Vanda Pharmaceuticals Inc.

Previous wording

Our commercial portfolio is currently comprised of five products: Fanapt® and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease and NEREUSTM for the prevention of vomiting induced by motion (collectively, our commercial products). In addition, we have a number of drugs and/or additional indications for current products in development, including:

Current wording

Our commercial portfolio is currently comprised of five products: Fanapt® (iloperidone) and BYSANTITM (milsaperidone) for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ® (tasimelteon) for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS), PONVORY® (ponesimod) for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease and NEREUSTM (tradipitant) for the prevention of vomiting induced by motion (collectively, our commercial products). In addition, we have a number of drugs and/or additional indications for current products in development, including:

Previous wording

•Fanapt® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia and hypertension;

Current wording

•Fanapt® long acting injectable (LAI) formulation for the treatment of schizophrenia and hypertension;

Previous wording

•BYSANTITM (milsaperidone) for major depressive disorder (MDD);

Current wording

•BYSANTITM for major depressive disorder (MDD);

Previous wording

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

Current wording

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

Previous wording

•PONVORY® (ponesimod) for the treatment of ulcerative colitis and psoriasis;

Current wording

•PONVORY® for the treatment of ulcerative colitis and psoriasis;

Previous wording

•Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP);

Current wording

•Quimilza TM (imsidolimab), an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP);

Previous wording

•NEREUSTM(tradipitant) for the prevention of vomiting induced by GLP-1 receptor agonists and the treatment of gastroparesis;

Current wording

•NEREUSTMfor the prevention of vomiting induced by GLP-1 receptor agonists and the treatment of gastroparesis;

Previous wording

•Fanapt® saw continued strong momentum with total prescriptions (TRx) up 32% and new-to-brand prescriptions (NBRx) up 76% versus Q1 2025. In April 2026, weekly TRx for Fanapt® reached an 11-year high of over 2,600 prescriptions for the week ending April 24, 2026.

Current wording

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

Previous wording

•BYSANTITM (milsaperidone) received U.S. Food and Drug Administration (FDA) approval for the treatment of bipolar I disorder and schizophrenia. BYSANTITM is protected by data exclusivity through February 20, 2031 and multiple patents, the latest of which expires on May 31, 2044.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

◦The Phase III study of BYSANTITM as a once-daily adjunctive treatment for major depressive disorder (MDD), with results expected in Q1 2027.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Since we began operations, we have devoted substantially all of our resources to the in-licensing, clinical development and commercialization of our products. Our ability to generate meaningful product sales and achieve profitability largely depends on our level of success in commercializing our commercial products, on our ability, alone or with others, to complete the development of our products and to obtain the regulatory approvals for and manufacture, market and sell our products. The results of our operations will vary significantly from year-to-year and quarter-to-quarter and depend on a number of factors, including risks related to our business, risks related to our industry, and other risks that are detailed in Part I, Item 1A, Risk Factors, of our annual report on Form 10-K (Annual Report) for the year ended December 31, 2025 and Item 1A, Risk Factors, of any Quarterly Report filed subsequent to our Annual Report.

Current wording

Since we began operations, we have devoted substantially all of our resources to the in-licensing, clinical development and commercialization of our products. Our ability to generate meaningful product sales and achieve profitability largely depends on our ability, alone or with others, to complete the development of, obtain regulatory approvals for and manufacture, market and sell our products. The results of our operations will vary significantly from year-to-year and quarter-to-quarter and depend on a number of factors, including risks related to our business, risks related to our industry and other risks that are detailed in Part I, Item 1A, Risk Factors, of our annual report on Form 10-K (Annual Report) for the year ended December 31, 2025 and Item 1A, Risk Factors, of any Quarterly Report filed subsequent to our Annual Report.

Previous wording

Fanapt® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. HETLIOZ® is available in the U.S. for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. PONVORY® is available in the U.S. for distribution primarily through a limited number of specialty distributors and specialty pharmacies. We invoice and record revenue when our customers, wholesalers, specialty pharmacies and specialty distributors, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. Revenues and accounts receivable are concentrated with these customers. Outside the U.S., we have a distribution agreement for the commercialization of Fanapt® in Israel and sell HETLIOZ® in Germany. Receivables are carried at transaction price paid by the wholesalers, specialty pharmacies and specialty distributors, net of estimated prompt-pay discounts and allowance for credit losses. Payment terms differ by customer, but are based on customary commercial terms and typically range between thirty and sixty days. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.

