Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024

☐	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: 001-39450

HARMONY BIOSCIENCES HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware	82-2279923
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


630 W. Germantown Pike, Suite 215, Plymouth Meeting, PA	19462
(Address of principal executive offices)	(Zip Code)

(484) 539-9800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.00001 value per share

HRMY

The Nasdaq Stock Market LLC
(Nasdaq Global Market)

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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:



Large accelerated filer	☒	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 August 2, 2024, there were 56,834,745 shares of the registrant’s common stock, par value $0.00001 value per share, outstanding.

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TABLE OF CONTENTS


	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	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
Item 4. Controls and Procedures	38
Part II. Other Information	38
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3. Defaults upon Senior Securities	40
Item 4. Mine Safety Disclosures	40
Item 5. Other Information	40
Item 6. Exhibits	41
Signatures	42

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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)


	June 30,		December 31,
	2024		2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	317,296	$	311,660
Investments, short-term		29,614		41,800
Trade receivables, net		83,157		74,140
Inventory, net		5,643		5,363
Prepaid expenses		16,127		12,570
Other current assets		6,507		5,537
Total current assets		458,344		451,070
NONCURRENT ASSETS:
Property and equipment, net		754		371
Restricted cash		270		270
Investments, long-term		87,178		72,169
Intangible assets, net		125,186		137,108
Deferred tax asset		180,186		144,162
Other noncurrent assets		6,465		6,298
Total noncurrent assets		400,039		360,378
TOTAL ASSETS	$	858,383	$	811,448
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables	$	22,683	$	17,730
Accrued compensation		9,641		23,747
Accrued expenses		91,644		99,494
Current portion of long-term debt		15,000		15,000
Other current liabilities		7,614		7,810
Total current liabilities		146,582		163,781
NONCURRENT LIABILITIES:
Long-term debt, net		171,422		178,566
Other noncurrent liabilities		1,796		2,109
Total noncurrent liabilities		173,218		180,675
TOTAL LIABILITIES		319,800		344,456
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY:
Common stock—$0.00001 par value; 500,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 56,833,771 and 56,769,081 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		1		1
Additional paid in capital		632,168		610,266
Accumulated other comprehensive (loss) income		(234)		2
Accumulated deficit		(93,352)		(143,277)
TOTAL STOCKHOLDERS’ EQUITY		538,583		466,992
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	858,383	$	811,448

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)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net product revenue	$	172,814	$	134,216	$	327,429	$	253,342
Cost of product sold		32,144		25,008		59,628		45,788
Gross profit		140,670		109,208		267,801		207,554
Operating expenses:
Research and development		63,583		14,969		85,772		28,258
Sales and marketing		28,507		24,528		55,740		47,100
General and administrative		27,224		22,809		52,900		44,871
Total operating expenses		119,314		62,306		194,412		120,229
Operating income		21,356		46,902		73,389		87,325
Other (expense) income, net		37		(31)		(104)		(29)
Interest expense		(4,404)		(6,218)		(8,939)		(11,949)
Interest income		4,705		3,442		9,133		6,528
Income before income taxes		21,694		44,095		73,479		81,875
Income tax expense		(10,103)		(9,795)		(23,554)		(18,090)
Net income	$	11,591	$	34,300	$	49,925	$	63,785
Unrealized (loss) income on investments		(63)		(491)		(236)		(371)
Comprehensive income	$	11,528	$	33,809	$	49,689	$	63,414
EARNINGS PER SHARE:
Basic	$	0.20	$	0.57	$	0.88	$	1.07
Diluted	$	0.20	$	0.56	$	0.87	$	1.05
Weighted average number of shares of common stock - basic		56,802,357		59,974,123		56,786,873		59,853,808
Weighted average number of shares of common stock - diluted		57,541,696		60,743,953		57,571,570		60,997,410

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 STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)


						Accumulated
				Additional		other				Total
	Common Stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		(loss) income		deficit		equity
Balance as of December 31, 2023	56,769,081	$	1	$	610,266	$	2	$	(143,277)	$	466,992
Net income	—		—		—		—		49,925		49,925
Unrealized loss on investments	—		—		—		(236)		—		(236)
Exercise of options and restricted stock units	64,690		—		420		—		—		420
Stock-based compensation	—		—		21,482		—		—		21,482
Balance as of June 30, 2024	56,833,771	$	1	$	632,168	$	(234)	$	(93,352)	$	538,583


						Accumulated
				Additional		other				Total
	Common Stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		(loss) income		deficit		equity
Balance as of March 31, 2024	56,791,214	$	1	$	620,507	$	(171)	$	(104,943)	$	515,394
Net income	—		—		—		—		11,591		11,591
Unrealized loss on investments	—		—		—		(63)		—		(63)
Exercise of options	42,557		—		573		—		—		573
Stock-based compensation	—		—		11,088		—		—		11,088
Balance as of June 30, 2024	56,833,771	$	1	$	632,168	$	(234)	$	(93,352)	$	538,583


						Accumulated
				Additional		other				Total
	Common Stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		(loss) income		deficit		equity
Balance as of December 31, 2022	59,615,731	$	1	$	675,118	$	(151)	$	(272,130)	$	402,838
Net income	—		—		—		—		63,785		63,785
Unrealized loss on investments	—		—		—		(371)		—		(371)
Exercise of stock options	383,927		—		4,069		—		—		4,069
Stock-based compensation	—		—		14,851		—		—		14,851
Balance as of June 30, 2023	59,999,658	$	1	$	694,038	$	(522)	$	(208,345)	$	485,172


						Accumulated
				Additional		other				Total
	Common Stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		(loss) income		deficit		equity
Balance as of March 31, 2023	59,954,618	$	1	$	685,716	$	(31)	$	(242,645)	$	443,041
Net income	—		—		—		—		34,300		34,300
Unrealized loss on investments	—		—		—		(491)		—		(491)
Exercise of options	45,040		—		674		—		—		674
Stock-based compensation	—		—		7,648		—		—		7,648
Balance as of June 30, 2023	59,999,658	$	1	$	694,038	$	(522)	$	(208,345)	$	485,172

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 CASH FLOWS

(In thousands, except share and per share data)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	49,925	$	63,785
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		254		206
Intangible amortization		11,922		11,922
Acquired in-process research & development (IPR&D) expense		42,595		—
Stock-based and employee stock purchase compensation expense		21,482		14,851
Stock appreciation rights market adjustment		(85)		(497)
Debt issuance costs amortization		356		840
Deferred taxes		(17,756)		(7,635)
Amortization of premiums and accretion of discounts on Investment securities		(1,220)		(1,312)
Other non-cash expenses		1,126		799
Change in operating assets and liabilities:
Trade receivables		(9,017)		(9,072)
Inventory		(280)		(557)
Prepaid expenses and other assets		(4,004)		2,227
Trade payables		3,555		2,777
Other liabilities		(25,095)		1,288
Net cash provided by operating activities		73,758		79,622
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities		(46,317)		(72,847)
Proceeds from maturities and sales of investment securities		44,481		63,491
Purchase of property and equipment		(637)		(205)
Acquisition of Epygenix Therapeutics, Inc., net of cash acquired		(33,069)		—
Payment of license fee		(25,500)		—
Net cash used in investing activities		(61,042)		(9,561)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayment of long term debt		(7,500)		(1,000)
Payments of employee withholding taxes related to stock-based awards		(269)		(514)
Proceeds from exercised options		689		4,584
Net cash (used in) provided by financing activities		(7,080)		3,070
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		5,636		73,131
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period		311,930		244,534
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period	$	317,566	$	317,665
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest	$	8,944	$	10,691
Cash paid during the year for taxes		42,093		19,890

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

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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”), 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 (“Harmony”), and Harmony Biosciences Management, Inc. The Company is a commercial-stage pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological disorders as well as patients living with other neurological diseases who have unmet medical needs. The Company is headquartered in Plymouth Meeting, Pennsylvania.

On October 10, 2023, the Company completed a tender offer to acquire all of the outstanding shares of common stock of Zynerba Pharmaceuticals, Inc. (together with its subsidiary, Zynerba Pharmaceutical Pty, Ltd., “Zynerba”). Zynerba is a clinical-stage pharmaceutical company focused on innovative pharmaceutically produced transdermal cannabidiol therapies for orphan neurobehavioral disorders, including Fragile X Syndrome. As of July 1, 2024, Zynerba was renamed and is known as Harmony Biosciences Management, Inc.

On April 30, 2024, the Company acquired all of the issued and outstanding capital stock of Epygenix Therapeutics, Inc., a Wyoming corporation (“Epygenix”). As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of Dravet Syndrome and Lennox-Gastaut Syndrome.

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 an accumulated deficit of $93,352 and $143,277, as of June 30, 2024, and December 31, 2023, respectively. As of June 30, 2024, the Company had cash, cash equivalents and investments of $434,088.

The Company believes that its existing cash, cash equivalents and investments on hand as of June 30, 2024, as well as additional cash generated from operating and financing activities will meet its operational liquidity needs and fund its planned investing activities for 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 June 30, 2024, the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2024, and 2023, and the unaudited condensed consolidated statements of operations and comprehensive income and the unaudited condensed consolidated statements of shareholders’ equity for the three and six months ended June 30, 2024, and 2023, are unaudited. The

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balance sheet as of December 31, 2023, was derived from audited financial statements as of and for the year ended December 31, 2023. 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, 2023, 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 June 30, 2024, and the results of its operations and its cash flows for the three and six months ended June 30, 2024, and 2023. 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, 2023.

Reclassifications

Certain prior period amounts within the unaudited condensed consolidated statements of operations and comprehensive income have been reclassified to conform to current period presentation. In particular, interest expense and interest income were previously classified together as interest expense, net and are now separately classified as interest expense and interest income, respectively. The reclassification of these items had no impact on net income, earnings per share or accumulated deficit in current or prior periods.

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 manufactured and sold or being developed by other companies; 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.

The Company currently has one commercially approved product, WAKIX, and there can be no assurance that the Company’s research and development efforts will result in successfully 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 management 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 due pursuant to commercial and government contracts, accrued research and development expenses, stock-based compensation expense and income taxes.

Operating Segments

The Company holds all its tangible assets, conducts its operations, and generates its revenue in the United States. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Makers in deciding how to allocate resources to an individual segment and in assessing performance. The Company has determined it operates in a single operating segment and has one reportable segment.

