an upfront payment to AnaptysBio, Inc. for the exclusive, global license to develop, manufacture, and commercialize imsidolimab and drug supply as well as an increase in expenses for our Fanapt® and Bysanti TM development programs, partially offset by a decrease in expenses for our tradipitant development program.

Previous wording

The following table summarizes the costs of our product development initiatives for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes the costs of our product development initiatives for the nine months ended September 30, 2025 and 2024:

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $45.1 million, or 65%, to $114.7 million for the six months ended June 30, 2025 compared to $69.6 million for the six months ended June 30, 2024. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt® in bipolar disorder and PONVORY® in relapsing forms of MS. During 2024, we commenced a host of commercial activities as part of our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. A direct-to-consumer campaign that started in the first quarter of 2025 continued in the second quarter of 2025, elevating brand awareness of the company and the key products Fanapt® and PONVORY®. Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $67.8 million, or 63%, to $175.0 million for the nine months ended September 30, 2025 compared to $107.1 million for the nine months ended September 30, 2024. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on commercial activities related to our commercial launches of Fanapt® in bipolar disorder and PONVORY® in relapsing forms of MS. During 2024, we commenced a host of commercial activities as part of our commercial launches of Fanapt® in bipolar disorder and PONVORY® in RMS, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. A direct-to-consumer campaign that started in the first quarter of 2025 continued in the second and third quarters of 2025, elevating brand awareness of the company and the key products Fanapt® and PONVORY®. Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches.

Previous wording

Intangible asset amortization. Intangible asset amortization was $3.5 million and $3.8 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Intangible asset amortization. Intangible asset amortization was $5.3 million and $5.5 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Other income. Other income was $7.3 million for the six months ended June 30, 2025 compared to $9.2 million for the six months ended June 30, 2024. Other income primarily consists of investment income on our marketable securities.

Current wording

Other income. Other income was $10.2 million for the nine months ended September 30, 2025 compared to $14.0 million for the nine months ended September 30, 2024. Other income primarily consists of investment income on our marketable securities.

Previous wording

Benefit for income taxes. We recorded an income tax benefit of $15.6 million and $1.5 million for the six months ended June 30, 2025 and 2024, respectively. The income tax benefit for the six months ended June 30, 2025 and 2024 was primarily driven by the estimated effective tax rate for the year, as well as discrete income tax expense of $0.8 million for each period.

Current wording

Benefit for income taxes. We recorded an income tax benefit of $21.4 million and $2.4 million for the nine months ended September 30, 2025 and 2024, respectively. The income tax benefit for the nine months ended September 30, 2025 and 2024 was primarily driven by the estimated effective tax rate for the year, as well as discrete income tax expense of $0.9 million and $1.0 million, respectively.

Previous wording

As of June 30, 2025, our total cash and cash equivalents and marketable securities were $325.6 million compared to $374.6 million at December 31, 2024. 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, 2025, our total cash and cash equivalents and marketable securities were $293.8 million compared to $374.6 million at December 31, 2024. 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

In the normal course of our business, we regularly enter into agreements with third-party vendors under fee service arrangements which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured but not paid for through the effective date of termination and other costs incurred by our contractors in closing out work in progress as of the effective date of termination. Our non-cancellable purchase commitments for agreements longer than one year primarily relate to commitments for data services. Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement that are within our control.

Current wording

In the normal course of our business, we regularly enter into agreements with third-party vendors under fee service arrangements which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured but not paid for through the effective date of termination and other costs incurred by our contractors in closing out work in progress as of the effective date of termination. Our non-cancellable purchase commitments for agreements with a remaining non-cancellable term longer than one year from September 30, 2025 primarily relate to commitments for data services and marketing activities. Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement that are within our control. We also have long-term contractual obligations related to our leases and license agreements.

Previous wording

We also have long-term contractual obligations related to our leases and license agreements. There have been no material changes to our long-term contractual obligations as disclosed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report. For further information regarding our license agreements, see Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Part I of this Quarterly Report.

