Harmony Biosciences Q3 net income falls to $48.2M
Management believes cash, cash equivalents, investments and further cash generation will meet liquidity needs for at least twelve months from issuance.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Harmony Biosciences Holdings, Inc. (HRMY) reported third-quarter net product revenue of $268.9 million, versus $239.5 million a year earlier, while net income was $48.2 million versus $50.9 million. For the first nine months, revenue was $745.6 million versus $624.7 million and net income was $156.1 million versus $136.2 million.
Cash, cash equivalents and investments totaled $1,051.6 million as of September 30, 2026. Management believes those balances, together with additional cash from operating and financing activities, will meet liquidity needs and fund potential investing activities for at least twelve months from issuance. Nine-month operating cash flow was $196.9 million, versus $222.0 million a year earlier.
WAKIX is approved for excessive daytime sleepiness and cataplexy in patients six years and older. The FDA accepted the Pitolisant GR NDA for full review, with a target PDUFA date of April 1, 2027; EPX-100 is in Phase 3 trials for Dravet and Lennox-Gastaut syndromes. An MSN patent-approval milestone triggered a $25.0 million payment expected in Q4 2026. An October Novitium clinical milestone triggered a $10.0 million payment the company expects to pay and record as IPR&D expense in Q4 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net product revenue reached $268.9 million, versus $239.5 million.
- Moderate pointNine-month net income was $156.1 million, versus $136.2 million.
Negative
- Moderate pointThird-quarter net income was $48.2 million, versus $50.9 million.
- Moderate pointNine-month operating cash flow was $196.9 million, versus $222.0 million.
Filing Explained
Unused buyback capacity does not establish that the company will purchase shares.
This Form 10-Q reports that Harmony made no repurchases under its share-repurchase program in the three or nine months ended
The consolidated WAKIX generic-drug trial concluded in February 2026, post-trial briefs were filed through May, and oral arguments were held on
Separately, in the patent case involving AET and Sandoz, arguments on motions and scheduling were held on
Key Figures
Key Terms
Prescription Drug User Fee Act date regulatory
Abbreviated New Drug Application regulatory
in-process research & development (IPR&D) financial
treasury stock method financial
available-for-sale debt securities financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did HRMY report in Q3 2026?
What was HRMY's net income in Q3 2026?
When do HRMY's settled WAKIX generic licenses begin?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer |
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(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading | | Name of each exchange |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
| | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 2, 2026, there were
Table of Contents
TABLE OF CONTENTS
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| Page |
Part I. Financial Information | 3 |
Item 1. Financial Statements | 3 |
Condensed Consolidated Balance Sheets (Unaudited) | 3 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) | 4 |
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | 5 |
Condensed Consolidated Statements of Cash Flows (Unaudited) | 6 |
Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 43 |
Item 4. Controls and Procedures | 44 |
Part II. Other Information | 44 |
Item 1. Legal Proceedings | 44 |
Item 1A. Risk Factors | 45 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 45 |
Item 3. Defaults upon Senior Securities | 45 |
Item 4. Mine Safety Disclosures | 45 |
Item 5. Other Information | 45 |
Item 6. Exhibits | 46 |
Signatures | 47 |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents | | $ | | | $ | |
Investments, short-term | | | | | | |
Trade receivables, net | |
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Inventory, net | |
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Prepaid expenses | |
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Other current assets | |
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Total current assets | |
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NONCURRENT ASSETS: | |
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Investments, long-term | | | | | | |
Intangible assets, net | |
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Deferred tax asset | | | | | | |
Other noncurrent assets | |
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Total noncurrent assets | |
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TOTAL ASSETS | | $ | | | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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CURRENT LIABILITIES: | |
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Trade payables | | $ | | | $ | |
Accrued compensation | |
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Accrued expenses | |
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Current portion of long-term debt | | | | | | |
Other current liabilities | |
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Total current liabilities | |
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NONCURRENT LIABILITIES: | |
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Long-term debt, net | |
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Other noncurrent liabilities | |
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Total noncurrent liabilities | |
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TOTAL LIABILITIES | |
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COMMITMENTS AND CONTINGENCIES (Note 12) | |
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STOCKHOLDERS’ EQUITY: | |
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Common stock—$ | |
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Additional paid in capital | |
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Accumulated other comprehensive (loss) income | | | ( | | | |
Retained earnings | |
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TOTAL STOCKHOLDERS’ EQUITY | |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | | | $ | |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
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HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except share and per share data)
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| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net product revenue | | $ | | | $ | | | $ | | | $ | |
Cost of product sold | |
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Gross profit | |
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Operating expenses: | |
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Research and development | |
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Sales and marketing | |
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General and administrative | |
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Total operating expenses | |
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Operating income | |
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Other expense, net | |
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Interest expense | | | ( | | | ( | | | ( | |
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Interest income | |
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Income before income taxes | |
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Income tax expense | |
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Net income | | $ | | | $ | | | $ | | | $ | |
Unrealized (loss) income on investments | |
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Comprehensive income | | $ | | | $ | | | $ | | | $ | |
EARNINGS PER SHARE: | |
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Basic | | $ | | | $ | | | $ | | | $ | |
Diluted | | $ | | | $ | | | $ | | | $ | |
Weighted average number of shares of common stock - basic | |
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Weighted average number of shares of common stock - diluted | |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
4
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HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share data)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | ||
| | | | | | | Additional | | other | | | | | Total | |||
| | Common Stock | | paid-in | | comprehensive | | Retained | | stockholders’ | |||||||
| | Shares | | Amount | | capital | | loss | | earnings | | equity | |||||
Balance as of June 30, 2026 | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Net income |
| — | |
| — | |
| — | | | — | |
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Unrealized loss on investments | | — | | | — | | | — | | | ( | | | — | | | ( |
Restricted stock unit tax withholding, net of stock option exercises |
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Stock-based compensation |
| — | |
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Balance as of September 30, 2026 |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | Accumulated | | | | | | ||||
| | | | | | | Additional | | other | | | | | Total | |||
| | Common Stock | | paid-in | | comprehensive | | Retained | | stockholders’ | |||||||
| | Shares | | Amount | | capital | | income (loss) | | earnings | | equity | |||||
Balance as of December 31, 2025 |
| | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income |
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| — | | | — | |
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Unrealized loss on investments | | — | | | — | | | — | | | ( | | | — | | | ( |
Restricted stock unit tax withholding, net of stock option exercises |
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Stock-based compensation |
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Balance as of September 30, 2026 |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | | |
| | | | | | | Additional | | other | | | | Total | ||||
| | Common Stock | | paid-in | | comprehensive | | Accumulated | | stockholders’ | |||||||
| | Shares | | Amount | | capital | | income | | deficit | | equity | |||||
Balance as of June 30, 2025 |
| | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income |
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| — | |
| — | | | — | |
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Unrealized loss on investments | | — | | | — | | | — | | | | | | — | | | |
Restricted stock unit tax withholding, net of stock option exercises |
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| — | |
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Stock-based compensation |
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| — | |
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Balance as of September 30, 2025 |
| | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | ||
| | | | | | | Additional | | other | | | | Total | ||||
| | Common Stock | | paid-in | | comprehensive | | Retained | | stockholders’ | |||||||
| | Shares | | Amount | | capital | | income | | earnings | | equity | |||||
Balance as of December 31, 2024 |
| | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income |
| — | |
| — | |
| — | | | — | |
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Unrealized gain on investments | | — | | | — | | | — | | | | | | — | | | |
Restricted stock unit tax withholding, net of stock option exercises |
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| — | | | | | | — | |
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Stock-based compensation |
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| — | | | | | | — | |
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Balance as of September 30, 2025 |
| | | $ | | | $ | | | $ | | | $ | | | $ | |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
5
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HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share data)
| | | | | | |
| | Nine Months Ended September 30, | ||||
| | 2026 | | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income | | $ | | | $ | |
Adjustments to reconcile net income to net cash used in operating activities: | |
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Depreciation | |
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Intangible amortization | |
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Acquired in-process research & development (IPR&D) expense | | | | | | |
Stock-based compensation | |
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Stock appreciation rights market adjustment | |
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Debt issuance costs amortization | |
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Deferred taxes | | | ( | | | ( |
Amortization of premiums and accretion of discounts on investment securities | | | ( | | | ( |
Other non-cash expenses | | | | | | |
Change in operating assets and liabilities: | |
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Trade receivables | |
| ( | |
| ( |
Inventory | |
| ( | |
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Prepaid expenses and other assets | |
| ( | |
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Trade payables | |
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Other liabilities | |
| ( | |
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Net cash provided by operating activities | |
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CASH FLOWS FROM INVESTING ACTIVITIES: | |
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Purchase of investment securities | | | ( | | | ( |
Proceeds from maturities and sales of investment securities | | | | | | |
Purchase of property and equipment | |
| — | |
| ( |
Payment of upfront fee related to license agreements | |
| ( | |
| ( |
Net cash used in investing activities | |
| ( | |
| ( |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
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Principal repayment of long-term debt | | | ( | | | ( |
Payments of employee withholding taxes related to stock-based awards | | | ( | | | ( |
Proceeds from exercised options | |
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Net cash provided by (used in) financing activities | |
| | |
| ( |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | |
| ( | |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period | |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period | | $ | | | $ | |
Supplemental Disclosure of Cash Flow Information: | |
| | |
| |
Cash paid during the year for interest | | $ | | | $ | |
Cash paid during the year for income taxes net of refunds received | | | | | | |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
6
Table of Contents
HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company
Harmony Biosciences Holdings, Inc., and its consolidated subsidiaries (the “Company” or “Harmony”), was founded in July 2017 as Harmony Biosciences II, LLC, a Delaware limited liability company. The Company converted to a Delaware corporation named Harmony Biosciences II, Inc. in September 2017 and, in February 2020, the Company changed its name to Harmony Biosciences Holdings, Inc. The Company’s operations are conducted in its wholly owned subsidiaries, Harmony Biosciences, LLC, and Harmony Biosciences Management, Inc. The Company is headquartered in Plymouth Meeting, Pennsylvania.
We are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases. To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments in rare and broad diseases that help patients thrive.
In July 2017, the Company entered into a License Agreement (the “2017 LCA”) with Bioprojet Société Civile de Recherche (“Bioprojet”) whereby the Company acquired the exclusive right to commercialize the pharmaceutical compound pitolisant. Our lead product, WAKIX® (pitolisant) (“WAKIX”), is a first-in-class therapy with a novel mechanism of action designed to enhance histamine signaling in the brain by binding to H3 receptors. Since its initial U.S. Food and Drug Administration (the “FDA”) approval in 2019 for excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy, WAKIX has subsequently been approved for cataplexy in adult patients in 2020, and EDS and cataplexy in pediatric patients six years and older in 2024 and 2026, respectively. Beyond narcolepsy, we are also advancing late-stage clinical programs exploring pitolisant in Prader-Willi syndrome (“PWS”) and continue to grow our impact in other rare neurological diseases. In July 2022, the Company entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more next generation pitolisant based products in the United States and Latin America.