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Fair Value of Financial Instruments

The Company’s unaudited condensed consolidated financial statements include cash, cash equivalents, restricted cash, 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 nonrecurring 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 other pricing sources. The Company did not classify any assets or liabilities as Level 3 as of June 30, 2024, or December 31, 2023.

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
	June 30,		December 31,
	2024		2023
Cash and cash equivalents	$	317,296	$	311,660
Restricted cash		270		270
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	317,566	$	311,930

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

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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 on 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 five financial institutions. Due to their size, the Company believes these financial institutions represent minimal credit risk. Deposits may exceed the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation for U.S. institutions. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company believes that it is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

The Company is subject to credit risk from its trade receivables related to its 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 against uncollectible accounts receivable if necessary. As of June 30, 2024, three customers accounted for 100% of gross accounts receivable; Caremark LLC (“CVS Caremark”), which accounted for 41% of gross accounts receivable; Accredo Health Group, Inc. (“Accredo”), which accounted for 35% of gross accounts receivable; and PANTHERx Specialty Pharmacy LLC (“Pantherx”), which accounted for 24% of gross accounts receivable. As of December 31, 2023, three customers accounted for 100% of gross accounts receivable; Accredo, which accounted for 39% of gross accounts receivable, CVS Caremark, which accounted for 32% of gross accounts receivable; and Pantherx, which accounted for 29% of gross accounts receivable.

For the six months ended June 30, 2024, three customers accounted for 100% of gross product revenue; CVS Caremark accounted for 40% of gross product revenue; Accredo accounted for 33% of gross product revenue; and Pantherx accounted for 27% of gross product revenue. For the six months ended June 30, 2023, three customers accounted for 100% of gross product revenue; CVS Caremark accounted for 35% of gross product revenue; Pantherx accounted for 33% of gross product revenue; and Accredo accounted for 32% of gross product revenue.

The Company depends on a single supplier for its product and a single supplier for its active pharmaceutical ingredient.

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.

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Business Combinations

Business combinations and asset acquisitions are accounted for in accordance with FASB ASC 805 Business Combinations. Refer to Note 4, Acquisitions, for a more detailed discussion of the Company’s acquisitions of Zynerba and Epygenix.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to improve reportable segment disclosures primarily through enhanced disclosure of reportable segment expenses and requires that a public entity that has a single reportable segment provide all the disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280. This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements. The Company has one reportable segment and is currently evaluating the impact that ASU 2023-07 will have on its condensed consolidated financial statements.

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 is permitted. The Company is currently evaluating the impact that ASU 2023-09 will have on its condensed consolidated financial statements.

4. ACQUISITIONS

Acquisition of Zynerba

In October 2023, the Company completed a tender offer to purchase the outstanding common stock of Zynerba (“Zynerba Common Stock”) for (i) $1.1059 per share of Zynerba Common Stock (the “Common Cash Amount”), the aggregate amount of which was $60,000 and was paid at closing, plus (ii) one contingent value right (each, a “CVR”) per share of Zynerba Common Stock (the “Common CVR Amount”), which represents the right to receive up to approximately $2.5444 per share of Zynerba Common Stock, subject to the achievement of certain clinical, regulatory and sales-based milestones. The Common CVR Amounts are to be paid in cash, subject to any applicable withholding of taxes and without interest. The aggregate amount of consideration to acquire Zynerba Common Stock was $60,000, excluding transaction related fees of $2,645 and was paid by the Company using cash on hand.

The Zynerba Acquisition was accounted for as an asset acquisition under ASC Topic 805, Business Combinations, because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable IPR&D asset, ZYN002, Zynerba’s lead asset. ZYN002 is the first and only pharmaceutically manufactured, synthetic cannabidiol, devoid of THC, formulated as a patent-protected permeation-enhanced gel for transdermal delivery through the skin and into the circulatory system and is currently in Phase III clinical trial for the potential treatment of Fragile X Syndrome. The Company recognized the acquired assets and assumed liabilities based on the consideration paid, including transaction costs, on a relative fair value basis, and after first allocating the preliminary excess of the fair value of net assets acquired over the purchase price consideration to certain qualifying assets, principally, the IPR&D asset.

Acquisition of Epygenix

On April 30, 2024, the Company acquired all of the issued and outstanding capital stock of Epygenix pursuant to the terms of a stock purchase agreement. In connection with the closing of the transaction, the Company paid the former stockholders of Epygenix up front consideration of $35,000 less a working capital

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adjustment. In addition, the Company will be obligated to pay up to $130,000 upon the achievement of development and regulatory milestones and up to $515,000 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 Dravet Syndrome and Lennox-Gastaut Syndrome.

The total purchase consideration for Epygenix was as follows:


Cash consideration paid to selling shareholders and to settle restricted stock units ("RSUs")	$	32,686
Transaction costs		450
Total purchase consideration	$	33,136

The acquisition of Epygenix was accounted for as an asset acquisition under ASC Topic 805, Business Combinations. The Company did not acquire any outputs and there was not an acquired substantive process in place to create outputs. The Company recognized the acquired assets and assumed liabilities based on the consideration paid, including transaction costs, on a relative fair value basis, and after first allocating the preliminary excess of the fair value of net assets acquired over the purchase price consideration to certain qualifying assets, principally, the IPR&D asset. In accordance with the accounting for asset acquisitions, an entity that acquires IPR&D assets in an asset acquisition follows the guidance in ASC Topic 730, Research and Development, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be allocated a portion of the consideration transferred and recorded as research and development expense at the acquisition date. As a result, the Company recorded a charge of $17,095 related to acquired in-process research and development expense during the three and six months ended June 30, 2024.

The following table shows the allocation of the purchase consideration based on the relative fair value of assets acquired and liabilities assumed by the Company, after reducing the excess fair value of the IPR&D asset as described above:


Assets acquired
Acquired in-process research and development	$	17,095
Deferred tax asset		18,268
Other assets		590
Total assets acquired	$	35,953
Total liabilities assumed	$	2,817

Net assets acquired	$	33,136

5. 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:


	June 30, 2024
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	16,175	1	(5)	$	16,171
Corporate debt securities		13,443	4	(4)		13,443
Total short-term investments	$	29,618	5	(9)	$	29,614

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Long-term:
Corporate debt securities		59,793	37	(87)		59,743
U.S. government securities		27,615	—	(180)		27,435
Total long-term investments	$	87,408	37	(267)	$	87,178

	December 31, 2023
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	23,832	36	(3)	$	23,865
Corporate debt securities		15,968	28	—		15,996
U.S. government securities		1,940	—	(1)		1,939
Total short-term investments	$	41,740	64	(4)	$	41,800

Long-term:
Commercial paper	$	744	—	—	$	744
Corporate debt securities		42,688	81	(28)		42,741
U.S. government securities		28,795	7	(118)		28,684
Total long-term investments	$	72,227	88	(146)	$	72,169

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 on its unaudited condensed consolidated balance sheet. The investments classified as noncurrent have original maturity dates ranging from 1-2 years. The Company did not have any available-for-sale debt security investments in a continuous unrealized loss position of greater than 12 months as of June 30, 2024, and December 31, 2023, respectively.

6. FAIR VALUE MEASUREMENTS

The Company’s assets measured at fair value consisted of the following:


	June 30, 2024				December 31, 2023
		Total	Level 1	Level 2		Total	Level 1	Level 2
Assets
Cash equivalents	$	270,989	270,989	—	$	244,569	243,685	884
Commercial paper		16,171	—	16,171		24,609	—	24,609
Corporate debt securities		73,186	—	73,186		58,737	—	58,737
U.S. government securities		27,435	—	27,435		30,623	—	30,623
Total	$	387,781	270,989	116,792	$	358,538	243,685	114,853

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7. INVENTORY

Inventory, net consisted of the following:


	As of
	June 30,		December 31,
	2024		2023
Raw materials	$	1,135	$	1,060
Work in process		1,744		2,020
Finished goods		2,764		2,283
Total inventory, net	$	5,643	$	5,363

8. INTANGIBLE ASSETS

In August 2019, the Company received FDA approval of WAKIX® (pitolisant) for the treatment of excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy. This event triggered a milestone payment of $75,000 under the provisions of the 2017 LCA (defined below) which the Company capitalized as an intangible asset. The Company determined a useful life of 10 years for such intangible asset, and, as of June 30, 2024, the remaining useful life was 5.3 years.

In October 2020, the Company received FDA approval for the New Drug Application (“NDA”) for WAKIX for the treatment of cataplexy in adult patients with narcolepsy. This event triggered a milestone payment of $100,000 under the provisions of the 2017 LCA which the Company capitalized as an intangible asset and paid in January of 2021. The Company determined a useful life of 9 years for such intangible asset, and, as of June 30, 2024, the remaining useful life was 5.3 years.

In February 2022, the Company attained $500,000 in life-to-date aggregate net sales of WAKIX in the United States. This event triggered a final $40,000 payment under the provisions of the 2017 LCA which the Company capitalized as an intangible asset and paid in March of 2022. The Company determined a useful life of 7.6 years for such intangible asset, and, as of June 30, 2024, the remaining useful life was 5.3 years.

Amortization expense was $5,961 for each of the three months ended June 30, 2024, and 2023, respectively, and $11,922 for each of the six months ended June 30, 2024, and 2023, respectively, and is recorded in general and administrative on the unaudited condensed consolidated statements of operations and comprehensive income.