Current wording

Other than as disclosed in Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Part I of this Quarterly Report, there have been no material changes to our long-term contractual obligations as disclosed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report. For further information regarding our long-term non-cancellable purchase commitments, leases and license agreements, see Note 8, Commitments and Contingencies.

Previous wording

Based on our current operating plans, which include costs and expenses in connection with our U.S. commercial activities, continued clinical development of tradipitant, Bysanti TM and our other products, pursuit of regulatory approval of tradipitant, Bysanti TM and imsidolimab, pursuit of further regulatory approvals for our currently approved products and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months. Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, the magnitude of our discovery, preclinical and clinical development programs, and potential costs to acquire or license the rights to additional products.

Current wording

Based on our current operating plans, which include costs and expenses in connection with our U.S. commercial activities, continued clinical development of tradipitant, Bysanti TM and our other products, pursuit of regulatory approval of tradipitant, Bysanti TM and imsidolimab, pursuit of further regulatory approvals for our currently approved products and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months. Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including a regulatory approval of tradipitant, Bysanti TM and imsidolimab, our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, the magnitude of our discovery, preclinical and clinical development programs, and potential costs to acquire or license the rights to additional products.

Previous wording

The following table summarizes our net cash flows from operating, investing and financing activities for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our net cash flows from operating, investing and financing activities for the nine months ended September 30, 2025 and 2024:

Previous wording

Operating Activities: Cash flows used in operating activities during the six months ended June 30, 2025 were $48.4 million, a decrease of $49.0 million compared to cash provided by operating activities of $0.6 million during the six months ended June 30, 2024. The decrease primarily reflects a decrease of $48.0 million in net income which includes expenses associated with the $15.0 million payment related to the exclusive, global license agreement with Anaptys for the development and commercialization of imsidolimab.

Current wording

Operating Activities: Cash flows used in operating activities during the nine months ended September 30, 2025 were $80.0 million, a decrease of $66.1 million compared to $13.9 million during the nine months ended September 30, 2024. The decrease primarily reflects a decrease of $65.3 million in net income, non-cash charges, including the change in deferred income taxes, as well as the net change in operating assets and liabilities. Our net loss for the nine months ended September 30, 2025 includes expenses associated with the $15.0 million payment related to the exclusive, global license agreement with Anaptys for the development and commercialization of imsidolimab. The decrease in net change in operating assets and liabilities is primarily due to timing of payments for product revenue allowances and receipt of cash for accounts receivable.

Previous wording

Investing Activities: Cash flows provided by investing activities during the six months ended June 30, 2025 were $28.6 million, an increase of $62.1 million compared to $33.5 million cash used in investing activities during the six months ended June 30, 2024. The change in investing activities primarily reflects the timing of net reinvestment of available cash and cash equivalents in our portfolio of marketable securities. Additionally, the $4.2 million asset acquisition cash flow during the six months ended June 30, 2024 relates to the payment of the remaining consideration for the PONVORY® acquisition that was accrued as of December 31, 2023.

Current wording

Investing Activities: Cash flows provided by investing activities during the nine months ended September 30, 2025 were $50.0 million, an increase of $71.4 million compared to $21.4 million cash used in investing activities during the nine months ended September 30, 2024. The change in investing activities primarily reflects the timing of reinvestment of available cash and cash equivalents and maturities of the investments in our portfolio of marketable securities. Additionally, the $4.2 million asset acquisition cash flow during the nine months ended September 30, 2024 relates to the payment of the remaining consideration for the PONVORY® acquisition that was accrued as of December 31, 2023.

Previous wording

Financing Activities: Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units. Cash flows used in financing activities during the six months ended June 30, 2025 were $1.7 million. There were no financing cash flows for the six months ended June 30, 2024.

Current wording

Financing Activities: Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units. Cash flows used in financing activities during the nine months ended September 30, 2025 were $2.3 million. There were no financing cash flows for the nine months ended September 30, 2024.