Along with nurturing the growth of our original pipeline, our innovation strategy includes targeted business development that strengthens our foundation and strategically extends our patient reach as we look to expand our portfolio to new diseases beyond histaminergic science.
In April 2024, we expanded into orexin science through a sublicense agreement with Bioprojet for an orexin 2 receptor agonist (“BP-205”) which is now in clinical development for narcolepsy and other potential central nervous system (“CNS”) indications. Under the sublicense agreement the Company obtained the exclusive right to develop, manufacture and commercialize BP-205 in the United States and Latin American territories, which are rights originally licensed from Teijin Pharma, the innovator of BP-205. We further broadened our portfolio into rare epilepsy when the Company acquired Epygenix Therapeutics, Inc. (“Epygenix”) in April 2024. As a result, the Company now has an exclusive license relating to the use of clemizole hydrochloride (“EPX-100”), initially for the treatment of Dravet Syndrome (“DS”) and Lennox-Gastaut Syndrome (“LGS”). EPX-100 is currently in two Phase 3 registrational trials, one each for DS (the ARGUS study) and LGS (the LIGHTHOUSE study).
In June 2025, we entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with CiRC Biosciences, Inc. (“CiRC”), a related party. Under this agreement, Harmony and CiRC
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will collaborate on the research and development of
2. LIQUIDITY AND CAPITAL RESOURCES
The unaudited condensed consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company had retained earnings of $
The Company believes that its existing cash, cash equivalents and investments on hand as of September 30, 2026, as well as additional cash generated from operating and financing activities will meet its operational liquidity needs and fund potential investing activities for at least the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated balance sheet as of September 30, 2026, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2026, and 2025, and the unaudited condensed consolidated statements of operations and comprehensive income and the unaudited condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2026, and 2025, are unaudited. The balance sheet as of December 31, 2025, was derived from audited financial statements as of and for the year ended December 31, 2025. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2025, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2026, and the results of its operations and its cash flows for the nine months ended September 30, 2026, and 2025. The unaudited condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Significant Risks and Uncertainties
The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to, clinical trial results of the Company’s product candidates; the Company’s ability to obtain regulatory approval to market its products; competition from products sold and/or being developed by other companies, including generic competition; the price of, and demand for, the Company’s products, if approved; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its product candidates; and the Company’s ability to raise capital.
The Company currently has
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commercialized products in addition to WAKIX. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting intellectual property.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts and disclosures in the unaudited condensed consolidated financial statements, including the notes thereto, and elsewhere in this report. Actual results may differ significantly from estimates, which include rebates payable pursuant to commercial and government contracts, accrued research and development expenses, stock-based compensation expense and income taxes.
Operating Segments
Operating segments are defined as comp
Fair Value of Financial Instruments
The Company’s unaudited condensed consolidated financial statements include cash, cash equivalents, accounts payable, and accrued liabilities, all of which are short term in nature and, accordingly, approximate fair value.
It is the Company’s policy to measure non-financial assets and liabilities at fair value on a non-recurring basis. These non-financial assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (such as evidence of impairment), which, if material, are disclosed in the accompanying footnotes.
The Company measures certain assets and liabilities at fair value based on the fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels based on the source of inputs as follows:
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.
Level 3—Valuations based on unobservable inputs and models that are supported by little or no market activity.
Money market funds are classified as Level 1 fair value instruments. Investments in available-for-sale debt securities are classified as Level 2 and carried at fair value, which we estimate utilizing a third-party pricing service. The pricing service utilizes industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. We validate valuations obtained from third-party services by obtaining market values from
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other pricing sources. The Company did not classify any assets or liabilities as Level 3 as of September 30, 2026, or December 31, 2025.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents and restricted cash consist of cash and, if applicable, highly liquid investments with an original maturity of three months or less when purchased, including investments in money market funds and debt securities that approximate fair value. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet and the statements of cash flows.
| | | | | | |
| | As of | ||||
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Cash and cash equivalents | | $ | | | $ | |
Restricted cash included in other noncurrent assets | |
| | |
| |
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows | | $ | | | $ | |
Restricted cash includes amounts required to be held as a security deposit in the form of letters of credit for the Company’s credit card program and the fleet program.
Investments
The Company’s investments consist of debt securities that are classified as available-for-sale. Short-term and long-term investments are carried at fair value and unrealized gains and losses are recorded as a component of accumulated comprehensive income in stockholders’ equity. Interest income earned on cash and investment balances, accretion of the discount on investments in debt securities, amortization of premiums and realized gains and losses, if any, are recorded in interest income in the unaudited condensed consolidated statement of operations and comprehensive income. Realized gains and losses that result from the sale of investments are determined on a specific identification basis.
At each reporting period, the Company reviews any unrealized losses position to determine if the decline in the fair value of the underlying investments is a result of credit losses or other factors. If the assessment indicates that a credit loss exists, any impairment is recognized as an allowance for credit losses in our consolidated statement of operations.
Concentrations of Risk
Substantially all of the Company’s cash and money market funds are held in
The Company is subject to credit risk from its trade receivables related to product sales. The Company extends credit to specialty pharmaceutical distribution companies within the United States. Customer creditworthiness is monitored, and collateral is not required. Historically, the Company has not experienced credit losses on its accounts receivable. The Company monitors its exposure within accounts receivable and would record a reserve for uncollectible amounts, if necessary. As of September 30, 2026,
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receivable; Accredo, which accounted for
For the nine months ended September 30, 2026,
The Company depends on
Share Repurchases
The Company accounts for share repurchases as constructive retirements, whereby it reduces common stock and additional paid-in capital by the amount of the original issuance, with any excess purchase price recorded as a reduction to retained earnings. Under this method, issued and outstanding shares of common stock are reduced by the amount of shares of common stock repurchased, and no treasury stock is recognized on the condensed consolidated financial statements.
Business Combinations
Business combinations and asset acquisitions are accounted for in accordance with FASB ASC 805 Business Combinations.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) No 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 expands disclosures in the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption was permitted. The Company adopted this guidance in the fourth quarter of 2025 on a prospective basis. This pronouncement addresses disclosures only and had no impact on its consolidated financial results.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 makes targeted improvements to accounting for and disclosure of software costs under ASC 350-40. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The guidance may be adopted prospectively, retrospectively, or via a modified prospective transition method. Early adoption is permitted. The Company early adopted this guidance in the first quarter of 2026 on a prospective basis. This pronouncement did not have a material impact on its unaudited condensed consolidated financial statements during the three and nine months ended September 30, 2026.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption, as well as a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 also requires disclosure of the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning
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after December 15, 2027. The guidance may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on the Company’s consolidated financial statements.
4. INVESTMENTS
The carrying value and amortized cost of the Company’s available-for-sale debt securities, summarized by type of security, consisted of the following:
| | | | | | | | | |
| September 30, 2026 | ||||||||
| | Amortized | | Unrealized | | Unrealized | | | Fair |
| | Cost | | Gains | | Losses | | | Value |
Short-term: | | | | | | | | | |
Commercial paper | $ | | | — | | ( | | $ | |
Corporate debt securities | | | | — | | ( | | | |
U.S. government securities | | | | — | | ( | | | |
Total short-term investments | $ | | | — | | ( | | $ | |
| | | | | | | | | |
Long-term: | | | | | | | | | |
Corporate debt securities | | | | | | ( | | | |
U.S. government securities | | | | — | | ( | | | |
Total long-term investments | $ | | | | | ( | | $ | |
| | | | | | | | | |
| December 31, 2025 | ||||||||
| | Amortized | | Unrealized | | Unrealized | | | Fair |
| | Cost | | Gains | | Losses | | | Value |
Short-term: | | | | | | | | | |
Commercial paper | $ | | | | | — | | $ | |
Corporate debt securities | | | | | | — | | | |
Total short-term investments | $ | | | | | — | | $ | |
| | | | | | | | | |
Long-term: | | | | | | | | | |
Commercial paper | $ | | | | | — | | $ | |
Corporate debt securities | | | | | | — | | | |
U.S. government securities | | | | | | — | | | |
Total long-term investments | $ | | | | | — | | $ | |
The Company classifies investments with an original maturity of less than one year as current and investments with an original maturity date of greater than one year as noncurrent in its unaudited condensed consolidated balance sheet. The investments classified as noncurrent have original maturity dates ranging from
5. FAIR VALUE MEASUREMENTS
Money market funds are classified as Level 1 fair value instruments. Investments in available-for-sale debt securities are classified as Level 2 and carried at fair value, which the Company estimates utilizing a third-
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party pricing service. The pricing service utilizes industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates valuations obtained from third-party services by obtaining market values from other pricing sources. The Company did not classify any assets or liabilities as Level 3 as of September 30, 2026, or December 31, 2025.