The Company expects the future annual amortization expense for the unamortized intangible assets to be as follows:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	11,923
2025		23,845
2026		23,845
2027		23,845
2028		23,845
Thereafter		17,883
Total	$	125,186

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The gross carrying amount and net book value of the intangible asset is as follows:


	As of
	June 30,		December 31,
	2024		2023
Gross Carrying Amount	$	215,000	$	215,000
Accumulated Amortization		(89,814)		(77,892)
Net Book Value	$	125,186	$	137,108

9. LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS

License Agreements

In July 2017, Harmony entered into a License Agreement (the “2017 LCA”) with Bioprojet Société Civile de Recherche (“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 $50,000 was due upon acceptance by the FDA of pitolisant’s NDA, which was achieved in February 2019 and was expensed within research and development for the year ended December 31, 2019. A milestone payment of $77,000, which included a $2,000 fee that is described below, was due upon FDA approval of WAKIX (pitolisant) for treatment of EDS in adult patients with narcolepsy, which was achieved in August 2019. The $2,000 payment and $75,000 milestone payment were paid in August and November 2019, respectively. In addition, a milestone payment of $102,000, which included a $2,000 fee was due upon the FDA approval of the NDA for WAKIX for the treatment of cataplexy in adult patients with narcolepsy. The $2,000 payment was paid in October 2020 and a $100,000 milestone payment was paid in January 2021. A final $40,000 milestone payment was paid to Bioprojet in March 2022 upon WAKIX attaining $500,000 in aggregate net sales in the United States. The 2017 LCA also requires a fixed trademark royalty and a tiered royalty based on net sales, which is payable to Bioprojet on a quarterly basis. The Company incurred $30,199 and $22,542 for the three months ended June 30, 2024, and 2023, respectively, and $54,937 and $41,602 for the six months ended June 30, 2024, and 2023, respectively, for sales-based, trademark and tiered royalties recognized as cost of product sold. As of June 30, 2024, and December 31, 2023, the Company had accrued $30,199 and $40,419, respectively, for sales-based, trademark and tiered royalties.

In July 2022, Harmony entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby Harmony obtained exclusive rights to manufacture, use 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 $30,000 licensing fee in October 2022 and additional payments of up to $155,000 are potentially due under the 2022 LCA upon the achievement of certain future development and sales-based milestones. In addition, there are other payments due upon achievement of development milestones for new indications and formulations as agreed upon by both parties. The 2022 LCA also requires a fixed trademark royalty and a tiered royalty based on net sales upon commercialization, which will be payable to Bioprojet on a quarterly basis.

In April 2024, the Company announced that it entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”). Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound. The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application currently anticipated in mid-2025. Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25,500, which the Company recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2024, and will also be obligated to pay up to $127,500 upon achievement of development and regulatory milestones and up to $240,000 upon

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achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using the Licensed Compound in the Licensed Territories.

Agreement Related to Intellectual Property

In August 2021, the Company entered into an asset purchase agreement with ConSynance Therapeutics, Inc. (the “APA”) to acquire HBS-102 (formerly referred to as “CSTI-100”), a potential first-in-class molecule with a novel mechanism of action. Under the terms of the APA, the Company acquired full development and commercialization rights globally, with the exception of Greater China, for $3,500. The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the assets acquired was concentrated in a single identified asset. In March 2023, the Company achieved a preclinical milestone, which triggered a $750 payment under the provisions of the APA, which the Company recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive income for the six months ended June 30, 2023. There are additional payments due under the APA upon the achievement of certain milestones including $1,000 for preclinical milestones, $19,000 for development milestones, $44,000 for regulatory milestones and $110,000 for sales milestones.

10. ACCRUED EXPENSES

Accrued expenses consist of the following:


	As of
	June 30,		December 31,
	2024		2023
Royalties due to Bioprojet	$	30,199	$	40,419
Rebates and other sales deductions		43,570		38,842
Interest		2,993		3,354
Sales and marketing		3,343		2,354
Research and development		7,201		9,835
Professional fees, consulting, and other services		2,053		2,195
Other expenses		2,285		2,495
	$	91,644	$	99,494

11. 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. The TLA Credit Agreement provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $185,000.

In September 2023, the Company entered into the First Incremental Amendment (the “First Incremental Amendment”) with the Administrative Agent and Bank of America, N.A., as incremental lender. The First Incremental Amendment provides for an incremental senior secured term loan (the “Incremental Term Loan”) in an aggregate principal amount of $15,000. The First Incremental Amendment amends the TLA Credit Agreement and provides that the Incremental Term Loan will have identical terms as the TLA Term Loan.

The repayment schedule for both the TLA Term Loan and the Incremental Term Loan (together, the “Term Loans”) consists of quarterly $3,750 principal payments, which commence on December 31, 2023, increasing to quarterly $5,000 principal payments beginning on December 31, 2025, with a $115,000 payment due on the maturity date of July 26, 2028. The Term Loans bear interest at a per annum rate equal to, at the Company’s option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on the

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Company’s 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 the Company’s senior secured net leverage ratio.

The net cash received related to the Term Loans as a result of the transactions, less debt issuance costs of $2,997, was $197,003. The debt issuance costs related to the Term Loans will be amortized as additional interest expense over the loan term of the TLA Credit Agreement. The fair value of the Term Loans as of June 30, 2024, was $187,863.

Long-term debt, net consists of the following:


	June 30,		December 31,
	2024		2023
Principal amount	$	188,750	$	196,250
Unamortized debt discount associated with debt financing costs		(2,328)		(2,684)
Total debt, net		186,422		193,566
Less current portion		(15,000)		(15,000)
Long-term debt, net	$	171,422	$	178,566

Future minimum payments relating to total debt, net as of June 30, 2024, for the periods indicated below consists of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	7,500
2025		16,250
2026		20,000
2027		20,000
2028		125,000
Thereafter		—
Total	$	188,750

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 consists of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Interest on principal balance	$	4,228	$	5,794	$	8,583	$	11,109
Amortization of deferred financing costs		176		424		356		840
Total term loan interest expense	$	4,404	$	6,218	$	8,939	$	11,949

12. LEASES

In June 2018, the Company entered into an operating lease for approximately fifteen thousand square feet of office space in Plymouth Meeting, PA, which expires in May 2024. The Company subsequently entered into two separate operating leases for additional office space in Plymouth Meeting, PA, which include approximately thirteen thousand square feet and seven thousand square feet of additional office space, respectively, and expire in May 2024. In March 2024, the Company amended its existing operating leases for office space in Plymouth Meeting to extend their terms through June 2025. The terms of the lease payments provide for rental payments on a monthly basis and on a graduated scale. The Company also leases a fleet of automobiles that are used by its sales representatives and are classified as operating leases.

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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 1 year to 3 years, some of which may include the option to extend or terminate the leases.

The Company recorded operating lease costs of $622 and $444 for the three months ended June 30, 2024, and 2023, respectively and $1,131 and $822 for the six months ended June 30, 2024, and 2023, respectively.

As of June 30, 2024, the weighted-average remaining lease term for operating leases was 1.7 years and the weighted-average discount rate for operating leases was 7.56%.

Supplemental balance sheet information related to operating leases was as follows:


Leases	Classification		June 30, 2024		December 31, 2023
Assets
Operating lease right-of-use assets	Other noncurrent assets	$	2,508	$	2,344
Liabilities
Operating lease liability, current portion	Other current liabilities	$	1,786	$	1,437
Operating lease liability, long-term	Other long-term liabilities		854		1,082
Total operating lease liabilities		$	2,640	$	2,519

Supplemental cash flow information related to operating leases was as follows:


		June 30, 2024		June 30, 2023
Operating cash flows from operating leases	$	1,075	$	922
Right of use assets obtained in exchange for operating lease obligations	$	1,254	$	615

Future payments under noncancelable operating leases with initial terms of one year or more as of June 30, 2024, consisted of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	1,047
2025		1,250
2026		495
2027		12
2028		—
Thereafter		—
Total lease payments		2,804
Less: imputed interest		(164)
Total lease liabilities	$	2,640

13. COMMITMENTS AND CONTINGENCIES

Litigation

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 estimated. As of June 30, 2024, there were no material claims or suits outstanding.

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14. STOCKHOLDERS’ EQUITY

Common Stock

The holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of the Company’s stockholders. The holders of common stock do not have any cumulative voting rights. Holders of common stock are entitled to receive any dividends declared by the Company’s board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. The Company’s common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

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 $200,000, excluding commissions and transaction fees. The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the three and six months ended June 30, 2024, and 2023, no shares of common stock were repurchased and cancelled by the Company. As of June 30, 2024, the remaining amount of common stock authorized for repurchases was $150,000.

15. 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”), SARs, restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards.

Stock options and stock appreciation rights under the 2020 Plan have a 10-year contractual term and vest over the vesting period specified in the applicable award agreement, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan). RSUs vest over the vesting period specified in the applicable award agreement, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan). As of June 30, 2024, there were 7,654,586 shares of common stock available for issuance under the 2020 Plan. The number of shares that may be issued under the 2020 Plan automatically increases on January 1 of each year in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31 of the preceding year or (ii) an amount determined by the Company’s board of directors.

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, stock appreciation rights (“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 six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	6,316,422	$	32.47	7.17
Awards issued	1,307,396	$	30.51
Awards exercised	(46,996)	$	8.97
Awards forfeited	(27,791)	$	37.14
Awards outstanding—June 30, 2024	7,549,031	$	32.26	7.20	$	27,893
Awards exercisable—June 30, 2024	3,772,766	$	30.50	6.30	$	21,050

Stock Appreciation Rights

The following table summarizes SARs activity for the six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	43,208	$	9.38	5.32
Awards issued	—	$	—
Awards exercised	—	$	—
Awards forfeited	—	$	—
Awards outstanding—June 30, 2024	43,208	$	9.38	4.83	$	887
Awards exercisable—June 30, 2024	39,556	$	8.98	4.72	$	827

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2024:



		Weighted-
		Average
	Number of	Grant Date
	Awards	Fair Value
Awards outstanding—December 31, 2023	330,000	$	31.53
Awards issued	464,600	$	30.62
Awards vested	(15,000)	$	29.03
Awards forfeited	(3,250)	$	30.69
Awards outstanding—June 30, 2024	776,350	$	31.03

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

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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 0% is based on the fact that the Company has never paid cash dividends and does not expect to do so in the foreseeable future.

The assumptions used to value the awards are summarized in the following table.


	As of
	June 30,		December 31,
	2024		2023
Dividend yield	0.00	%	0.00	%
Expected volatility	69.84 - 72.98	%	74.87 - 80.78	%
Risk-free interest rate	4.06 - 4.65	%	3.42 - 4.62	%
Lack of marketability discount	0.00	%	0.00	%
Expected term (years)	2.04 - 6.11		2.26 - 10.77

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 per share fair value of awards issued under the 2017 Plan and 2020 Plan was $21.24 and $20.64 on June 30, 2024, and December 31, 2023, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense for the three and six months ended June 30, 2024, and 2023, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income in the following line items:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development expense	$	1,683	$	956	$	3,054	$	1,932
Sales and marketing expense		2,100		1,146		4,094		2,219
General and administrative expense		7,180		5,691		14,249		10,203
	$	10,963	$	7,793	$	21,397	$	14,354

Stock-based compensation expense related to options and RSUs issued under the 2017 Plan and 2020 Plan is included in stockholder’s equity, and a liability for SARs is included in other non-current liabilities, in the Company’s unaudited condensed consolidated balance sheet. As of June 30, 2024, the total unrecognized stock-based compensation expense was $68,926 and $19,749 for stock options and RSUs, respectively. This amount will be recognized in the Company’s consolidated statement of operations over a weighted average period of 2.6 years.

Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (“ESPP”) was adopted by the Company’s Board of Directors on April 30, 2021. The ESPP permits eligible employees to purchase shares of the Company’s common stock at a 15% discount from the lesser of the fair market value per share of the Company’s common stock on the first day of the offering period or the fair market value of the Company’s common stock on the purchase date. Funds are collected from employees through after-tax payroll deductions. The total number of shares reserved for issuance under the ESPP was initially 629,805, which automatically increases on January 1 of each year in an amount equal to the lesser of (i) 1.0% of the shares of the Company’s common stock outstanding on

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December 31 of the preceding year or (ii) an amount determined by the Company’s board of directors. It is intended that the ESPP meet the requirements for an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. There were 10,707 and 14,043 shares issued under the ESPP for each of the three and six months ended June 30, 2024, and 2023, respectively. The discount on the ESPP was $78 and $103 for the three months ended June 30, 2024, and 2023, respectively, and $158 and $208 for the six months ended June 30, 2024, and 2023, respectively, and is recorded within stock-based compensation expense.

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator
Net income	$	11,591	$	34,300	$	49,925	$	63,785
Denominator
Net income per share of common stock - basic	$	0.20	$	0.57	$	0.88	$	1.07
Net income per share of common stock- diluted	$	0.20	$	0.56	$	0.87	$	1.05
Weighted average number of shares of common stock - basic		56,802,357		59,974,123		56,786,873		59,853,808
Weighted average number of shares of common stock - diluted		57,541,696		60,743,953		57,571,570		60,997,410

Securities outstanding that were included in the computation above, utilizing the treasury stock method are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

739,339

769,830

784,697

1,143,602

Potential shares of common stock issuable that were excluded from the computation of diluted weighted-average shares outstanding excluded from the numerator, are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

7,629,250

5,520,235

7,583,892

5,146,464

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17. INCOME TAXES

A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate for the three and six months ended June 30, 2024, and 2023 is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Stock-based compensation	(0.7)		(0.5)		(0.2)		(1.5)
State taxes	11.2		4.0		7.4		5.1
Credits	(2.6)		(2.9)		(1.6)		(2.9)
Nondeductible IPR&D	16.5		—		4.9		—
Valuation allowance	0.6		—		0.3		—
Other	0.6		0.6		0.3		0.4
Total	46.6	%	22.2	%	32.1	%	22.1	%

18. RELATED-PARTY TRANSACTIONS

The Company was party to a management agreement for professional services provided by a related party, Paragon Biosciences, LLC (“Paragon”). Paragon is an entity that shares common ownership with the Company. In addition, the Chairman of the Company’s board of directors is the Founder, Chairman and CEO of Paragon. The Company is also 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, IL. The Company incurred $72 and $74 for the three months ended June 30, 2024, and 2023, respectively, and incurred $145 and $145 for the six months ended June 30, 2024, and 2023, respectively, in expenses to Paragon, which are included in general and administrative in the unaudited condensed consolidated statements of operations and comprehensive loss. As of June 30, 2024, and December 31, 2023, there were no amounts due to or due from related parties included in the unaudited condensed consolidated balance sheets.

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, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, statements about:

●

our commercialization efforts and strategy for WAKIX;

●

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;

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●

our research and development plans, including our plans to explore the therapeutic potential of pitolisant in additional indications;

●

our ongoing and planned clinical trials;

●

our ability to expand the scope of our license agreements with Bioprojet Société Civile de Recherche (“Bioprojet”);

●

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 position;

●

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; and

●

the impact of government laws and regulations.

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 terms or other similar expressions. 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.

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

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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 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

We are a commercial-stage, pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs. Our product, WAKIX (pitolisant), is a first-in-class molecule with a novel mechanism of action (“MOA”) specifically designed to increase histamine signaling in the brain by binding to H3 receptors. In August 2019, WAKIX was approved by the U.S. Food and Drug Administration (the “FDA”) for the treatment of excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy, and its U.S. commercial launch was initiated in November 2019. In October 2020, WAKIX was approved by the FDA for the treatment of cataplexy in adult patients with narcolepsy. WAKIX is the first-and-only approved product for patients with narcolepsy that is not scheduled as a controlled substance by the U.S. Drug Enforcement Administration (the “DEA”).

We believe that pitolisant’s ability to regulate histamine gives it the potential to provide therapeutic benefit in other rare neurological diseases that are mediated through H₃ receptors and histamine signaling. We have applied a mechanism-based approach to managing the life cycle of pitolisant and identified idiopathic hypersomnia (“IH”), another central disorder of hypersomnolence like narcolepsy, as our next potential new indication for WAKIX, which received orphan drug designation by the FDA in September 2023 and Fast Track Designation in November 2023. In April 2022, we initiated a Phase 3 registrational trial, the INTUNE Study, to evaluate the efficacy and safety of pitolisant in adult patients with IH. We completed enrollment in the INTUNE study in May 2023 and we announced topline data in October 2023. While the primary endpoint did not meet statistical significance, we believe the totality of the data showed favorable numerical trends for pitolisant in the treatment of adult patients with IH and we met with the FDA in March 2024 to discuss the path forward for IH. Following our meeting with the FDA, we plan to submit a supplemental NDA (“sNDA”) for IH in the second half of 2024 based on the totality of the data obtained from the INTUNE study and from other sources.

We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy, otherwise known as

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dystrophia myotonica (“DM”). Based on the positive signals from the data from our Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS and other key behavioral symptoms in patients with PWS, an end-of-phase 2 meeting with the FDA was held in June 2023. We aligned with the FDA on the proposed Phase 3 registration study design to support further investigation of pitolisant as a potential treatment to address the unmet medical need for children, adolescents and adults with PWS experiencing EDS, for which there is currently no approved treatment. In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which we believe will satisfy the requirements for both the registrational trial and one of the two requirements for pediatric exclusivity for pitolisant. In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS. The Phase 3 registrational trial, the TEMPO study, was initiated in March 2024. In June 2021, we initiated a Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and announced topline results from this trial in the fourth quarter of 2023, in which clinically meaningful improvements were demonstrated in EDS and fatigue. The safety profile was consistent with the established safety profile of pitolisant.

Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication. In January 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) and in March 2023, the EMA granted approval for the marketing authorization of WAKIX for the treatment of narcolepsy with or without cataplexy in children six and older. Based on the data from the positive Phase 3 trial conducted by Bioprojet, we submitted an sNDA for pediatric narcolepsy in December 2023. On June 24, 2024, we announced that the FDA approved our sNDA for WAKIX for the treatment of EDS in pediatric patients six years of age and older with narcolepsy.

We remain committed to obtaining pediatric exclusivity for WAKIX. The initiation of the PWS Phase 3 registrational trial, the TEMPO study, and the approval for EDS in pediatric narcolepsy are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.

We also seek to expand our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs. We are targeting assets that will allow us to further leverage the expertise and infrastructure that we have successfully built at Harmony so we can optimize the benefit of internal synergies. Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties. We have made progress in the development of two new formulations of pitolisant, Pitolisant Gastro-resistant (“Pitolisant GR”) and Pitolisant High Dose (“Pitolisant HD”). Both formulations entered clinical studies in the fourth quarter of 2023. We received data from the Pitolisant GR pilot bioequivalence study, which supports further development of Pitolisant GR. We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials. Provisional patents have been filed for both of these formulations with the potential for patent protection to the mid-2040’s.

In October 2023, we completed the acquisition of Zynerba Pharmaceuticals, Inc. (together with its subsidiary, Zynerba Pharmaceutical Pty, Ltd., “Zynerba”), a clinical-stage pharmaceutical company focused on innovative pharmaceutically manufactured transdermal cannabidiol therapies for orphan neurobehavioral disorders. Zynerba’s drug candidate is ZYN002, the first and only pharmaceutically manufactured synthetic cannabidiol gel, devoid of THC, and formulated as a patent protected, permeation-enhanced gel for transdermal delivery. ZYN002 is currently in a pivotal Phase 3 trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”). Topline data from this Phase 3 study is anticipated in mid-2025. ZYN002 has patent protection for the treatment of FXS until 2038. Based on the positive proof-of-concept (“PoC”) study in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we are working with the FDA to align on the primary endpoint and finalize the Phase 3 protocol.

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Additionally, in April 2024, the Company acquired all of the issued and outstanding capital stock of Epygenix, pursuant to the terms of a stock purchase agreement. As a result, we now have an exclusive license relating to the use of clemizole (“EPX-100”), initially for the treatment of Dravet Syndrome (“DS”) and Lennox-Gastaut Syndrome (“LGS”). EPX-100 is currently in a late-stage registrational trial for DS with plans to initiate a pivotal phase 3 clinical trial in patients with LGS later this year.

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

Pitolisant was developed by Bioprojet and approved by the EMA in 2016 for the treatment of narcolepsy in adult patients with or without cataplexy and in 2021 for the treatment of EDS in adult patients with obstructive sleep apnea. We acquired an exclusive license to develop, manufacture and commercialize pitolisant in the United States pursuant to our license agreement with Bioprojet (as amended, the “2017 LCA”) in July 2017. Pitolisant was granted Orphan Drug Designation for the treatment of narcolepsy by the FDA in 2010. It received Breakthrough Therapy designation for the treatment of cataplexy in patients with narcolepsy and Fast Track status for the treatment of EDS and cataplexy in patients with narcolepsy in April 2018.

Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Zynerba, which is now known as Harmony Biosciences Management, Inc. as of July 1, 2024.

Commercial Performance Metrics

As of June 30, 2024, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019. The average number of patients on WAKIX for the three months ended June 30, 2024, was approximately 6,550. Additionally, as of June 30, 2024, we have secured 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.