Current wording

Fanapt® and NEREUSTM are available in the U.S. for distribution through a limited number of wholesalers and are also available in retail pharmacies. In addition, NEREUSTM is available by prescription directly through the nereus.us website. HETLIOZ® is available in the U.S. for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. PONVORY® is available in the U.S. for distribution primarily through a limited number of specialty distributors and specialty pharmacies. We invoice and record revenue when our customers, wholesalers, specialty pharmacies and specialty distributors, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. Revenues and accounts receivable are concentrated with these customers. Outside the U.S., we have a distribution agreement for the commercialization of Fanapt® in Israel and sell HETLIOZ® in Germany. Receivables are carried at transaction price paid by the wholesalers, specialty pharmacies and specialty distributors, net of estimated prompt-pay discounts and allowance for credit losses. Payment terms differ by customer, but are based on customary commercial terms and typically range between thirty and sixty days. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.

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.

Current wording

The transaction price is determined based upon the consideration to which we will be entitled in exchange for transferring product to the customer. Our product sales are recorded net of applicable product revenue allowances for which reserves are established and include discounts, rebates, chargebacks, service fees, co-pay assistance and product returns that are applicable for various government and commercial payors. Where appropriate, our estimates of variable consideration included in the transaction price consider a range of possible outcomes. Allowances for rebates, chargebacks and co-pay assistance are based upon the insurance benefits of the end customer, if any, which are estimated using historical activity and, where available, actual and pending prescriptions for which we have validated the insurance benefits. Variable consideration may be constrained and is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts. If actual results in the future vary from our estimates, we adjust our estimate in the period identified, which would affect net product sales in the period such variances become known. During the six months ended June 30, 2026, we constrained NEREUSTM net product sales. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

Previous wording

The following table summarizes sales discounts and allowance activity as of and for the three months ended March 31, 2026:

Current wording

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

Previous wording

The provision of $28.5 million for rebates and chargebacks for the three months ended March 31, 2026 and its ending balance at March 31, 2026 primarily represent Medicaid rebates. The provision of $11.3 million for discounts, returns and other for the three months ended March 31, 2026 and its ending balance at March 31, 2026 primarily represents service fees, estimated product returns, co-pay assistance costs and prompt-pay discounts.

Current wording

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

Previous wording

Income taxes. We assess the need for a valuation allowance against our deferred tax assets each quarter through the review of all available positive and negative evidence. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The analysis is highly dependent upon historical and projected pretax income. Projected pretax income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt® in bipolar I disorder, PONVORY® in RMS, NEREUSTM in the prevention of vomiting induced by motion and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved on February 20, 2026, and HETLIOZ® generic competition, as well as commercial and research and development activities, including spend on our commercial launches and late-stage clinical activities and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors. After considering all available positive and negative evidence, including but not limited to historical, current and future projected results and significant risks and uncertainties related to forecasts, we have concluded that it is not more likely than not that substantially all of our deferred tax assets are realizable in future periods and maintained a valuation allowance against all net deferred tax assets as of March 31, 2026 and December 31, 2025. The valuation allowance was recorded in the fourth quarter of 2025, resulting in a non-cash income tax expense of $113.7 million for the year ended December 31, 2025. If we have cumulative pretax income in future periods and if our projections indicate pretax income in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in a future period. A future reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction. The potential timing and amount of any future valuation allowance release has yet to be determined and requires an analysis that is highly dependent upon historical and future projected earnings, among other factors. Any such adjustment could have a material impact on our financial position and results of operations.

Current wording

Income taxes. We assess the need for a valuation allowance against our deferred tax assets each quarter through the review of all available positive and negative evidence. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The analysis is highly dependent upon historical and projected pretax income. Projected pretax income includes significant assumptions related to revenue, which could be affected by the success of the commercial launches of Fanapt® in bipolar I disorder, PONVORY® in RMS, NEREUSTM in the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved in February 2026, and HETLIOZ® generic competition, as well as commercial and research and development activities, including spend on our commercial launches and late-stage clinical activities and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors. After considering all available positive and negative evidence, including but not limited to historical, current and future projected results and significant risks and uncertainties related to forecasts, we have concluded that it is not more likely than not that substantially all of our deferred tax assets are realizable in future periods and maintained a valuation allowance against all net deferred tax assets as of June 30, 2026 and December 31, 2025. The valuation allowance was recorded in the fourth quarter of 2025, resulting in a non-cash income tax expense of $113.7 million for the year ended December 31, 2025. If we have cumulative pretax income in future periods and if our projections indicate pretax income in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in a future period. A future reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction. The potential timing and amount of any future valuation allowance release has yet to be determined and requires an analysis that is highly dependent upon historical and future projected earnings, among other factors. Any such adjustment could have a material impact on our financial position and results of operations.