The Company’s assets measured at fair value consisted of the following:
| | | | | | | | | | | | | |
| September 30, 2026 | | December 31, 2025 | ||||||||||
| | Total | | Level 1 | | Level 2 | | | Total | | Level 1 | | Level 2 |
Assets | | | | | | | | | | | | | |
Cash equivalents | $ | | | | | | | $ | | | | | — |
Commercial paper | | | | — | | | | | | | — | | |
Corporate debt securities | | | | — | | | | | | | — | | |
U.S. government securities | | | | — | | | | | | | — | | |
Total | $ | | | | | | | $ | | | | | |
6. INVENTORY
Inventory, net consisted of the following:
| | | | | | |
| | As of | ||||
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Work in process | |
| | |
| |
Finished goods | |
| | |
| |
Inventory, gross | |
| | |
| |
Reserve for excess inventory | |
| ( | |
| ( |
Total inventory, net | | $ | | | $ | |
7. INTANGIBLE ASSETS
In August 2019, the Company received FDA approval of WAKIX for the treatment of EDS in adult patients with narcolepsy. This event triggered a milestone payment of $
In October 2020, the Company received FDA approval for the NDA for WAKIX for the treatment of cataplexy in adult patients with narcolepsy. This event triggered a milestone payment of $
In February 2022, the Company attained $
Amortization expense was $
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The Company expects the future annual amortization expense for the unamortized intangible assets to be as follows:
| | | |
Years ending December 31, | | | |
2026 (excluding the nine months ended September 30, 2026) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| — |
Thereafter | | | — |
Total | | $ | |
The gross carrying amount and net book value of the intangible asset was as follows:
| | | | | | |
| | As of | ||||
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Gross Carrying Amount | | $ | | | $ | |
Accumulated Amortization | |
| ( | |
| ( |
Net Book Value | | $ | | | $ | |
8. LICENSE AGREEMENTS
Bioprojet Agreements
In July 2017, Harmony entered into the 2017 LCA with Bioprojet whereby Harmony acquired the exclusive right to commercialize the pharmaceutical compound pitolisant for the treatment, and/or prevention, of narcolepsy, obstructive sleep apnea, idiopathic hypersomnia, and Parkinson’s disease, as well as any other indications unanimously agreed by the parties in the United States and its territories. A milestone payment of $
In July 2022, Harmony entered into the 2022 LCA with Bioprojet whereby Harmony obtained exclusive rights to develop, manufacture and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon agreement of both parties. Harmony paid an initial, non-refundable $
In April 2024, the Company announced that it entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and
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other potential indications (the “Sublicense”). Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound. Under the Sublicense, the Company paid Bioprojet an upfront license fee of $
CiRC Agreement
In June 2025, the Company entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with a related party, CiRC Biosciences, Inc. (“CiRC”). Under this agreement, the Company and CiRC will collaborate on the research and development of
Novitium Agreement
In January 2026, the Company entered into a license agreement (the “Novitium License Agreement”) with Novitium Pharma LLC (“Novitium”), which includes an exclusive license to additional intellectual property that expands the intellectual property estate of the Company, as well as a co-exclusive license, under which the Company and Novitium intend to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake. Pursuant to the Novitium License Agreement, the Company paid an upfront license fee of $
MSN Agreement
In February 2026, the Company entered into a license agreement (the “MSN License Agreement”) with MSN Laboratories Private Limited (“MSN”), which includes an exclusive, royalty-bearing license, with the right to grant sublicenses, to additional intellectual property, including licensed patents, under which the Company intends to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake. Pursuant to the MSN License Agreement, the Company paid an upfront license fee of $
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IPR&D charge recorded in research and development in the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2026. The milestone payment is expected to be paid in the fourth quarter of 2026. In addition, the Company will be obligated to pay low single-digit royalties on net sales of future products that include a new formulation of pitolisant, if covered by a patent provided under the MSN License Agreement.
The Company incurred $
9. ACCRUED EXPENSES
Accrued expenses consisted of the following:
| | | | | | |
| | As of | ||||
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Royalties | | $ | | | $ | |
Rebates and other sales deductions | |
| | |
| |
Interest | | | | | | |
Sales and marketing | |
| | |
| |
Research and development | |
| | |
| |
Milestone payments | |
| | |
| — |
Legal and professional fees | |
| | |
| |
Other expenses | |
| | |
| |
| | $ | | | $ | |
10. DEBT
Term Loan A Credit Agreement
In July 2023, the Company entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders, which was subsequently amended in September 2023. The TLA Credit Agreement, as amended, provides for a
The repayment schedule for the TLA Term Loan consisted of quarterly $
The net cash received related to the TLA Term Loan as a result of the transactions, less debt issuance costs of $
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Long-term debt, net consisted of the following:
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Principal amount | | $ | | | $ | |
Unamortized debt discount associated with debt financing costs | |
| ( | |
| ( |
Total debt, net | | | | | | |
Less current portion | | | ( | | | ( |
Long-term debt, net | | $ | | | $ | |
Future minimum payments relating to long-term debt, net as of September 30, 2026, for the periods indicated below consisted of the following:
| | | |
Years ending December 31, | | | |
2026 (excluding the nine months ended September 30, 2026) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| — |
2030 | |
| — |
Thereafter | |
| — |
Total | | $ | |
Interest expense related to the Company’s long-term debt, net, is included in interest expense within the unaudited condensed consolidated statements of operations and comprehensive income and consisted of the following:
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Interest on principal balance | | $ | | | $ | | | $ | | | $ | | |
Amortization of deferred financing costs | |
| | |
| | |
| | |
| | |
Total term loan interest expense | | $ | | | $ | | | $ | | | $ | | |
The TLA Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. The Company had an event of default, which dated back to July 2025, related to a nonfinancial covenant due to a delay in a subsidiary joining the TLA Credit Agreement as a guarantor. On May 4, 2026, the Company entered into a Waiver and Consent Agreement with the Administrative Agent and certain lenders, whereby the event of default was waived. The Company has made all required principal and interest payments on time in connection with the TLA Credit Agreement and is in compliance with all covenants as of September 30, 2026.
11. LEASES
In June 2018, the Company entered into an operating lease for
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The Company also leases a fleet of automobiles that are primarily used by its sales force and are classified as operating leases.
Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments using our incremental borrowing rate. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Our leases have remaining lease terms of less than
The Company recorded operating lease costs of $
As of September 30, 2026, the weighted-average remaining lease term for operating leases was
Supplemental balance sheet information related to operating leases was as follows:
| | | | | | |
Leases | Classification | | September 30, 2026 | | | December 31, 2025 |
Assets | | | | | | |
Operating lease right-of-use assets | Other noncurrent assets | $ | | | $ | |
Liabilities | | | | | | |
Operating lease liability, current portion | Other current liabilities | $ | | | $ | |
Operating lease liability, long-term | Other long-term liabilities | | | | | |
Total operating lease liabilities | | $ | | | $ | |
Supplemental cash flow information related to operating leases was as follows:
| | | | | | |
| | September 30, 2026 | | | September 30, 2025 | |
Operating cash flows from operating leases | $ | | | $ | | |
Right of use assets obtained in exchange for operating lease obligations | $ | | | $ | | |
Future payments under non-cancelable operating leases with initial terms of one year or more as of September 30, 2026, consisted of the following:
| | | |
Years ending December 31, | | | |
2026 (excluding the nine months ended September 30, 2026) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | |
| |
Total lease payments | | | |
Less: imputed interest | | | ( |
Total lease liabilities | | $ | |
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, the Company is subject to claims and suits arising in the ordinary course of business. The Company accrues such liabilities when they are known, if they are deemed probable and can be reasonably
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estimated. Accruals may be adjusted from time to time, as appropriate, in light of new information. The amount of loss incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued. Any expenses, fines, fees, penalties, judgments or settlements that might be incurred by the Company in connection with proceedings could have a material adverse effect on the Company’s results of operations and financial condition. As of September 30, 2026, there were no material claims or lawsuits outstanding other than the Abbreviated New Drug Application (“ANDA”) litigation and patent litigation discussed below.
ANDA Litigation
In September 2023, the Company and its licensor, Bioprojet, received notice from Lupin Limited (“Lupin”) pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Lupin Notice Letter”) that Lupin has submitted ANDA No. 218846 (the “Lupin ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of U.S. Patent Nos. 8,486,947 (“’947 patent”) and 8,207,197 (“’197 patent”). The ’947 patent and the ‘197 patent are listed with respect to WAKIX® in the FDA’s Orange Book and will expire in September 2029 and March 2030, respectively. The Lupin Notice Letter asserts that their generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, we, Bioprojet and Bioprojet’s wholly owned subsidiary, Bioprojet Pharma SAS (“Bioprojet Pharma”), filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Lupin and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to the filing of their respective ANDAs with the FDA. In December 2024, the Company and Bioprojet received further notice from Lupin pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Second Lupin Notice Letter”) that Lupin has submitted the Lupin ANDA to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ‘947 patent and the ‘197 patent. The Second Lupin Notice Letter asserts that its generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable. In January 2025, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ’947 patent and the ‘197 patent against Lupin. In June 2025, the Company reached an agreement with Lupin to resolve the dispute over Lupin’s ANDA to market a generic version of WAKIX. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware will be dismissed, and Lupin will have a license to sell its generic product beginning July 2030 if WAKIX receives pediatric exclusivity, or earlier under certain circumstances.
In September 2023, the Company and Bioprojet received notice from Novugen Pharma Sdn. Bhd. (“Novugen”) pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Novugen Notice Letter”) that Novugen had submitted ANDA No. 218834 (the “Novugen ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ’947 patent and ’197 patent. The Novugen Notice Letter asserts that their generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, we, Bioprojet and Bioprojet’s wholly owned subsidiary, Bioprojet Pharma SAS (“Bioprojet Pharma”), filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Novugen and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to the filing of their respective ANDAs with the FDA. In October 2024, the Company reached an agreement with Novugen Pharma to resolve the dispute over Novugen’s ANDA for a generic pitolisant hydrochloride product. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware was ended on November 4, 2024, and Novugen will have a license to sell its generic product beginning July 2030 if WAKIX receives pediatric exclusivity, or earlier under certain circumstances.
In October 2023, the Company and Bioprojet received notice from Novitium, pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Novitium Notice Letter”), that Novitium has submitted ANDA No. 218495 (the “Novitium ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of U.S. Patent No. 8,354,430 (the “’430 patent”), which is also listed with respect to WAKIX® in the FDA’s Orange Book and expired in February 2026. The Novitium Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent,
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’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, the Company, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Novitium and certain of their affiliates and agents and for patent infringement of the ’430 patent against Novitium and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA. In January 2026, the Company reached an agreement with Novitium to resolve the dispute over Novitium’s ANDA to market a generic version of WAKIX. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware will be dismissed, and Novitium will have a license to sell its generic product beginning July 2030 if WAKIX receives pediatric exclusivity, or earlier under certain circumstances.
In October 2023, the Company and Bioprojet received notice from Zenara Pharma Pvt. Ltd. (“Zenara”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Zenara Notice Letter”), that Zenara has submitted ANDA No. 218796 (the “Zenara ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ’430 patent, ’947 patent and the ’197 patent. The Zenara Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent, ’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, the Company, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Zenara and certain of their affiliates and agents and for patent infringement of the ’430 patent against Zenara and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA. In January 2026, the Company reached an agreement with Hikma (to whom Zenara transferred its ANDA) to resolve the dispute over Hikma’s ANDA to market a generic version of WAKIX. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware will be dismissed, and Hikma will have a license to sell its generic product beginning March 2030 if WAKIX receives pediatric exclusivity, or earlier under certain circumstances.