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Cost of Product Sales

Cost of product sales 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 sales 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 three years from date of manufacture, with the earliest expiration of current inventory expected to be June 2025. We regularly review our inventory levels and expect write-offs from time to time. We will continue to assess inventory levels in future periods as demand for WAKIX and the rate of inventory turnover evolves. We currently have adequate supply of WAKIX to cover demand into the fourth quarter of 2025, with additional API on-hand inventory to support at least 36 months beyond this time frame.

Research and Development Expenses

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS, DM and the development of ZYN002 in patients with FXS. 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 assess other 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 manufacturing organizations (“CMOs”);

●

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;

●

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 CMOs, 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 over the next several years as we advance our current clinical development programs and prepare to seek regulatory

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approval for additional indications for pitolisant, complete the Phase 3 clinical trial for ZYN002, and advance Pitolisant GR, Pitolisant HD, ZYN002 and HBS-102 to develop 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;

●

the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;

●

the impact of the COVID-19 pandemic, including any future resurgence or new variants, on the ability to initiate new clinical trials and/or maintain the continuity of ongoing clinical trials, including our ability to access sleep labs in order to conduct objective sleep testing, that could be impacted by future shelter-in-place orders and needs of the health care system to focus on managing patients affected by COVID-19;

●

receiving Bioprojet’s consent to pursue additional indications for pitolisant;

●

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 market development and commercialization activities of WAKIX for the treatment of EDS and cataplexy in adult patients with narcolepsy. Market

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development 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 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;

●

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, ongoing and future potential research and development activities, and increased costs of operating as a public company. 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 anticipate increased 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 Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois. For the three and six months ended June 30, 2024, we paid fees of $0.1 million and $0.2 million, respectively, pursuant to this agreement.

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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.

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

	(In thousands)				(In thousands)
Net product revenue	$	172,814	$	134,216	$	327,429	$	253,342
Cost of product sales		32,144		25,008		59,628		45,788
Gross profit		140,670		109,208		267,801		207,554
Operating expenses:
Research and development		63,583		14,969		85,772		28,258
Sales and marketing		28,507		24,528		55,740		47,100
General and administrative		27,224		22,809		52,900		44,871
Total operating expenses		119,314		62,306		194,412		120,229
Operating income		21,356		46,902		73,389		87,325

Other (expense) income, net		37		(31)		(104)		(29)
Interest expense		(4,404)		(6,217)		(8,939)		(11,948)
Interest income		4,705		3,441		9,133		6,527
Net income before provision for income taxes		21,694		44,095		73,479		81,875
Income tax expense		(10,103)		(9,795)		(23,554)		(18,090)
Net income	$	11,591	$	34,300	$	49,925	$	63,785

Net Product Revenue

Net product revenue increased by $38.6 million, or 28.8%, for the three months ended June 30, 2024, and increased by $74.1 million, or 29.2%, for the six months ended June 30, 2024, compared to the same periods in 2023. The increase for the three months ended June 30, 2024, was primarily due to a 24.1% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates and co-pay assistance, which resulted in a decrease to net product revenue of approximately 4%. The increase for the six months ended June 30, 2024, was primarily due to a 24.6% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates and co-pay assistance, which resulted in a decrease to net product revenue of approximately 4%. The price increase occurred in January 2024.

Cost of Product Sales

Cost of product sales increased by $7.1 million, or 28.5%, for the three months ended June 30, 2024, and increased by $13.8 million, or 30.2%, for the six months ended June 30, 2024, compared to the same periods in 2023. Cost of product sales as a percentage of net product revenue was 18.6% and 18.2% for the three and six months ended June 30, 2024, respectively, compared to 18.6% and 18.1% for the three and six months ended June 30, 2023, respectively. The increase in cost of product sales in the period was due to higher sales of WAKIX.

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Research and Development Expenses

The following table is a summary of our research and development expenses:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024		2023		Change		2024		2023		Change

	(in thousands)						(in thousands)
Pitolisant	$	7,275	$	8,788	$	(1,513)	$	16,385	$	14,975	$	1,410
ZYN002		3,726		-		3,726		7,605		-		7,605
IPR&D		42,595		-		42,595		42,595		750		41,845
Personnel expenses		5,813		3,759		2,054		11,196		7,361		3,835
Stock-based compensation		1,684		956		728		3,055		1,932		1,123
Other research and development		2,490		1,466		1,024		4,936		3,240		1,696
Total	$	63,583	$	14,969	$	48,614	$	85,772	$	28,258	$	57,514

Research and development expenses increased by $48.6 million, or 324.8%, for the three months ended June 30, 2024, and increased by $57.5 million or 203.5%, for the six months ended June 30, 2024, compared to the same periods in 2023. The increase for the three months ended June 30, 2024 was primarily driven by $42.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement and the acquisition of Epygenix, a $3.7 million increase in research and development expenses for ZYN002, which did not have any expenses in the prior year, a $2.1 million increase in personnel costs associated with higher headcount and a $0.7 million increase in stock compensation associated with new awards partially offset by a $1.5 million decrease in clinical development and regulatory work associated with pitolisant, driven by declines for IH and DM indications.

The increase for the six months ended June 30, 2024 was primarily driven by $42.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement and the acquisition of Epygenix, a $7.6 million increase in research and development expenses for ZYN002, which did not have any expenses in the prior year, a $3.8 million increase in personnel costs associated with higher headcount, a $1.4 million increase in clinical development and regulatory work associated with pitolisant, driven by increases for the PWS indication and a $1.1 million increase in stock compensation associated with new awards, partially offset by a $0.8 million IPR&D charge related to preclinical milestones achieved for HBS-102 during the six months ended June 30, 2023.

Sales and Marketing Expenses

Sales and marketing expenses increased by $4.0 million, or 16.2%, for the three months ended June 30, 2024, and increased by $8.6 million, or 18.3%, for the six months ended June 30, 2024, compared to the same periods in 2023. The increase for the three months ended June 30, 2024, was primarily due to a $1.9 million increase in patient engagement and marketing activities, a $1.1 million increase in personnel costs, and a $1.0 million increase in stock compensation associated with new awards. The increase for the six months ended June 30, 2024, was primarily due to a $4.4 million increase in patient engagement and marketing activities, a $1.9 million increase in personnel costs, and a $1.9 million increase in stock compensation associated with new awards. The increase in patient engagement and marketing activities for both comparable periods was driven by our continued growth of WAKIX and the increase in personnel costs for both comparable periods was related to increased headcount.

General and Administrative Expenses

General and administrative expenses increased by $4.4 million, or 19.4%, for the three months ended June 30, 2024, and increased by $8.0 million, or 17.9%, for the six months ended June 30, 2024, compared to the same periods in 2023. The increase in the three months ended June 30, 2024, was primarily due to a $2.0 million increase in legal and professional fees, primarily associated with patent lawsuits, a $1.5 million increase

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in stock compensation associated with new awards, and a $1.0 million increase in personnel costs. The increase in the six months ended June 30, 2024, was primarily due to a $3.4 million increase in legal and professional fees, primarily associated with patent lawsuits, a $4.0 million increase in stock compensation associated with new awards, and a $1.5 million increase in personnel costs, partially offset by a $0.4 million decrease in travel expenses.

Interest Expense

Interest expense decreased by $1.8 million, or 29.2%, for the three months ended June 30, 2024, and decreased by $3.0 million, or 25.2%, for the six months ended June 30, 2024, compared to the same periods in 2023. The decrease for the three and six months ended June 30, 2024, was primarily due to lower interest rates as a result of refinancing into the TLA Credit Agreement (defined below).

Interest Income

Interest income increased by $1.3 million, or 36.7%, for the three months ended June 30, 2024, and increased by $2.6 million, or 39.9%, for the six months ended June 30, 2024, compared to the same periods in 2023. The increase for the three and six months ended June 30, 2024, was primarily a result of having higher invested balances, and higher investment yields on those balances, compared to the prior year periods.

Income Taxes

Income tax expense was $10.1 million, representing a 46.6% effective tax rate, for the three months ended June 30, 2024, compared to $9.8 million, representing a 22.2% effective tax rate, for the three months ended June 30, 2023. Income tax expense was $23.6 million, representing a 32.1% effective tax rate, for the six months ended June 30, 2024, compared to $18.1 million, representing a 22.1% effective tax rate, for the six months ended June 30, 2023. The increase in our effective tax rate for both comparable periods was primarily driven by the $17.1M IPR&D charge related to the Epygenix acquisition, which is nondeductible for tax purposes. The effective tax rate of 46.6% for the three months ended June 30, 2024, included 16.5% for nondeductible IPR&D charges and 11.2% in state income taxes, partially offset by a 2.6% benefit from credits. The effective tax rate of 32.1% for the six months ended June 30, 2024, included 4.9% for nondeductible IPR&D charges and 7.4% in state income taxes, partially offset by a 1.5% benefit from credits.

Liquidity, Sources of Funding and Capital Resources

Overview

As of June 30, 2024, we had cash, cash equivalents, and investments of $434.1 million, outstanding debt of $188.8 million and an accumulated deficit of $93.4 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 June 30, 2024, will enable us to meet our operational liquidity needs and fund our planned investing activities for 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. The TLA Credit Agreement provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $185.0 million.

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In September 2023, we entered into the First Incremental Amendment (the “First Incremental Amendment”) with the Administrative Agent and Bank of America, N.A., as incremental lender. The First Incremental Amendment provides for an incremental senior secured term loan (the “Incremental Term Loan”) in an aggregate principal amount of $15.0 million. The First Incremental Amendment amends the TLA Credit Agreement and provides that the Incremental Term Loan will have identical terms as the TLA Term Loan.

The repayment schedule for both the TLA Term Loan and the Incremental Term Loan (together, the “Term Loans”) consists of $3.8 million quarterly principal payments, which commence on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028. The Term Loans bear 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 were in compliance with all covenants as of June 30, 2024.

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 $200,000, excluding commissions and transaction fees. The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason. During the three and six months ended June 30, 2024, no shares of common stock were repurchased and cancelled by the Company under the October 2023 Repurchase Program. As of June 30, 2024, the remaining amount of common stock authorized for repurchases was $150.0 million.

Zynerba Acquisition

In October 2023, we completed a tender offer (the “Tender Offer”) to acquire all of the outstanding shares of common stock of Zynerba (“Zynerba Common Stock”).