Previous wording

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.

Current wording

Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon 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.

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 the ongoing commercial launch of NEREUSTM for the prevention of vomiting induced by motion, which was approved in December 2025 and became commercially available in the U.S. on May 1, 2026, and the upcoming launch of BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved on February 20, 2026, the impact of regulatory changes to the pharmaceutical industry such as the Medicare Part D provisions of the Inflation Reduction Act of 2022, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property. 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 our newest products, NEREUSTM for the prevention of vomiting induced by motion, which was approved in December 2025 and became commercially available in the U.S. in May 2026, and BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, which was approved in February 2026, the impact of regulatory changes to the pharmaceutical industry such as the Medicare Part D provisions of the Inflation Reduction Act of 2022, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property. 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.

Previous wording

Revenues. Total revenues increased by $1.7 million, or 3%, to $51.7 million for the three months ended March 31, 2026 compared to $50.0 million for the three months ended March 31, 2025. Revenue from net product sales was as follows:

Current wording

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

Previous wording

HETLIOZ® net product sales decreased by $4.9 million, or 24%, to $15.9 million for the three months ended March 31, 2026 compared to $20.9 million for the three months ended March 31, 2025. The decrease to net product sales was attributable to a decrease in volume. Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at our specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. The elevated levels of inventory have resulted in longer periods to resolve uncertainties related to variable consideration. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Current wording

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

Previous wording

Cost of goods sold. Cost of goods sold decreased by $0.4 million, or 10%, to $3.2 million for the three months ended March 31, 2026 compared to $3.5 million for the three months ended March 31, 2025. 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 and third-party royalty costs on Fanapt® net product sales in the U.S. will end in November 2026. There are no third-party royalty costs on net sales of PONVORY®. Third-party royalty costs on NEREUSTM net product sales in the U.S. are tiered, up to the low double digits, and began with the U.S. commercial launch of NEREUSTM on May 1, 2026. We evaluate the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life and build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage, and generic competition. Our inventory balance consisted of $7.5 million of HETLIOZ® product and $3.0 million of other products as of March 31, 2026. Our inventory balance consisted of $7.8 million of HETLIOZ® product and $3.2 million of other products as of December 31, 2025.

Current wording

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

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $18.3 million, or 36%, to $68.4 million for the three months ended March 31, 2026 compared to $50.1 million for the three months ended March 31, 2025. The increase in selling, general and administrative expenses was primarily the result of an increase in spending on our continued commercialization efforts for Fanapt® in bipolar disorder and PONVORY® in RMS, including the expansion of our sales force during 2025. Selling, general and administrative expenses may increase in future periods as a result of the ongoing commercial launches, including the U.S. commercial launch of NEREUSTM initiated on May 1, 2026, as well as the other future commercial launches.

Current wording

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

Previous wording

Other income, net. Other income, net was $1.8 million for the three months ended March 31, 2026 compared to $3.7 million for the three months ended March 31, 2025. Other income primarily consists of investment income on our marketable securities.

Current wording

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

Previous wording

Provision (benefit) for income taxes. We recorded an income tax provision of $0.1 million and a benefit for income taxes of $7.9 million for the three months ended March 31, 2026 and 2025, respectively. The income tax provision for the three months ended March 31, 2026 was driven by discrete income tax expense of $0.1 million. The income tax benefit for the three months ended March 31, 2025 was primarily driven by the estimated effective tax rate for the year as well as discrete income tax expense of $0.5 million.

Current wording

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

Previous wording

Fanapt® net product sales increased by $6.0 million, or 26%, to $29.6 million for the three months ended March 31, 2026 compared to $23.5 million for the three months ended March 31, 2025. The increase to net product sales was primarily attributable to an increase in volume, partially offset by a decrease in price, net of deductions. An amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025.

Current wording

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

Previous wording

PONVORY® net product sales increased by $0.6 million, or 10%, to $6.2 million for the three months ended March 31, 2026 compared to $5.6 million for the three months ended March 31, 2025. An amount of variable consideration related to PONVORY® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2024.

Current wording

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

Previous wording

Research and development expenses. Research and development expenses decreased by $7.3 million, or 20%, to $28.4 million for the three months ended March 31, 2026 compared to $35.7 million for the three months ended March 31, 2025. The decrease was primarily due to lower expenses on our imsidolimab program, partially offset by an increase in expenses for our VQW-765 andvarious of our other development programs. The three months ended March 31, 2025 included an upfront payment to AnaptysBio, Inc. for the exclusive, global license to develop, manufacture, and commercialize imsidolimab and drug supply.