In October 2023, the Company and Bioprojet received notice from AET Pharma US, Inc. (“AET”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “AET Notice Letter”), that AET has submitted ANDA No. 218892 (the “AET ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ’947 patent and the ’197 patent. AET’s Notice Letter asserts that AET’s generic product will not infringe the ’947 patent and the ‘197 patent and/or that ’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, the Company, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against AET and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA. In August 2024, the Company and Bioprojet received further notice from AET pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Second AET Notice Letter”) that AET has submitted the AET ANDA to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ‘947 patent and the ‘197 patent. The Second AET Notice Letter asserts that its generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable. In August 2024, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ’947 patent and the ‘197 patent against AET.
In October 2023, the Company and Bioprojet received notice from Annora Pharma Private Limited (“Annora”), pursuant to 21 U.S.C. § 355(j) et seq. and 21 C.F.R. § 314.95 et seq. (the “Annora Notice Letter”), that Annora has submitted ANDA No. 218832 (the “Annora ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX® before the expiration of the ’430 patent, the ’947 patent and the ’197 patent. The Annora Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent, ’947 patent and the ‘197 patent are invalid or unenforceable. In November 2023, the Company, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Annora and certain of their affiliates and agents and for patent infringement of the ’430 patent against Annora and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA. In March 2025, the Company reached an agreement with Annora to resolve the dispute over Annora’s
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ANDA for a generic pitolisant hydrochloride product. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware was ended on March 31, 2025, and Annora will have a license to sell its generic product beginning July 2030 if WAKIX receives pediatric exclusivity, or earlier under certain circumstances.
In October 2023, MSN Pharmaceuticals Inc. (“MSN Pharma”) sent correspondence to the Company and Bioprojet stating that MSN Pharma has submitted ANDA No. 218873 (the “MSN ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX®. In December 2023, MSN Laboratories Private Limited (“MSN”) filed a declaratory judgment action in the United States District Court for the Eastern District of Virginia against Bioprojet claiming that the ‘430 patent, the ’947 patent and the ‘197 patent will not be infringed by MSN’s generic version of WAKIX® and that the ‘947 patent is invalid. In December 2023, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ‘430 patent, the ’947 patent and the ‘197 patent against MSN and MSN Pharma. In January 2024, the declaratory judgment action was transferred from the United States District Court for the Eastern District of Virginia to the United States District Court for the District of Delaware. In January 2026, the Company reached an agreement with MSN to resolve the dispute over MSN’s ANDA to market a generic version of WAKIX. Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware will be dismissed. The remaining terms of the settlement agreement remain confidential.
In April 2024, the United States District Court for the District of Delaware issued a scheduling order consolidating the cases described above for all purposes up to and including trial (the “Scheduling Order”). The Scheduling Order set March 27, 2025, as the date for the hearing on claim construction and scheduled a bench trial that began on February 17, 2026, and concluded on February 19, 2026. Opening post-trial briefs were filed on April 9, 2026. Rebuttal briefs were filed on May 7, 2026, and reply briefs were filed on May 21, 2026. Oral arguments were held on October 22, 2026.
The resolution of any ANDA litigation matter against the Company could have a material adverse effect on the Company’s results of operations.
Patent Infringement Litigation
On April 20, 2026, the Company, along with its exclusive licensor Novitium, filed a lawsuit against AET, AET Laboratories Private Limited, Alfred E. Tiefenbacher (GmbH & Co. KG), Sandoz Inc., Sandoz Private Limited, and Sandoz GmbH, alleging that the defendants’ actions in connection with the filing of AET’s ANDA No. 218892 infringe one or more claims of U.S. Patent No. 11,623,920. The case was filed in the United States District Court for the District of Delaware and assigned case no. 26-cv-00453-JLH.
On June 22, 2026, the defendants filed their answer to our complaint, along with counterclaims alleging various antitrust counterclaims against either the Company or the Company and Novitium. On July 6, 2026, the parties stipulated that defendants Sandoz Private Limited and Sandoz GmbH be dismissed without prejudice, which stipulation was granted on July 7, 2026. On July 21, 2026, the defendants filed an amended answer updating the complaint to remove those parties.
Arguments on several pending motions and proposals concerning a Scheduling Order were held on October 21, 2026 and rulings on the motions and entry of a Scheduling Order remain pending. In addition, a Preliminary Injunction hearing is scheduled for January 26, 2027, with an expected decision by February 14, 2027.
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13. STOCKHOLDERS’ EQUITY
Common Stock
The holders of common stock are entitled to
Share Repurchase Program
In October 2023, the Company’s Board of Directors approved a share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $
14. STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION
2020 Stock Incentive Plan
In August 2020, the Company adopted, and its stockholders approved, the 2020 Incentive Award Plan (the “2020 Plan”), in order to facilitate the grant of cash and equity incentives to directors, employees (including the Company’s named executive officers) and consultants of the Company and its subsidiaries. The 2020 Plan provides for the grant of stock options, including incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”), Stock Appreciation Rights (“SARs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards.
Stock options and SARs under the 2020 Plan have a
2017 Stock Incentive Plan
In August 2017, the Company adopted an equity incentive plan (the “2017 Plan”). Under the 2017 Plan, directors, officers, employees, consultants, and advisors of the Company can be paid incentive compensation measured by the value of the Company’s shares of common stock through grants of stock options, SARs or restricted stock. Following the adoption of the 2020 Plan, no further grants have been, or will be, made under the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of outstanding awards granted under it.
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Stock Options
The following table summarizes stock option activity for the nine months ended September 30, 2026:
| | | | | | | | | | | |
| | | | | | | | Weighted- | | | |
| | | | Weighted- | | | Average | | | | |
| | | | Average | | | Remaining | | | Aggregate | |
| | Number of | | Exercise | | | Contractual | | | Intrinsic | |
| | Awards | | Price | | | Term | | | Value ($000's) | |
Awards outstanding—December 31, 2025 |
| | | $ | | | | | | | |
Awards issued |
| | | $ | | | | | | | |
Awards exercised |
| ( | | $ | | | | | | | |
Awards forfeited |
| ( | | $ | | | | | | | |
Awards outstanding—September 30, 2026 |
| | | $ | | | | | $ | | |
Awards exercisable—September 30, 2026 | | | | $ | | | | | $ | | |
Awards unvested—September 30, 2026 | | | | $ | | | | | $ | | |
The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2026, was $
Stock Appreciation Rights
The following table summarizes SARs activity for the nine months ended September 30, 2026:
| | | | | | | | | | | |
| | | | | | | | Weighted- | | | |
| | | | Weighted- | | | Average | | | | |
| | | | Average | | | Remaining | | | Aggregate | |
| | Number of | | Exercise | | | Contractual | | | Intrinsic | |
| | Awards | | Price | | | Term | | | Value ($000's) | |
Awards outstanding—December 31, 2025 |
| | | $ | | | | | | | |
Awards issued |
| | | $ | — | | | | | | |
Awards exercised |
| ( | | $ | | | | | | | |
Awards forfeited |
| — | | $ | — | | | | | | |
Awards outstanding—September 30, 2026 |
| | | $ | | | | | $ | | |
Awards exercisable—September 30, 2026 | | | | $ | | | | | $ | | |
Restricted Stock Units
The following table summarizes RSU activity for the nine months ended September 30, 2026:
| | | | | |
| | | | | |
| | | | Weighted- | |
| | | | Average | |
| | Number of | | Grant Date | |
| | Awards | | Fair Value | |
Awards outstanding—December 31, 2025 |
| | | $ | |
Awards issued |
| | | $ | |
Awards vested |
| ( | | $ | |
Awards forfeited |
| ( | | $ | |
Awards outstanding—September 30, 2026 |
| | | $ | |
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Value of RSUs
The fair value of RSUs is equal to the value of the Company’s common stock on the grant date.
The weighted-average grant date fair value of awards issued under the 2020 Plan during the nine months ended September 30, 2026, was $
Value of Stock Options and SARs
The Company values options and SARs using the Black-Scholes option-pricing model. The Company lacks sufficient historical company-specific volatility information. Therefore, the Company estimates expected stock volatility based on historical volatility of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. For SARs, the expected term is based upon the weighting of certain future events. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for the time periods approximately equal to the expected term of the award. An expected dividend yield of
The assumptions used to value the awards are summarized in the following table.
| | | | | |
| | As of | |||
| | September 30, 2026 | | December 31, 2025 | |
Dividend yield |
| | % | | % |
Expected volatility |
| % | % | ||
Risk-free interest rate |
| % | % | ||
Lack of marketability discount |
| | % | | % |
Expected term (years) |
|
| | ||
Stock-Based Compensation Expense
Stock-based compensation expense for each of the three and nine months ended September 30, 2026, and 2025, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income in the following line items:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Research and development expense | | $ | | | $ | | | $ | | | $ | |
Sales and marketing expense | |
| | |
| | |
| | |
| |
General and administrative expense | |
| | |
| | |
| | |
| |
| | $ | | | $ | | | $ | | | $ | |
Stock-based compensation expense related to options and RSUs issued under the 2017 Plan and 2020 Plan is included in stockholders’ equity, and a liability for SARs is included in other non-current liabilities, in the Company’s unaudited condensed consolidated balance sheet. As of September 30, 2026, the total unrecognized stock-based compensation expense was $
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respectively. These amounts will be recognized in the Company’s consolidated statement of operations over a weighted average period of
Employee Stock Purchase Plan
The 2020 Employee Stock Purchase Plan (“ESPP”) was adopted by the Company on April 30, 2021. The ESPP permits eligible employees to purchase shares of the Company’s common stock at a
15. SEGMENT INFORMATION
The Company has
The accounting policies of the rare neurological diseases segment are consistent with those described in Note 3, Summary of Significant Accounting Policies, and the measure of segment assets is reported on the consolidated balance sheets as total assets. The Company’s CODM is the chief executive officer. The CODM assesses performance of the rare neurological diseases segment using net income as reported in the consolidated statements of operations and comprehensive income. Net income is assessed by the CODM to make decisions on how to allocate resources, such as reinvesting profits into the rare neurological diseases segment or pursuing potential investing activities.
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The following table summarizes segment revenue and significant segment expenses for each of the three and nine months ended September 30, 2026, and 2025:
| | | | | | | | | | | |
| Rare Neurological Diseases Segment | ||||||||||
| Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||
Net product revenue | $ | | | $ | | | $ | | | $ | |
Less: | | | | | | | | | | | |
Cost of product sold (a) | | | | | | | | | | | |
Research and development (b) | | | | | | | | | | | |
Sales and marketing (c) | | | | | | | | | | | |
General and administrative (d) | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | |
Stock-based compensation | | | | | | | | | | | |
Interest expense | | | | | | | | | | | |
Interest income | | ( | | | ( | | | ( | | | ( |
Income tax expense | | | | | | | | | | | |
Other segment items (e) |
| | |
| | |
| | |
| |
Consolidated net income | $ | | | $ | | | $ | | | $ | |
| (a) | Cost of product sold excluding depreciation. |
| (b) | Research and development excluding stock-based compensation and IPR&D. |
| (c) | Sales and marketing excluding stock-based compensation. |
| (d) | General and administrative excluding stock-based compensation and amortization. |
| (e) |
16. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted net income per share of common is computed under the treasury stock method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income, the potential dilutive effects of stock options, stock appreciation rights and restricted stock units.