Under the terms of the Tender Offer, we paid (i) $1.1059 per share of Zynerba Common Stock (the “Common Cash Amount”), the aggregate amount of which was $60,000 and was paid at closing, plus (ii) one contingent value right (each, a “CVR”) per share of Zynerba Common Stock (the “Common CVR Amount”), which represents the right to receive up to approximately $2.5444 per share of Zynerba Common Stock, subject to the achievement of certain clinical, regulatory and sales-based milestones. The Common CVR Amounts are to be paid in cash, subject to any applicable withholding of taxes and without interest. The aggregate consideration we paid to acquire the Zynerba Common Stock upon completion of the Tender Offer was $60 million, exclusive of transaction related fees. We financed the acquisition with cash on hand.

On July 1, 2024, we announced the change of the name of our wholly owned subsidiary from “Zynerba Pharmaceuticals, Inc.” to “Harmony Biosciences Management, Inc.” As of July 1, 2024, Zynerba Pharmaceuticals, Inc. is now known as Harmony Biosciences Management, Inc.

Epygenix Acquisition

In April 2024, we acquired all of the issued and outstanding capital stock of 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

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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.

Asset Purchase Agreement

In August 2021, we entered into an asset purchase agreement with ConSynance Therapeutics, Inc. (the “APA”) to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action. Under the terms of the APA, we acquired full development and commercialization rights globally, with the exception of Greater China, for $3.5 million. Additionally, there are payments due upon the achievement of certain milestones below, including $1.0 million for additional preclinical milestones (see “Recent Milestone Payments”), $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.

License Agreements

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

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 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.

Recent Milestone Payments

There were no milestones achieved or paid during the three and six months ended June 30, 2024.

Cash Flows

The following table sets forth a summary of our cash flows for the six months ended June 30, 2024, and 2023:


	Six Months Ended June 30,
	2024		2023

Selected cash flow data	(In thousands)
Cash provided by (used in):
Operating activities	$	73,758	$	79,622
Investing activities		(61,042)		(9,561)
Financing activities		(7,080)		3,070

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Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2024, primarily consisted of net income of $49.9 million adjusted for non-cash items of $42.6 million related to acquired IPR&D, $21.4 million related to stock-based compensation expense, and $12.2 million related to intangible amortization and depreciation, offset by $17.8 million related to deferred tax assets. Net working capital excluding cash increased by $34.8 million.

Net cash provided by operating activities for the six months ended June 30, 2023, consisted of net income of $63.8 million adjusted for non-cash items of $7.6 million related to deferred tax assets, $12.1 million related to intangible amortization and depreciation and $14.4 million related to stock-based compensation expense. Net working capital excluding cash decreased by $3.3 million.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2024, was $61.0 million, which was primarily attributable to $46.3 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, $33.1 million net cash consideration paid for the acquisition of Epygenix, and $0.6 million in purchases of property and equipment, partially offset by $44.5 million from maturities of investments.

Net cash used in investing activities for the six months ended June 30, 2023, was $9.6 million, which was primarily attributable to $72.8 million in purchases of debt securities, partially offset by $63.5 million in proceeds from sales and maturities of investments and $0.2 million in purchases of property and equipment.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2024, was $7.1 million, which primarily consisted of $7.5 million in principal payments associated with the TLA Credit Agreement, partially offset by $0.7 million in proceeds from the exercise of stock options, and $0.3 million of employee withholding tax payments related to stock-based awards.

Net cash provided by financing activities for the six months ended June 30, 2023, was $3.0 million, which primarily consisted of $4.6 million in proceeds from exercised options offset by a $1.0 million principal payment associated with the Blackstone Credit Agreement and $0.5 million of employee withholding tax payments related to stock-based awards.

Critical Accounting Estimates

Our 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, and the measurement of compensation expense pursuant to stock-based awards. 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.

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We define our critical accounting policies as those under GAAP 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 the accounting policies and assumptions previously disclosed, except as disclosed 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 $387.8 million of investments in money market funds, U.S. treasury notes, corporate bonds and municipal obligations as of June 30, 2024, 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 June 30, 2024, we had $188.8 million in borrowings outstanding. The Term Loans bear 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 $188.8 million of principal outstanding as of June 30, 2024, an immediate 10% change in the 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 currently 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. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation Fluctuation Risk

Inflation generally affects us by increasing our cost of labor and 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 months ended June 30, 2024, and 2023.

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Item 4. Controls and Procedures

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 June 30, 2024. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management does 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.

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.

ANDA Litigation

On September 27, 2023, we and our 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”). On September 27, 2023, we 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 has 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 ’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 and the Novugen Notice Letter assert 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. On November 9, 2023, we, Bioprojet and Bioprojet’s wholly owned subsidiary, Bioprojet Pharma SAS (“Bioprojet Pharma”), filed a complaint for patent infringement of the ’947

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patent and the ‘197 patent against Lupin, 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.

On October 12, 2023, we and Bioprojet received notice from Novitium Pharma LLC (“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 will expire in February 2026, ’947 patent, and ’197 patent. On October 12, 2023, we 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. On October 14, 2023, we 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. On October 16, 2023, we 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. 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. 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. 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, ’947 patent and the ‘197 patent are invalid or unenforceable. 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. On November 21, 2023, we, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against AET, Annora, Novitium and Zenara and certain of their affiliates and agents and for patent infringement of the ’430 patent against Annora, Novitium and 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 October 2023, MSN Pharmaceuticals Inc. (“MSN Pharma”) sent correspondence to us 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^®_.On December 8, 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. On December 11, 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. On January 12, 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.

On April 15, 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 four-day bench trial beginning on February 17, 2026.

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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, 2023, 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Rule 10b5-1 Trading Arrangements

During the three months ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) 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.	8-K	August 21, 2020	3.2
10.1*	Amendment No. 1 to License and Commercialization Agreement, dated July 31, 2022, by and between Bioprojet Société Civile de Recherche and Harmony Biosciences, LLC.	10-Q	April 30, 2024	10.1
10.2*	Amendment No. 2 to License and Commercialization Agreement, dated July 28, 2017, by and between Bioprojet Société Civile de Recherche and Harmony Biosciences, LLC.	10-Q	April 30, 2024	10.2
10.3#	Employment Letter between Harmony Biosciences, LLC, and Kumar Budur, as amended.	8-K	May 3, 2024	10.1
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, 2023 formatted in Inline XBRL: (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Stockholders’ Equity and (vi) Notes to Financial Statements, tagged as blocks of text and including detailed tags.
104*	Cover Page Interactive Date 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.

Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 for any schedules so furnished.

#	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
	Title:		President, Chief Executive Officer and Director (principal executive officer)
	Date:		August 6, 2024

	By:		/s/ Sandip Kapadia
	Name:		Sandip Kapadia
	Title:		Chief Financial Officer and Chief Administrative Officer (principal financial officer)
	Date:		August 6, 2024

Exhibit 31.1

Certification of Principal Executive Officer

I, Jeffrey M. Dayno, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Harmony Biosciences Holdings, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2024	By:	/s/ Jeffrey M. Dayno
		Jeffrey M. Dayno
		President, Chief Executive Officer and Director (Principal Executive Officer)

Exhibit 31.2

Certification of Principal Financial Officer

I, Sandip Kapadia, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Harmony Biosciences Holdings, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2024	By:	/s/ Sandip Kapadia
		Sandip Kapadia
		Chief Financial Officer and Chief Administrative Officer (Principal Financial Officer and Principal Accounting Officer)

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant To 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Harmony Biosciences Holdings, Inc. (the “Company”) for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 6, 2024	By:	/s/ Jeffrey M. Dayno
		Jeffrey M. Dayno
		President, Chief Executive Officer and Director (Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as a part of the Report or on a separate disclosure document.

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant To 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Harmony Biosciences Holdings, Inc. (the “Company”) for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 6, 2024	By:	/s/ Sandip Kapadia
		Sandip Kapadia
		Chief Financial Officer and Chief Administrative Officer (Principal Financial Officer and Principal Accounting Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as a part of the Report or on a separate disclosure document.

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2024	Aug. 02, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-39450
Entity Registrant Name	HARMONY BIOSCIENCES HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-2279923
Entity Address, Postal Zip Code	19462
Entity Address, Address Line One	630 W.
Entity Address, Address Line Two	Germantown Pike
Entity Address, Address Line Three	Suite 215
Entity Address, City or Town	Plymouth Meeting
Entity Address, State or Province	PA
City Area Code	484
Local Phone Number	539-9800
Title of 12(b) Security	Common Stock, par value $0.00001 value per share
Trading Symbol	HRMY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		56,834,745
Entity Central Index Key	0001802665
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Amendment Flag	false

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash and cash equivalents	$ 317,296	$ 311,660
Investments, short-term	29,614	41,800
Trade receivables, net	83,157	74,140
Inventory, net	5,643	5,363
Prepaid expenses	16,127	12,570
Other current assets	6,507	5,537
Total current assets	458,344	451,070
NONCURRENT ASSETS:
Property and equipment, net	754	371
Restricted cash	270	270
Investments, long-term	87,178	72,169
Intangible assets, net	125,186	137,108
Deferred tax asset	180,186	144,162
Other noncurrent assets	6,465	6,298
Total noncurrent assets	400,039	360,378
TOTAL ASSETS	858,383	811,448
CURRENT LIABILITIES:
Trade payables	22,683	17,730
Accrued compensation	9,641	23,747
Accrued expenses	91,644	99,494
Current portion of long-term debt	15,000	15,000
Other current liabilities	7,614	7,810
Total current liabilities	146,582	163,781
NONCURRENT LIABILITIES:
Long-term debt, net	171,422	178,566
Other noncurrent liabilities	1,796	2,109
Total noncurrent liabilities	173,218	180,675
TOTAL LIABILITIES	319,800	344,456
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS' EQUITY:
Common stock-$0.00001 par value; 500,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 56,833,771 and 56,769,081 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	1	1
Additional paid in capital	632,168	610,266
Accumulated other comprehensive (loss) income	(234)	2
Accumulated deficit	(93,352)	(143,277)
TOTAL STOCKHOLDERS' EQUITY	538,583	466,992
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 858,383	$ 811,448

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	56,833,771	56,769,081
Common stock, shares outstanding	56,833,771	56,769,081