Current wording

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

Previous wording

As of March 31, 2026, our total cash and cash equivalents and marketable securities were $202.3 million compared to $263.8 million at December 31, 2025. Our cash and cash equivalents are deposits in operating accounts and highly liquid investments with an original maturity of 90 days or less at date of purchase and consist of investments in money market funds with commercial banks and financial institutions and commercial paper of high-quality corporate issuers. Our marketable securities consist of investments in government sponsored and corporate enterprises and commercial paper.

Current wording

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

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 and certain commitments for marketing activities. Our non-cancellable purchase commitments for agreements with a remaining non-cancellable term longer than one year from March 31, 2026 primarily relate to commitments for marketing activities and 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. We also have long-term contractual obligations related to our leases and license agreements. See Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Part I of this Quarterly Report for more information about these commitments.

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. Occasionally, we enter into short- and long-term agreements with third-party vendors that are non-cancellable. Our short-term non-cancellable purchase commitments primarily relate to inventory and clinical manufacturing purchase commitments, for which the production is expected to be completed within a one-year period, and certain marketing activities. Our non-cancellable purchase commitments for agreements with a remaining non-cancellable term longer than one year from June 30, 2026 primarily relate to commitments for marketing activities, inventory purchase commitments for certain of our commercial products and data services. Various other long-term agreements entered into for services with other third-party vendors 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. See Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Part I of this Quarterly Report for more information about these commitments.

Previous wording

Based on our current operating plans, which include continued investment in support of our commercial products, including the ongoing commercial launch of NEREUSTM for the prevention of vomiting induced by motion, which became commercially available in the U.S. on May 1, 2026, and the upcoming commercial launch of BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, continued clinical development of our commercial and other products, pursuit of regulatory approval of 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 as of the date the financial statements were issued. Our activities will necessitate significant working capital through 2026 and beyond, and future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, including the commercial launches of NEREUSTM and BYSANTITM, a regulatory approval of imsidolimab, the magnitude of our discovery, preclinical and clinical development programs and potential costs to acquire or license the rights to additional products.

Current wording

Based on our current operating plans, which include continued investment in support of our commercial products, including the ongoing commercial launch of NEREUSTM for the prevention of vomiting induced by motion, which became commercially available in the U.S. in May 2026, and the upcoming commercial launch of BYSANTITM for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia, continued clinical development of our commercial and other products, pursuit of regulatory approval of Quimilza TM, pursuit of further regulatory approvals for our currently approved products and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months as of the date the financial statements were issued. Our activities will necessitate significant working capital through 2026 and beyond, and future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue, the scope and costs of our commercial, manufacturing and process development activities, including the commercial launches of NEREUSTM and BYSANTITM, a regulatory approval of Quimilza TM, the magnitude of our discovery, preclinical and clinical development programs and potential costs to acquire or license the rights to additional products.

Previous wording

The following table summarizes our net cash flows from operating, investing and financing activities for the three months ended March 31, 2026 and 2025:

Current wording

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

Previous wording

Operating Activities. Cash flows used in operating activities during the three months ended March 31, 2026 were $50.2 million, an increase of $17.1 million compared to $33.1 million during the three months ended March 31, 2025. The increase reflects an increase in net loss of $19.1 million and a decrease of $6.0 million from the net change in operating assets and liabilities, partially offset by an increase of $8.0 million in non-cash charges primarily due a valuation allowance against all of our deferred tax assets in 2026. The decrease from net change in operating assets and liabilities due to timing for our accounts receivable and accounts payable and accrued liabilities. We generally pay approved invoices when due, with vendor terms typically ranging from 30 to 45 days.

Current wording

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

Previous wording

Investing Activities. Cash flows provided by investing activities during the three months ended March 31, 2026 were $20.2 million, a decrease of $23.7 million compared to $43.9 million during the three months ended March 31, 2025. The change in investing activities primarily reflects the net use of cash and cash equivalents and maturities of the investments in our portfolio of marketable securities. The $10.0 million milestone payment owed to Eli Lilly and Company for the FDA’s approval of NEREUSTM for the prevention of vomiting induced by motion was accrued as of December 31, 2025 and paid in 2026.

Current wording

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

Previous wording

Financing Activities. Cash flows used in financing activities during the three months ended March 31, 2026 were $0.8 million, a decrease of $0.5 million compared to $1.3 million during the three months ended March 31, 2025. Financing activities include principal payments for our finance lease liabilities and tax obligations paid in connection with settlement of restricted stock units.

Current wording

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