The following table sets forth the computation of basic and diluted net income per share:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator |
| | |
| | | | | |
| | |
Net income | | $ | | | $ | | | $ | | | $ | |
Denominator | |
| | |
| | |
| | |
| |
Net income per share of common stock - basic | | $ | | | $ | | | $ | | | $ | |
Net income per share of common stock- diluted | | $ | | | $ | | | $ | | | $ | |
Weighted average number of shares of common stock - basic | |
| | |
| | |
| | |
| |
Weighted average number of shares of common stock - diluted | |
| | |
| | |
| | |
| |
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Securities outstanding and included in the computation above, utilizing the treasury stock method are as follows:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Stock options, SARs, and RSUs to purchase common stock | | | | | | | | | | | | |
The following table represents the shares of common stock excluded from the diluted earnings per share calculation because their effect would have been anti-dilutive:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Stock options, SARs, and RSUs to purchase common stock |
| | |
| | | | | |
| | |
17. INCOME TAXES
A reconciliation of the differences between the U.S. statutory federal income tax rate of
| | | | | | | | | |
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | ||||
| | 2026 | | | 2026 | ||||
| | Amount | | Percent | | | Amount | | Percent |
Federal statutory rate | $ | | | | $ | | | ||
State income taxes, net of federal tax effect* | | | | | | | | ||
Tax credits | | | | | | | | | |
Orphan drug credit | | ( | | ( | | | ( | | ( |
Research and development credit | | | | | | ( | | ( | |
Other nontaxable or nondeductible items | | | | | | | | ||
Other adjustments | | | | | | | | ||
Effective tax rate | $ | | | | $ | | | ||
* State taxes in Illinois and Tennessee made up the majority (greater than 50%) of the tax effect in this category.
A reconciliation of the differences between the U.S. statutory federal income tax rate of
| | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2025 | | 2025 | |
Federal income tax rate | | | % | | % |
State taxes | | | | | |
Credits | | ( | | ( | |
Nondeductible IPR&D | | | | | |
Other | | | | | |
Total | | | % | | % |
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18. RELATED-PARTY TRANSACTIONS
Paragon Biosciences, LLC (“Paragon”) is an entity that shares common ownership with the Company. In addition, the Chairman of the Company’s board of directors was the President and owner of the entity. The Company is party to a right of use agreement with Paragon whereby it has access to and the right to use certain office space leased by Paragon in Chicago, Illinois. In addition, the Company received consulting services from Paragon during the three and nine months ended September 30, 2026, and 2025. The Company incurred $
In June 2025, the Company entered into the CiRC Agreement with CiRC, an entity controlled by Paragon. The Company paid a $
19. SUBSEQUENT EVENT
In October 2026, a clinical pharmacokinetic development milestone related to the Novitium License Agreement was achieved, which triggered a $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, liquidity and capital resources, including the sufficiency of our cash, cash equivalents and investments to fund our operations, business strategy, including business development activities, our commercial products, including expected sales of, and market opportunity for, WAKIX; our product candidates and their potential benefits and differentiation; the development and expansion of our pipeline, product approvals and the timing and outcome of regulatory submissions and reviews, including target PDUFA dates; research and development and other costs and expenses, anticipated timing and likelihood of success of clinical trials, the expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these items or similar expressions.
All of our forward-looking statements are qualified in their entirety by reference to known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to, risks and uncertainties relating to:
| ● | our commercialization efforts and strategy for WAKIX; |
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| ● | the rate and degree of market acceptance and clinical utility of pitolisant in additional indications, if approved, and any other product candidates we may develop or acquire, if approved; |
| ● | our research and development plans, including our plans to explore the therapeutic potential of pitolisant in additional indications, progress developing the new Pitolisant Gastro-resistant (“Pitolisant GR”) and Pitolisant High Dose (“Pitolisant HD”) formulations, and the development of BP-205, clemizole hydrochloride (“EPX-100”), an amorphous form of pitolisant, and other compounds; |
| ● | our ongoing and planned clinical trials; |
| ● | the availability of favorable insurance coverage and reimbursement for WAKIX; |
| ● | the timing of, and our ability to obtain, regulatory approvals for pitolisant for other indications as well as any other product candidates; |
| ● | our estimates regarding expenses, future revenue, capital requirements and additional financing needs; |
| ● | our ability to identify, acquire and integrate additional products or product candidates with significant commercial potential that are consistent with our commercial objectives; |
| ● | our commercialization, marketing and manufacturing capabilities and strategy; |
| ● | significant competition in our industry; |
| ● | our intellectual property positions; |
| ● | loss or retirement of key members of management; |
| ● | failure to successfully execute our growth strategy, including any delays in our planned future growth; |
| ● | our failure to maintain effective internal controls; |
| ● | the impact of government laws and regulations; and |
| ● | other risks and uncertainties identified under the “Risk Factors” section or other portions of this report or other of our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025. |
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the section in our most recent Annual Report on Form 10-K entitled “Item 1A. Risk Factors” and the sections in this Quarterly Report on Form 10-Q titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
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Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry, including industry statistics and forecasts, competitive position and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industry and markets, which we believe to be reasonable. In addition, projections, forecasts, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed and forecasts in the estimates made by the independent parties and by us.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
As used herein, the terms “Harmony,” “we,” “us,” “our” and “the Company” refer to Harmony Biosciences Holdings, Inc., a Delaware corporation and our operating subsidiary, Harmony Biosciences, LLC.
Further, we have in-licensed from Bioprojet Société Civile de Recherche (“Bioprojet”) the registered trademark product name WAKIX® in the United States. We also have registered trademark protection in the United States for KNOW NARCOLEPSY®, REM AT THE WRONG TIME® and NON-REM AT THE WRONG TIME®, as well as our brand and logo HB®, HB HARMONY BIOSCIENCES® and HARMONY BIOSCIENCES®. This report also includes trademarks, service marks and trade names of other companies. Trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.
Company Overview
At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases. To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake and rare epilepsy, and we are harnessing scientific insights and pioneering approaches as we move forward to advance meaningful treatments that help patients thrive in both rare and broad diseases. Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc.
Products and Product Candidates
WAKIX® (pitolisant) (“WAKIX”)
Our pitolisant franchise is anchored by WAKIX, an oral, once-daily therapy licensed from Bioprojet Société Civile de Recherche (“Bioprojet”) for the treatment of narcolepsy. WAKIX is approved by the U.S. Food and Drug Administration (the “FDA”) for the treatment of excessive daytime sleepiness (“EDS”) and cataplexy in patients six years and older with narcolepsy. WAKIX is a first-in-class molecule with a novel mechanism of action (“MOA”) and is the only selective H3 receptor antagonist/inverse agonist approved by the FDA. Additionally, it is the first-and-only FDA-approved treatment for patients with narcolepsy that is not scheduled as a controlled substance by the United States Drug Enforcement Administration (the “DEA”).
We are focusing development efforts on other rare neurological diseases in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”), and remain committed to obtaining pediatric exclusivity for
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WAKIX. In 2024, we initiated the PWS Phase 3 registrational trial, the TEMPO study, in support of these efforts. We anticipate topline data from the TEMPO study in mid-2027.
Pitolisant gastro-resistant (“Pitolisant GR”) and Pitolisant high dose (“Pitolisant HD”)
We are developing two new formulations of pitolisant through a license agreement with Bioprojet: Pitolisant GR and Pitolisant HD. Pitolisant GR is designed with an enteric coating meant to reduce the potential for gastrointestinal side effects in patients prone to gastrointestinal symptoms, and to enable patients to initiate treatment at a therapeutic dose without titration, which we believe is an important clinical differentiation. In June 2026, we submitted a New Drug Application (“NDA”) for Pitolisant GR to the FDA, which was subsequently accepted for full review with a target Prescription Drug User Fee Act (“PDUFA”) date of April 1, 2027. Pitolisant HD is an enhanced formulation of pitolisant with an optimized pharmacokinetic (“PK”) profile, enteric coating, and higher dosing to drive greater efficacy, and enables patients to initiate treatment at a therapeutic dose without titration. It is designed to provide differentiated labeling for fatigue in narcolepsy and sleep inertia in idiopathic hypersomnia (“IH”). Pitolisant HD is currently in a Phase 3 registrational trial in narcolepsy, ONSTRIDE1, and a Phase 3 registrational trial in IH, ONSTRIDE2. We expect topline data in 2027 and anticipate a target PDUFA date in 2028. Utility patents for both Pitolisant GR and Pitolisant HD have been filed to extend the pitolisant franchise into the 2040s.
Other Pipeline Products
Through business development, we have acquired or licensed the rights to develop BP-205 (orexin-2 receptor agonist), EPX-100 (clemizole hydrochloride), CBS-104 and CBS-105.
BP-205 is built on a novel chemical scaffold with the potential for best-in-class therapy due to its high potency. We intend to develop BP-205 for the treatment of multiple CNS indications. We filed an investigational medicinal product dossier (“IMPD”) with the EMA and began first-in-human studies in the fourth quarter of 2025. The topline data from the single ascending dose (“SAD”) study are encouraging and supportive of a potential best-in-class profile for an orexin 2 receptor agonist. In July 2026, we submitted an Investigational New Drug application (“IND”) to the FDA, which is now open. During the third quarter of 2026, we initiated a Phase 1b study in sleep-deprived healthy volunteers. The BP-205 Phase 1 preliminary clinical PK data from the multiple ascending dose (“MAD”) study continue to be supportive of a potential best-in-class profile.
EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of Dravet syndrome (“DS”) and Lennox-Gastaut syndrome (“LGS”). EPX-100 is currently in two Phase 3 registrational trials, one for each of DS (the ARGUS study) and LGS (the LIGHTHOUSE study). We expect topline data in 2027 and anticipate a target PDUFA date in 2028.
CBS-104 and CBS-105 are investigational novel regenerative cellular therapies being developed in collaboration with CiRC Biosciences for the treatment of refractory epilepsy and treatment-resistant narcolepsy, respectively.
Key Developments
In January 2026, we entered into a license agreement (the “Novitium License Agreement”) with Novitium Pharma LLC (“Novitium”), which includes an exclusive license to additional intellectual property that will expand our patent estate, as well as a co-exclusive license, under which we intend to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake.