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net product revenue	$ 172,814	$ 134,216	$ 327,429	$ 253,342
Revenue from Contract with Customer, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost of product sold	$ 32,144	$ 25,008	$ 59,628	$ 45,788
Cost, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit	$ 140,670	$ 109,208	$ 267,801	$ 207,554
Operating expenses:
Research and development	63,583	14,969	85,772	28,258
Sales and marketing	28,507	24,528	55,740	47,100
General and administrative	27,224	22,809	52,900	44,871
Total operating expenses	119,314	62,306	194,412	120,229
Operating income	21,356	46,902	73,389	87,325
Other (expense) income, net	37	(31)	(104)	(29)
Interest expense	(4,404)	(6,218)	(8,939)	(11,949)
Interest income	4,705	3,442	9,133	6,528
Income before income taxes	21,694	44,095	73,479	81,875
Income tax expense	(10,103)	(9,795)	(23,554)	(18,090)
Net income	11,591	34,300	49,925	63,785
Unrealized (loss) income on investments	(63)	(491)	(236)	(371)
Comprehensive income	$ 11,528	$ 33,809	$ 49,689	$ 63,414
EARNINGS PER SHARE:
Basic	$ 0.20	$ 0.57	$ 0.88	$ 1.07
Diluted	$ 0.20	$ 0.56	$ 0.87	$ 1.05
Weighted average number of shares of common stock - basic	56,802,357	59,974,123	56,786,873	59,853,808
Weighted average number of shares of common stock - diluted	57,541,696	60,743,953	57,571,570	60,997,410

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Accumulated deficit	Total
Beginning balance at Dec. 31, 2022	$ 1	$ 675,118	$ (151)	$ (272,130)	$ 402,838
Beginning balance, shares at Dec. 31, 2022	59,615,731
Net Income (Loss)				63,785	63,785
Unrealized loss on investments			(371)		(371)
Exercise of stock options		4,069			4,069
Exercise of stock options , Shares	383,927
Stock-based compensation		14,851			14,851
Ending balance at Jun. 30, 2023	$ 1	694,038	(522)	(208,345)	485,172
Ending balance, shares at Jun. 30, 2023	59,999,658
Beginning balance at Mar. 31, 2023	$ 1	685,716	(31)	(242,645)	443,041
Beginning balance, shares at Mar. 31, 2023	59,954,618
Net Income (Loss)				34,300	34,300
Unrealized loss on investments			(491)		(491)
Exercise of stock options		674			674
Exercise of stock options , Shares	45,040
Stock-based compensation		7,648			7,648
Ending balance at Jun. 30, 2023	$ 1	694,038	(522)	(208,345)	485,172
Ending balance, shares at Jun. 30, 2023	59,999,658
Beginning balance at Dec. 31, 2023	$ 1	610,266	2	(143,277)	466,992
Beginning balance, shares at Dec. 31, 2023	56,769,081
Net Income (Loss)				49,925	49,925
Unrealized loss on investments			(236)		(236)
Exercise of options and restricted stock units		420			$ 420
Exercise of options and restricted stock units, Shares	64,690
Exercise of stock options , Shares					46,996
Stock-based compensation		21,482			$ 21,482
Ending balance at Jun. 30, 2024	$ 1	632,168	(234)	(93,352)	538,583
Ending balance, shares at Jun. 30, 2024	56,833,771
Beginning balance at Mar. 31, 2024	$ 1	620,507	(171)	(104,943)	515,394
Beginning balance, shares at Mar. 31, 2024	56,791,214
Net Income (Loss)				11,591	11,591
Unrealized loss on investments			(63)		(63)
Exercise of stock options		573			573
Exercise of stock options , Shares	42,557
Stock-based compensation		11,088			11,088
Ending balance at Jun. 30, 2024	$ 1	$ 632,168	$ (234)	$ (93,352)	$ 538,583
Ending balance, shares at Jun. 30, 2024	56,833,771

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 49,925	$ 63,785
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	254	206
Intangible amortization	11,922	11,922
Acquired in-process research & development (IPR&D) expense	42,595
Stock-based and employee stock purchase compensation expense	21,482	14,851
Stock appreciation rights market adjustment	(85)	(497)
Debt issuance costs amortization	356	840
Deferred taxes	(17,756)	(7,635)
Amortization of premiums and accretion of discounts on Investment securities	(1,220)	(1,312)
Other non-cash expenses	1,126	799
Change in operating assets and liabilities:
Trade receivables	(9,017)	(9,072)
Inventory	(280)	(557)
Prepaid expenses and other assets	(4,004)	2,227
Trade payables	3,555	2,777
Other liabilities	(25,095)	1,288
Net cash provided by operating activities	73,758	79,622
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities	(46,317)	(72,847)
Proceeds from maturities and sales of investment securities	44,481	63,491
Purchase of property and equipment	(637)	(205)
Acquisition of Zynerba Pharmaceuticals, Inc., net of cash acquired	(33,069)
Payment of license fee	(25,500)
Net cash used in investing activities	(61,042)	(9,561)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayment of long term debt	(7,500)	(1,000)
Payments of employee withholding taxes related to stock-based awards	(269)	(514)
Proceeds from exercised options	689	4,584
Net cash (used in) provided by financing activities	(7,080)	3,070
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	5,636	73,131
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH-Beginning of period	311,930	244,534
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH-End of period	317,566	317,665
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest	8,944	10,691
Cash paid during the year for taxes	$ 42,093	$ 19,890

ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2024

ORGANIZATION AND DESCRIPTION OF BUSINESS

ORGANIZATION AND DESCRIPTION OF BUSINESS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

The Company

LIQUIDITY AND CAPITAL RESOURCES

6 Months Ended

Jun. 30, 2024

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY AND CAPITAL RESOURCES

2. LIQUIDITY AND CAPITAL RESOURCES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Reclassifications

Significant Risks and Uncertainties

Use of Estimates

Operating Segments

Fair Value of Financial Instruments

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.

Cash, Cash Equivalents and Restricted Cash


	As of
	June 30,		December 31,
	2024		2023
Cash and cash equivalents	$	317,296	$	311,660
Restricted cash		270		270
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	317,566	$	311,930

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

Concentrations of Risk

The Company depends on a single supplier for its product and a single supplier for its active pharmaceutical ingredient.

Share Repurchases

Business Combinations

Recently Issued Accounting Pronouncements

ACQUISITIONS

6 Months Ended

Jun. 30, 2024

ACQUISITIONS

ACQUISITIONS

4. ACQUISITIONS

Acquisition of Zynerba

Acquisition of Epygenix

The total purchase consideration for Epygenix was as follows:


Cash consideration paid to selling shareholders and to settle restricted stock units ("RSUs")	$	32,686
Transaction costs		450
Total purchase consideration	$	33,136


Assets acquired
Acquired in-process research and development	$	17,095
Deferred tax asset		18,268
Other assets		590
Total assets acquired	$	35,953
Total liabilities assumed	$	2,817

Net assets acquired	$	33,136

INVESTMENTS

6 Months Ended

Jun. 30, 2024

INVESTMENTS

INVESTMENTS

5. 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:


	June 30, 2024
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	16,175	1	(5)	$	16,171
Corporate debt securities		13,443	4	(4)		13,443
Total short-term investments	$	29,618	5	(9)	$	29,614


Long-term:
Corporate debt securities		59,793	37	(87)		59,743
U.S. government securities		27,615	—	(180)		27,435
Total long-term investments	$	87,408	37	(267)	$	87,178

	December 31, 2023
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	23,832	36	(3)	$	23,865
Corporate debt securities		15,968	28	—		15,996
U.S. government securities		1,940	—	(1)		1,939
Total short-term investments	$	41,740	64	(4)	$	41,800

Long-term:
Commercial paper	$	744	—	—	$	744
Corporate debt securities		42,688	81	(28)		42,741
U.S. government securities		28,795	7	(118)		28,684
Total long-term investments	$	72,227	88	(146)	$	72,169

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2024

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

6. FAIR VALUE MEASUREMENTS

The Company’s assets measured at fair value consisted of the following:


	June 30, 2024				December 31, 2023
		Total	Level 1	Level 2		Total	Level 1	Level 2
Assets
Cash equivalents	$	270,989	270,989	—	$	244,569	243,685	884
Commercial paper		16,171	—	16,171		24,609	—	24,609
Corporate debt securities		73,186	—	73,186		58,737	—	58,737
U.S. government securities		27,435	—	27,435		30,623	—	30,623
Total	$	387,781	270,989	116,792	$	358,538	243,685	114,853

INVENTORY

6 Months Ended

Jun. 30, 2024

INVENTORY

INVENTORY

7. INVENTORY

Inventory, net consisted of the following:


	As of
	June 30,		December 31,
	2024		2023
Raw materials	$	1,135	$	1,060
Work in process		1,744		2,020
Finished goods		2,764		2,283
Total inventory, net	$	5,643	$	5,363

INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2024

INTANGIBLE ASSETS

INTANGIBLE ASSETS

8. INTANGIBLE ASSETS

The Company expects the future annual amortization expense for the unamortized intangible assets to be as follows:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	11,923
2025		23,845
2026		23,845
2027		23,845
2028		23,845
Thereafter		17,883
Total	$	125,186

The gross carrying amount and net book value of the intangible asset is as follows:


	As of
	June 30,		December 31,
	2024		2023
Gross Carrying Amount	$	215,000	$	215,000
Accumulated Amortization		(89,814)		(77,892)
Net Book Value	$	125,186	$	137,108

LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS

6 Months Ended

Jun. 30, 2024

LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS

LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS

9. LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS

License Agreements

achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using the Licensed Compound in the Licensed Territories.