In February 2026, we entered into a license agreement (the “MSN License Agreement”) with MSN Laboratories Private Limited (“MSN”), which includes an exclusive, royalty-bearing license, with the right to grant sublicenses, to additional intellectual property, including licensed patents, under which we intend to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake. In September 2026, the pending licensed patents were approved by the United States Patent and Trademark Office
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(“USPTO”), and triggered a $25.0 million milestone payment, which we expect to be paid in the fourth quarter of 2026.
In April 2026, we, along with our exclusive licensor Novitium, filed a lawsuit against AET Pharma US, Inc. (“AET”), AET Laboratories Private Limited, Alfred E. Tiefenbacher (GmbH & Co. KG), Sandoz Inc., Sandoz Private Limited, and Sandoz GmbH, alleging that the defendants’ actions in connection with the filing of AET’s ANDA No. 218892 infringe one or more claims of U.S. Patent No. 11,623,920. The case was filed in the United States District Court for the District of Delaware and assigned case no. 26-cv-00453-JLH.
In June 2026, we submitted an NDA for Pitolisant GR to the FDA, which was subsequently accepted for full review with a target PDUFA date of April 1, 2027.
In July 2026, we submitted an IND for BP-205 to the FDA, which is now open, and initiated a Phase 1b study in sleep-deprived healthy volunteers in the third quarter of 2026, with topline data expected in the first quarter of 2027. In August 2026, we announced Phase 1 clinical PK data from the SAD study for BP-205, which demonstrated favorable PK, safety, and tolerability profiles. In November 2026, we announced topline data from the Phase 1 MAD study, which reinforced the favorable safety, tolerability and PK profile observed in the SAD portion of the study, with no liver or visual adverse events reported and no clinically significant cardiovascular events or electrocardiogram abnormalities recorded. In addition, we plan to initiate Phase 2 trials for BP-205 in mid-2027 to evaluate multiple CNS indications.
Commercial Performance Metrics
As of September 30, 2026, we have continued to see growth in the number of unique healthcare professionals (“HCP”) prescribing WAKIX since it became available in November 2019. There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) programs. The average number of patients on WAKIX for the three months ended September 30, 2026, was approximately 9,350. Additionally, as of September 30, 2026, we have maintained formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.
Financial Operations Overview
Net Product Revenue
Net product revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts. Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different customer segments and/or changes in our estimates.
Cost of Product Sold
Cost of product sold includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs, and salaries of employees involved with oversight of production. We expect the cost of product sold to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX.
The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be August 2027. We regularly review our inventory levels and expect write-offs from time to time. We will continue to assess inventory levels in future periods as demand for WAKIX and the rate of inventory turnover evolves. We currently have adequate supply of WAKIX tablets to cover demand into the fourth quarter of 2028, with additional API on-hand inventory to support at least 18 months beyond this time frame.
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Research and Development Expenses
Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with PWS, and the development of our product candidates EPX-100, Pitolisant GR, Pitolisant HD, BP-205 and an amorphous form of pitolisant. We also incur research and development expenses related to our team of Medical Science Liaisons (“MSLs”) who interact with key opinion leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant. In addition, our MSLs support our market access team with the presentation of clinical data to payors upon request and our clinical development team to identify potential clinical trial sites. Research and development costs are expensed as incurred. We have significantly increased our research and development efforts as we advance our clinical programs and add product candidates to expand our pipeline. Research and development expenses also include:
| ● | employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our research and development personnel; |
| ● | direct third-party costs such as expenses incurred under agreements with clinical research organizations (“CROs”), and contract development and manufacturing organizations (“CDMOs”); |
| ● | manufacturing costs in connection with producing materials for use in conducting clinical trials; |
| ● | costs related to packaging and labelling of clinical supplies; |
| ● | other third-party expenses (e.g., consultants, advisors) directly attributable to the development of our product candidates; |
| ● | payments associated with the achievement of development and regulatory milestones; |
| ● | acquired in-process research and development; and |
| ● | amortization expense for assets used in research and development activities. |
A significant portion of our research and development costs are external costs, such as fees paid to CROs and CDMOs, central laboratories, contractors, and consultants in connection with our clinical development programs. Internal expenses primarily relate to personnel who are deployed across multiple programs.
Product candidates in later stages of clinical development generally have higher development costs in the current period than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, milestone payments, and the cost of submitting an NDA to the FDA (and/or other regulatory authorities). We expect our research and development expenses to be significant as we advance our current clinical development programs and seek regulatory approval for Pitolisant GR, complete the Phase 3 clinical trials for additional indications for pitolisant, EPX-100 and Pitolisant HD, and advance the development of BP-205, a new formulation of pitolisant and CBS-105 toward new indications.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any additional indications for pitolisant or other product candidates that we move forward for regulatory approval. There are numerous risks and uncertainties associated with developing product candidates, including uncertainty related to:
| ● | the duration, costs and timing of clinical trials of our current development programs and any further clinical trials related to new product candidates; |
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| ● | the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; |
| ● | the acceptance of INDs for our planned clinical trials or future clinical trials; |
| ● | the successful and timely enrollment and completion of clinical trials; |
| ● | the successful completion of preclinical studies and clinical trials; |
| ● | successful data from our clinical programs that support an acceptable risk-benefit profile of our product candidates in the intended populations; |
| ● | the receipt and maintenance of regulatory and marketing approvals from applicable regulatory authorities; |
| ● | establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved; |
| ● | the entry into collaborations to further the development of our product candidates; |
| ● | obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates; and |
| ● | successfully launching our product candidates and achieving commercial sales, if and when approved. |
A change in the outcome of any of these variables with respect to the development of any of our programs or any product candidate we develop would significantly change the costs, timing and viability associated with the development and/or regulatory approval of such programs or product candidates.
Sales and Marketing Expenses
Our sales and marketing expenses primarily relate to the marketing and commercialization activities of WAKIX for the treatment of EDS and cataplexy in patients six years and older with narcolepsy. Marketing and commercial activities account for a significant portion of our operating expenses and are expensed as incurred. We expect our sales and marketing expenses to increase in the near- and mid-term to support WAKIX’s indications for the treatment of EDS or cataplexy in adult patients with narcolepsy, the treatment of EDS in pediatric patients 6 years of age and older with narcolepsy and to expand our portfolio with the anticipated growth from potential additional indications.
Sales and marketing expenses include:
| ● | employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our sales, marketing and market access personnel; |
| ● | healthcare professional-related expenses, including marketing programs, healthcare professional promotional medical education, disease education, conference exhibits and market research; |
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| ● | patient-related expenses, including patient awareness and education programs, disease awareness education, patient reimbursement programs, patient support services and market research; |
| ● | market access expenses, including payor education, specialty pharmacy programs and services to support the continued commercialization of WAKIX; and |
| ● | secondary data purchases (i.e., patient claims and prescription data), data warehouse development and data management. |
In addition, sales and marketing expenses include external costs such as website development, media placement fees, agency fees for patient, medical education and promotional expenses, market research, analysis of secondary data, conference fees and consulting fees.
General and Administrative Expenses
General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments. General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting, and consulting fees.
We anticipate that our general and administrative expenses will increase in the future to support our continued commercialization efforts and ongoing and future potential research and development activities. These increases will likely be driven by costs associated with the hiring of additional personnel and fees paid to outside consultants, lawyers and accountants, among other expenses. Additionally, we face costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the SEC, insurance and investor relations costs. If any of our current or future indication expansion programs or new product candidates obtain U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.
Paragon Agreement
We are party to a right-of-use agreement with Paragon whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. We paid fees of $0.1 million and $0.2 million to Paragon related to rent and consulting fees for the three and nine months ended September 30, 2026, respectively.
Interest Expense
Interest expense consists primarily of interest expense on debt facilities, amortization of debt issuance costs and amortization of premiums on our debt securities.
Interest Income
Interest income consists primarily of cash interest earned on our cash and investment balances and accretion of the discount on our investments in debt securities.
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Results of Operations
The following table sets forth selected items in our unaudited condensed consolidated statements of operations for the periods presented:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (In thousands) | | (In thousands) | ||||||||
Net product revenue | | $ | 268,917 | | $ | 239,455 | | $ | 745,584 | | $ | 624,677 |
Cost of product sold | |
| 80,686 | |
| 59,650 | |
| 188,396 | |
| 129,797 |
Gross profit | |
| 188,231 | |
| 179,805 | |
| 557,188 | |
| 494,880 |
Operating expenses: | |
| | |
| | |
| | |
| |
Research and development | |
| 71,663 | |
| 54,962 | |
| 187,642 | |
| 139,661 |
Sales and marketing | |
| 34,721 | |
| 29,549 | |
| 100,535 | |
| 90,333 |
General and administrative | |
| 27,650 | |
| 29,807 | |
| 88,207 | |
| 94,974 |
Total operating expenses | |
| 134,034 | |
| 114,318 | |
| 376,384 | |
| 324,968 |
Operating income | |
| 54,197 | |
| 65,487 | |
| 180,804 | |
| 169,912 |
Other (expense) income, net | |
| (316) | |
| (106) | |
| (496) | |
| (575) |
Interest expense | | | (3,060) | | | (3,621) | | | (9,364) | | | (11,103) |
Interest income | |
| 8,428 | |
| 5,730 | |
| 21,257 | |
| 16,070 |
Net income before provision for income taxes | |
| 59,249 | |
| 67,490 | |
| 192,201 | |
| 174,304 |
Income tax expense | |
| (11,053) | |
| (16,625) | |
| (36,086) | |
| (38,103) |
Net income | | $ | 48,196 | | $ | 50,865 | | $ | 156,115 | | $ | 136,201 |
Net Product Revenue
Net product revenue increased by $29.5 million, or 12.3%, for the three months ended September 30, 2026, and increased by $120.9 million, or 19.4%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The increase for the three months ended September 30, 2026, was primarily due to a 7.5% increase in the number of units shipped and the impact of a 7% price increase partially offset by higher rebates of approximately 2.0%. The increase for the nine months ended September 30, 2026, was primarily due to a 14.9% increase in the number of units shipped and the impact of a 7% price increase partially offset by higher rebates of approximately 3.2%. The price increase occurred in January 2026.
Cost of Product Sold
Cost of product sold increased by $21.0 million, or 35.3%, for the three months ended September 30, 2026, and increased by $58.6 million, or 45.1%, for the nine months ended September 30, 2026, compared to the same periods in 2025. Cost of product sold as a percentage of net product revenue was 30.0% and 25.3% for the three and nine months ended September 30, 2026, respectively, compared to 24.9% and 20.8% for the three and nine months ended September 30, 2025, respectively. The increase in cost of product sold was primarily due to higher royalties as a result of the increase in net product revenue of WAKIX and new royalties related to the Novitium License Agreement. The increase in the cost of product sold as a percentage of net revenue was driven by new royalties related to the Novitium License Agreement.
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Research and Development Expenses
The following table is a summary of our research and development expenses:
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | | | | Nine Months Ended September 30, | | | | ||||||||
| | 2026 | | 2025 | | Change | | 2026 | | 2025 | | Change | ||||||
| | (in thousands) | | | | | (in thousands) | | | | ||||||||
BP-205 | | $ | 2,569 | | $ | 2,520 | | $ | 49 | | $ | 9,150 | | $ | 4,782 | | $ | 4,368 |
Pitolisant | | | 4,525 | | | 6,651 | | | (2,126) | | | 14,553 | | | 18,385 | | | (3,832) |
EPX-100 | | | 16,055 | | | 7,699 | | | 8,356 | | | 37,609 | | | 22,144 | | | 15,465 |
Pitolisant GR and Pitolisant HD | | | 10,030 | | | 4,029 | | | 6,001 | | | 27,375 | | | 8,067 | | | 19,308 |
IPR&D | | | 25,000 | | | 15,000 | | | 10,000 | | | 57,000 | | | 30,000 | | | 27,000 |
Personnel expenses | | | 7,868 | | | 8,100 | | | (232) | | | 24,991 | | | 24,133 | | | 858 |
Stock-based compensation | | | 2,318 | | | 2,243 | | | 75 | | | 7,245 | | | 6,658 | | | 587 |
Other research and development | | | 3,298 | | | 8,720 | | | (5,422) | | | 9,719 | | | 25,492 | | | (15,773) |
Total | | $ | 71,663 | | $ | 54,962 | | $ | 16,701 | | $ | 187,642 | | $ | 139,661 | | $ | 47,981 |
Research and development expenses increased by $16.7 million, or 30.4%, for the three months ended September 30, 2026, and increased by $48.0 million, or 34.4%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The increase for the three months ended September 30, 2026, was primarily driven by a $25.0 million IPR&D charge related to a patent milestone associated with the MSN License Agreement that was achieved during the three months ended September 30, 2026, a combined $14.4 million increase in research and development expenses for BP-205, EPX-100, and Pitolisant GR and HD as we progressed clinical trials and manufacturing, and a $0.1 million increase in stock compensation offset by a $15.0 million clinical milestone related to ZYN002 achieved during the three months ended September 30, 2025, a $5.8 million decrease related to the phase out of the ZYN002 program in FXS, and a $2.1 million decrease in clinical development associated with pitolisant.
The increase for the nine months ended September 30, 2026, was primarily driven by a combined $39.1 million increase in research and development expenses for BP-205, EPX-100, and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $27.0 million increase in IPR&D charges composed of upfront license fees related to the Novitium License Agreement ($15.0 million) and the MSN License Agreement ($17.0 million) and a patent milestone associated with the MSN License Agreement ($25.0 million), all of which occurred during the nine months ended September 30, 2026, offset by a ZYN002 clinical milestone ($15.0 million) and entrance into the CiRC Agreement ($15.0 million), both of which occurred during the nine months ended September 30, 2025, a $0.9 million increase in personnel costs associated with higher headcount, a $0.6 million increase in stock compensation associated with new equity awards, and a $1.4 million increase in other research and development expenses offset by a $17.1 million decrease related to the phase out of the ZYN002 program in FXS and a $3.8 million decrease in clinical development associated with pitolisant.
Sales and Marketing Expenses
Sales and marketing expenses increased by $5.2 million, or 17.5%, for the three months ended September 30, 2026, and increased by $10.2 million, or 11.3%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The increase for the three months ended September 30, 2026, was primarily due to a $2.2 million increase in patient engagement and marketing activities, a $2.2 million increase in personnel costs, a $0.5 million increase in travel expenses and a $0.2 million increase in stock compensation expense. The increase for the nine months ended September 30, 2026, was primarily due to a $6.4 million
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increase in patient engagement and marketing activities and a $4.3 million increase in personnel costs offset by a $0.5 million decrease in stock compensation expense. The increase in patient engagement and marketing activities was driven by our continued growth of WAKIX and the increase in personnel costs was driven primarily by higher headcount as a result of our sales force expansion.
General and Administrative Expenses
General and administrative expenses decreased by $2.2 million, or 7.2%, for the three months ended September 30, 2026, and decreased by $6.8 million, or 7.1%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The decrease for the three months ended September 30, 2026, was primarily due to a $1.3 million decrease in legal and professional fees and a $3.0 million decrease in stock compensation partially offset by a $1.3 million increase in personnel costs. The decrease for the nine months ended September 30, 2026, was primarily due to a $4.6 million decrease in legal and professional fees and a $6.7 million decrease in stock compensation partially offset by a $3.2 million increase in personnel costs. The decrease in legal and professional fees during the three months ended September 30, 2026, was primarily due to lower Abbreviated New Drug Application (“ANDA”) litigation expenses compared to the prior year period. The decrease in legal and professional fees during the nine months ended September 30, 2026, was primarily due to fewer ANDA settlements and lower litigation expenses compared to the prior year period. The increase in personnel costs for both comparable periods was primarily driven by higher headcount and severance during the three and nine months ended September 30, 2026.
Interest Expense
Interest expense decreased by $0.6 million, or 15.5%, for the three months ended September 30, 2026, and decreased by $1.7 million, or 15.7%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The decrease for the three and nine months ended September 30, 2026, was primarily due to lower average outstanding debt balances and lower interest rates compared to the same periods in the prior year.
Interest Income
Interest income increased by $2.7 million, or 47.1%, for the three months ended September 30, 2026, and increased by $5.2 million, or 32.3%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The increase for the three and nine months ended September 30, 2026, was primarily a result of having higher invested balances compared to the prior year.
Income Taxes
Income tax expense was $11.1 million, representing an 18.7% effective tax rate, for the three months ended September 30, 2026, compared to $16.6 million, representing a 24.6% effective tax rate, for the three months ended September 30, 2025. Income tax expense was $36.1 million, representing an 18.8% effective tax rate, for the nine months ended September 30, 2026, compared to $38.1 million, representing a 21.9% effective tax rate, for the nine months ended September 30, 2025. The decrease in our effective tax rate for both comparable periods was primarily driven by an increase in the benefits from research and development and orphan drug credits. The effective tax rate of 18.7% for the three months ended September 30, 2026, included 2.8% in state income taxes offset by a 6.7% benefit from credits. The effective tax rate of 18.8% for the nine months ended September 30, 2026, included 1.9% in state income taxes offset by a 4.9% benefit from credits.
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Liquidity, Sources of Funding and Capital Resources
Overview
As of September 30, 2026, we had cash, cash equivalents, and investments of $1,052.0 million, outstanding debt of $150.0 million and retained earnings of $317.0 million.
The unaudited condensed consolidated financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
We believe that our existing cash, cash equivalents and investments on hand as of September 30, 2026, will enable us to meet our operational liquidity needs and fund our potential investing activities for at least the next 12 months. We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.
Term Loan A Credit Agreement
In July 2023, we entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders, which was subsequently amended in September 2023. The TLA Credit Agreement, as amended, provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $200.0 million.
The repayment schedule for the TLA Term Loan consisted of $3.8 million quarterly principal payments, commencing on December 31, 2023, which increased to $5.0 million quarterly principal payments beginning on December 31, 2025, and includes a $115.0 million payment due on the maturity date of July 26, 2028. The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.
The TLA Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. We had an event of default, which dated back to July 2025, related to a nonfinancial covenant due to a delay in a subsidiary joining the TLA Credit Agreement as a guarantor. On May 4, 2026, we entered into a Waiver and Consent Agreement with the Administrative Agent and certain lenders, whereby the event of default was waived. We have made all required principal and interest payments on time in connection with the TLA Credit Agreement and are in compliance with all covenants as of September 30, 2026.
Share Repurchases
In October 2023, our Board of Directors approved a share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $200.0 million, excluding commissions and transaction fees. The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the three and nine months ended September 30, 2026, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program. As of September 30, 2026, the remaining amount of common stock authorized for repurchases was $150.0 million.
Bioprojet Agreements
In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both
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parties. We paid an initial, non-refundable $30.0 million licensing fee in October 2022 and additional payments of up to $155.0 million are potentially due under the 2022 LCA upon the achievement of certain future development and sales-based milestones. In addition, certain payments will become due upon the achievement of development milestones for new indications and formulations as agreed upon by both parties. The 2022 LCA also includes a fixed trademark royalty and a tiered royalty based on net sales of any new products commercialized, which will be payable to Bioprojet on a quarterly basis.
In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”), which we are developing for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound. Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million. In November 2025, we achieved a clinical milestone for BP-205 that triggered a $4.3 million payment to Bioprojet under the Sublicense. We will also be obligated to pay up to $123.3 million upon achievement of other development and regulatory milestones and up to $240.0 million upon achievement of certain sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories.
Epygenix Acquisition
In April 2024, we acquired Epygenix, pursuant to the terms of a stock purchase agreement. In connection with the closing of the transaction, we paid the former stockholders of Epygenix up front consideration of $35.0 million less a working capital adjustment. In addition, we will also be obligated to pay up to $130.0 million upon the achievement of development and regulatory milestones and up to $515.0 million upon the achievement of certain sales-based milestones, in each case to Epygenix’s former stockholders. As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of DS and LGS.
CiRC Agreement
In June 2025, we entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with a related party, CiRC Biosciences, Inc. (“CiRC”). Under this agreement, we will collaborate on the research and development of two discovery-stage candidates (together the “Candidates”) using cell replacement therapy for the treatment of refractory epilepsies and treatment-resistant narcolepsy. As part of the CiRC Agreement, we paid CiRC an upfront fee of $15.0 million and we will also be obligated to pay $2.0 million upon the achievement of certain research milestones for each of the Candidates. In addition, we have an option to obtain an exclusive license for each of the Candidates that would grant us global rights to develop, manufacture and commercialize that Candidate. We would be obligated to pay an option exercise fee of $8.0 million, or $16.0 million in the aggregate if the options related to both Candidates were exercised, and we would be obligated upon achievement to pay future development, regulatory and sales-based milestones, as well as royalties on sales of any product derived from the Candidates.
Novitium Agreement
In January 2026, we entered into the Novitium License Agreement with Novitium, which includes an exclusive license to additional intellectual property that will expand our patent estate, as well as a co-exclusive license, under which we intend to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake. Pursuant to the Novitium License Agreement, we paid an upfront license fee of $15.0 million, which was recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2026, and will also be obligated to pay $10.0 million upon the achievement of certain development milestones, as well as low single-digit royalties on net sales of current and future pitolisant based products.
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MSN Agreement
In February 2026, we entered into the MSN License Agreement with MSN, which includes an exclusive, royalty-bearing license, with the right to grant sublicenses, to additional intellectual property, including licensed patents, under which we intend to develop an amorphous formulation of pitolisant in broad CNS indications outside of sleep/wake. Pursuant to the MSN License Agreement, we paid an upfront license fee of $17.0 million, which was recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2026. In September 2026, a milestone was achieved upon approval of MSN’s pending licensed patents by the USPTO which triggered a $25.0 million payment, which was recognized as an IPR&D charge recorded in research and development in the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2026. The milestone payment is expected to be paid in the fourth quarter of 2026. In addition, we will be obligated to pay low single-digit royalties on net sales of future products that include a new formulation of pitolisant, if covered by a patent provided under the MSN License Agreement.
Recent Milestone Payments
In November 2025, we achieved a clinical milestone for BP-205 that triggered a $4.3 million payment to Bioprojet under the Sublicense, which was paid in December 2025.
In September 2025, we achieved a clinical milestone for ZYN002 that triggered a $15.0 million payment to contingent value rights holders per the terms of our acquisition of Zynerba, which was paid in November 2025.
In September 2026, a milestone was achieved upon approval of MSN’s pending licensed patents by the USPTO that triggered a $25.0 million payment, which is expected to be paid in the fourth quarter of 2026.
Cash Flows
The following table sets forth a summary of our cash flows for the nine months ended September 30, 2026, and 2025:
| | | | | | |
| | Nine Months Ended September 30, | ||||
| | 2026 | | 2025 | ||
Selected cash flow data | | (In thousands) | ||||
Cash provided by (used in): |
| | |
| | |
Operating activities | | $ | 196,885 | | $ | 222,048 |
Investing activities | |
| (307,472) | |
| (22,016) |
Financing activities | |
| 5,184 | |
| (6,034) |
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026, primarily consisted of net income of $156.1 million adjusted for non-cash items of $28.0 million related to stock-based compensation expense, $57.0 million related to acquired IPR&D, $17.9 million related to intangible amortization and depreciation, offset by $11.7 million related to deferred tax assets. Net working capital excluding cash increased by $51.3 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and a decrease in accounts payable due to the timing of payments offset by higher accrued expenses including accrued royalties and accrued milestone payments.
Net cash provided by operating activities for the nine months ended September 30, 2025, primarily consisted of net income of $136.2 million adjusted for non-cash items of $34.7 million related to stock-based compensation expense, $30.0 million related to acquired IPR&D, $17.9 million related to intangible amortization
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and depreciation, offset by $14.7 million related to deferred tax assets. Net working capital excluding cash decreased by $17.8 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period, offset by an increase in accounts payable due to the timing of payments and an increase in accrued expenses primarily from higher accrued rebates.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026, was $307.5 million, which was primarily attributable to $369.9 million in purchases of debt securities and $32.0 million in upfront license fees related to new license agreements, offset by $94.5 million from maturities of investments.
Net cash used in investing activities for the nine months ended September 30, 2025, was $22.0 million, which was primarily attributable to $67.3 million in purchases of debt securities, a $15.0 million upfront fee paid to CiRC and $0.2 million in purchases of property and equipment, partially offset by $60.5 million from maturities of investments.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2026, was $5.2 million, which primarily consisted of $23.8 million in proceeds from the exercise of stock options, partially offset by $15.0 million in principal payments associated with the TLA Credit Agreement and $3.6 million of employee withholding tax payments related to stock-based awards.
Net cash used in financing activities for the nine months ended September 30, 2025, was $6.0 million, which primarily consisted of $11.3 million in principal payments associated with the TLA Credit Agreement and $2.3 million of employee withholding tax payments related to stock-based awards, partially offset by $7.6 million in proceeds from the exercise of stock options.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis.
Significant estimates include assumptions used in the determination of the amount of revenue recognized on sales of WAKIX, costs incurred under services type agreements related to the performance of research and development activities, the measurement of compensation expense pursuant to stock-based awards, the calculation of our income tax provision, and the determination of accounting treatment for our business combinations. We base our estimates on contractual terms, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Items Deducted from Gross Product Revenue
Product revenue is recorded at the product’s list price and is reduced from the product’s list price at the time of recognition for variable consideration that is offered within contracts between us and our customers, payors, and other indirect customers relating to the sale of WAKIX. Components of variable consideration include government (as detailed below) and commercial contracts, commercial co-payment assistance program, and distribution service fees. These deductions are based on the amounts earned, or to be claimed
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on the related sales, and are classified as a current liability or reduction of receivables in our condensed consolidated balance sheet.
The following table provides a summary of activity and ending balances of our sales allowances and accruals for the nine months ended September 30, 2026 (in thousands):
| | | | | | | | | | | |
| | Distribution Fees & Discounts | | | Co-Pay Assistance | | | Rebates | | | Total |
Balance as of December 31, 2025 | $ | 2,984 | | $ | 8,424 | | $ | 70,015 | | $ | 81,423 |
Provision, net | | 23,122 | | | 34,473 | | | 211,993 | | | 269,588 |
Payments/Credits | | (22,827) | | | (38,954) | | | (210,416) | | | (272,197) |
Balance as of September 30, 2026 | $ | 3,279 | | $ | 3,943 | | $ | 71,592 | | $ | 78,814 |
Included in these amounts are immaterial adjustments related to prior-year sales due to changes in estimates.
We define our critical accounting policies as those that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. During the quarter covered by this report, there were no material changes to our previously disclosed accounting policies and assumptions, except as discussed in Note 3 to the unaudited condensed consolidated financial statements contained herein.
Recent Accounting Pronouncements
See Note 3 to our unaudited condensed consolidated financial statements for recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Fluctuation Risk
We are exposed to market risk related to changes in interest rates. We invest a portion of our cash in investment-grade, interest-bearing securities. The primary objectives of our investment activities are to preserve principal, maintain liquidity and maximize total return. In order to achieve these objectives, we invest in money market funds, U.S. government and agency securities, corporate bonds and commercial paper in accordance with our investment policy. Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of our investments to preserve principal and maintain liquidity. All investment securities have a credit rating of at least A-2/P-2/F2 from at least two National Recognized Statistical Rating Organizations. We do not have any direct investments in asset-backed securities, collateralized debt or loan obligations, or structured investment vehicles. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. Based on our $709.4 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of September 30, 2026, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.
As of September 30, 2026, we had $150.0 million in borrowings outstanding. The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio. Based on the $150.0 million of principal outstanding as of September
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30, 2026, an immediate 10% change in the Term SOFR would not have a material impact on our debt-related obligations, financial position or results of operations.
Foreign Currency Fluctuation Risk
We are not exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe and other parts of the world. Our operations may be subject to fluctuations in foreign currency exchange rates in the future, which could have a material impact on our financial condition or results of operations.
Inflation Fluctuation Risk
Inflation may affect us by potentially increasing costs such as labor and our clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations for each of the three and nine months ended September 30, 2026, and 2025.
Item 4. Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
We do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2026. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in litigation relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations or financial condition other than the ANDA litigation and patent litigation discussed in Part I, Item I, Note 12 “Commitments and Contingencies”.
Refer to Part I, Item I, Note 12 “Commitments and Contingencies,” of this Quarterly Report for a full description of our material pending legal matters.
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Item 1A. Risk Factors.
In addition to the other information included in this report, you should carefully consider the discussion of risk factors affecting the Company as set forth in Part I, Item 1A "Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in these reports are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, and operating results. As of September 30, 2026, there have been no material changes from the risk factors previously disclosed in response to Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
Discussion of defaults under our TLA Credit Agreement is incorporated by reference from Part I, Item 1, Note 10 – Debt of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 3, “Defaults Upon Senior Securities.”
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
| (a) |
| (b) |
| (c) | During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” and/or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. |
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Item 6. Exhibits.
Exhibit | | | | Incorporated by Reference | ||||
No. | | Exhibit Description | | Form | | Date | | Number |
2.1 | | Agreement and Plan of Merger, dated August 14, 2023, by and among Harmony Biosciences Holdings, Inc., Xylophone Acquisition Corp. and Zynerba Pharmaceuticals, Inc. | | 8-K/A | | September 14, 2023 | | 2.1 |
3.1 | | Amended and Restated Certificate of Incorporation of Harmony Biosciences Holdings, Inc. | | 8-K | | August 21, 2020 | | 3.1 |
3.2* | | Amended and Restated Bylaws. | | | | | | |
10.1# | | Separation and Consulting Agreement by and between Harmony Biosciences Holdings, Inc., Harmony Biosciences Management, Inc., and Jeffrey M. Dayno, dated October 29, 2026. | | 8-K/A | | October 30, 2026 | | 10.1 |
10.2# | | Amended and Restated Executive Employment Agreement by and between Harmony Biosciences Management, Inc. and Peter Anastasiou, dated October 29, 2026. | | 8-K/A | | October 30, 2026 | | 10.2 |
10.3# | | Separation Agreement between Harmony Biosciences Management, Inc. and Glenn Reicin, dated July 16, 2026. | | 8-K | | July 16, 2026 | | 10.1 |
10.4#* | | Retention Agreement between Harmony Biosciences Management, Inc. and Stephen Mollichella, dated October 6, 2026. | | | | | | |
31.1* | | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | | | |
31.2* | | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | | | |
32.1** | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | | | |
32.2** | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | | | |
101* | | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2026, formatted in Inline XBRL: (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Stockholders’ Equity and (iv) Notes to Financial Statements, tagged as blocks of text and including detailed tags. | | | | | | |
104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | | |
* | Filed herewith. |
** | Furnished herewith. This certification is deemed furnished, and not filed, with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Harmony Biosciences Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
# | Indicates management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | |
| HARMONY BIOSCIENCES HOLDINGS, INC. | ||
| |||
| By: | | /s/ Jeffrey M. Dayno |
| Name: |
| Jeffrey M. Dayno, M.D. |
| Title: | | President, Chief Executive Officer and Director (principal executive officer) |
| Date: |
| November 4, 2026 |
| | | |
| By: |
| /s/ Stephen Mollichella |
| Name: |
| Stephen Mollichella |
| Title: | | Senior Vice President, Controller and Interim Principal Financial Officer (principal financial officer) |
| Date: |
| November 4, 2026 |
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