Agreement Related to Intellectual Property

ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2024

ACCRUED EXPENSES

ACCRUED EXPENSES

10. ACCRUED EXPENSES

Accrued expenses consist of the following:


	As of
	June 30,		December 31,
	2024		2023
Royalties due to Bioprojet	$	30,199	$	40,419
Rebates and other sales deductions		43,570		38,842
Interest		2,993		3,354
Sales and marketing		3,343		2,354
Research and development		7,201		9,835
Professional fees, consulting, and other services		2,053		2,195
Other expenses		2,285		2,495
	$	91,644	$	99,494

DEBT

6 Months Ended

Jun. 30, 2024

DEBT

DEBT

11. DEBT

Term Loan A Credit Agreement

Long-term debt, net consists of the following:


	June 30,		December 31,
	2024		2023
Principal amount	$	188,750	$	196,250
Unamortized debt discount associated with debt financing costs		(2,328)		(2,684)
Total debt, net		186,422		193,566
Less current portion		(15,000)		(15,000)
Long-term debt, net	$	171,422	$	178,566

Future minimum payments relating to total debt, net as of June 30, 2024, for the periods indicated below consists of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	7,500
2025		16,250
2026		20,000
2027		20,000
2028		125,000
Thereafter		—
Total	$	188,750


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Interest on principal balance	$	4,228	$	5,794	$	8,583	$	11,109
Amortization of deferred financing costs		176		424		356		840
Total term loan interest expense	$	4,404	$	6,218	$	8,939	$	11,949

LEASES

6 Months Ended

Jun. 30, 2024

LEASES

LEASES

12. LEASES

As of June 30, 2024, the weighted-average remaining lease term for operating leases was 1.7 years and the weighted-average discount rate for operating leases was 7.56%.

Supplemental balance sheet information related to operating leases was as follows:


Leases	Classification		June 30, 2024		December 31, 2023
Assets
Operating lease right-of-use assets	Other noncurrent assets	$	2,508	$	2,344
Liabilities
Operating lease liability, current portion	Other current liabilities	$	1,786	$	1,437
Operating lease liability, long-term	Other long-term liabilities		854		1,082
Total operating lease liabilities		$	2,640	$	2,519

Supplemental cash flow information related to operating leases was as follows:


		June 30, 2024		June 30, 2023
Operating cash flows from operating leases	$	1,075	$	922
Right of use assets obtained in exchange for operating lease obligations	$	1,254	$	615

Future payments under noncancelable operating leases with initial terms of one year or more as of June 30, 2024, consisted of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	1,047
2025		1,250
2026		495
2027		12
2028		—
Thereafter		—
Total lease payments		2,804
Less: imputed interest		(164)
Total lease liabilities	$	2,640

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

Litigation

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2024

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

14. STOCKHOLDERS’ EQUITY

Common Stock

Share Repurchase Program

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

15. STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

2020 Stock Incentive Plan

2017 Stock Incentive Plan

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	6,316,422	$	32.47	7.17
Awards issued	1,307,396	$	30.51
Awards exercised	(46,996)	$	8.97
Awards forfeited	(27,791)	$	37.14
Awards outstanding—June 30, 2024	7,549,031	$	32.26	7.20	$	27,893
Awards exercisable—June 30, 2024	3,772,766	$	30.50	6.30	$	21,050

Stock Appreciation Rights

The following table summarizes SARs activity for the six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	43,208	$	9.38	5.32
Awards issued	—	$	—
Awards exercised	—	$	—
Awards forfeited	—	$	—
Awards outstanding—June 30, 2024	43,208	$	9.38	4.83	$	887
Awards exercisable—June 30, 2024	39,556	$	8.98	4.72	$	827

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2024:



		Weighted-
		Average
	Number of	Grant Date
	Awards	Fair Value
Awards outstanding—December 31, 2023	330,000	$	31.53
Awards issued	464,600	$	30.62
Awards vested	(15,000)	$	29.03
Awards forfeited	(3,250)	$	30.69
Awards outstanding—June 30, 2024	776,350	$	31.03

Value of Stock Options and SARs

The assumptions used to value the awards are summarized in the following table.


	As of
	June 30,		December 31,
	2024		2023
Dividend yield	0.00	%	0.00	%
Expected volatility	69.84 - 72.98	%	74.87 - 80.78	%
Risk-free interest rate	4.06 - 4.65	%	3.42 - 4.62	%
Lack of marketability discount	0.00	%	0.00	%
Expected term (years)	2.04 - 6.11		2.26 - 10.77

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 per share fair value of awards issued under the 2017 Plan and 2020 Plan was $21.24 and $20.64 on June 30, 2024, and December 31, 2023, respectively.

Stock-Based Compensation Expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development expense	$	1,683	$	956	$	3,054	$	1,932
Sales and marketing expense		2,100		1,146		4,094		2,219
General and administrative expense		7,180		5,691		14,249		10,203
	$	10,963	$	7,793	$	21,397	$	14,354

Employee Stock Purchase Plan

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2024

EARNINGS PER SHARE

EARNINGS PER SHARE

16. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net income per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator
Net income	$	11,591	$	34,300	$	49,925	$	63,785
Denominator
Net income per share of common stock - basic	$	0.20	$	0.57	$	0.88	$	1.07
Net income per share of common stock- diluted	$	0.20	$	0.56	$	0.87	$	1.05
Weighted average number of shares of common stock - basic		56,802,357		59,974,123		56,786,873		59,853,808
Weighted average number of shares of common stock - diluted		57,541,696		60,743,953		57,571,570		60,997,410

Securities outstanding that were included in the computation above, utilizing the treasury stock method are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

739,339

769,830

784,697

1,143,602

Potential shares of common stock issuable that were excluded from the computation of diluted weighted-average shares outstanding excluded from the numerator, are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

7,629,250

5,520,235

7,583,892

5,146,464

INCOME TAXES

6 Months Ended

Jun. 30, 2024

INCOME TAXES

INCOME TAXES

17. INCOME TAXES

A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate for the three and six months ended June 30, 2024, and 2023 is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Stock-based compensation	(0.7)		(0.5)		(0.2)		(1.5)
State taxes	11.2		4.0		7.4		5.1
Credits	(2.6)		(2.9)		(1.6)		(2.9)
Nondeductible IPR&D	16.5		—		4.9		—
Valuation allowance	0.6		—		0.3		—
Other	0.6		0.6		0.3		0.4
Total	46.6	%	22.2	%	32.1	%	22.1	%

RELATED-PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

RELATED-PARTY TRANSACTIONS

RELATED-PARTY TRANSACTIONS

18. RELATED-PARTY TRANSACTIONS

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 11,591	$ 34,300	$ 49,925	$ 63,785

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

Reclassifications

Reclassifications

Significant Risks and Uncertainties

Significant Risks and Uncertainties

Use of Estimates

Use of Estimates

Operating Segments

Operating Segments

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash


	As of
	June 30,		December 31,
	2024		2023
Cash and cash equivalents	$	317,296	$	311,660
Restricted cash		270		270
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	317,566	$	311,930

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

Investments

Concentrations of Risk

Concentrations of Risk

The Company depends on a single supplier for its product and a single supplier for its active pharmaceutical ingredient.

Share Repurchases

Share Repurchases

Business Combinations

Business Combinations

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of reconciliation of cash, cash equivalents, and restricted cash

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
	June 30,		December 31,
	2024		2023
Cash and cash equivalents	$	317,296	$	311,660
Restricted cash		270		270
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	317,566	$	311,930

ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2024

ACQUISITIONS

Schedule of purchase consideration and allocation of purchase consideration


Cash consideration paid to selling shareholders and to settle restricted stock units ("RSUs")	$	32,686
Transaction costs		450
Total purchase consideration	$	33,136


Assets acquired
Acquired in-process research and development	$	17,095
Deferred tax asset		18,268
Other assets		590
Total assets acquired	$	35,953
Total liabilities assumed	$	2,817

Net assets acquired	$	33,136

INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2024

INVESTMENTS

Schedule of carrying value and amortized cost of available-for-sale debt securities

The carrying value and amortized cost of the Company’s available-for-sale debt securities, summarized by type of security, consisted of the following:


	June 30, 2024
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	16,175	1	(5)	$	16,171
Corporate debt securities		13,443	4	(4)		13,443
Total short-term investments	$	29,618	5	(9)	$	29,614


Long-term:
Corporate debt securities		59,793	37	(87)		59,743
U.S. government securities		27,615	—	(180)		27,435
Total long-term investments	$	87,408	37	(267)	$	87,178

	December 31, 2023
		Amortized	Unrealized	Unrealized		Fair
		Cost	Gains	Losses		Value
Short-term:
Commercial paper	$	23,832	36	(3)	$	23,865
Corporate debt securities		15,968	28	—		15,996
U.S. government securities		1,940	—	(1)		1,939
Total short-term investments	$	41,740	64	(4)	$	41,800

Long-term:
Commercial paper	$	744	—	—	$	744
Corporate debt securities		42,688	81	(28)		42,741
U.S. government securities		28,795	7	(118)		28,684
Total long-term investments	$	72,227	88	(146)	$	72,169

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2024

FAIR VALUE MEASUREMENTS

Schedule of assets measured at fair value

The Company’s assets measured at fair value consisted of the following:


	June 30, 2024				December 31, 2023
		Total	Level 1	Level 2		Total	Level 1	Level 2
Assets
Cash equivalents	$	270,989	270,989	—	$	244,569	243,685	884
Commercial paper		16,171	—	16,171		24,609	—	24,609
Corporate debt securities		73,186	—	73,186		58,737	—	58,737
U.S. government securities		27,435	—	27,435		30,623	—	30,623
Total	$	387,781	270,989	116,792	$	358,538	243,685	114,853

INVENTORY (Tables)

6 Months Ended

Jun. 30, 2024

INVENTORY

Schedule of inventory net

Inventory, net consisted of the following:


	As of
	June 30,		December 31,
	2024		2023
Raw materials	$	1,135	$	1,060
Work in process		1,744		2,020
Finished goods		2,764		2,283
Total inventory, net	$	5,643	$	5,363

INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2024

INTANGIBLE ASSETS

Schedule of future annual amortization expense for unamortized intangible assets

The Company expects the future annual amortization expense for the unamortized intangible assets to be as follows:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	11,923
2025		23,845
2026		23,845
2027		23,845
2028		23,845
Thereafter		17,883
Total	$	125,186

Schedule of gross carrying amount and net book value of intangible assets

The gross carrying amount and net book value of the intangible asset is as follows:


	As of
	June 30,		December 31,
	2024		2023
Gross Carrying Amount	$	215,000	$	215,000
Accumulated Amortization		(89,814)		(77,892)
Net Book Value	$	125,186	$	137,108

ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2024

ACCRUED EXPENSES

Schedule of accrued expenses

Accrued expenses consist of the following:


	As of
	June 30,		December 31,
	2024		2023
Royalties due to Bioprojet	$	30,199	$	40,419
Rebates and other sales deductions		43,570		38,842
Interest		2,993		3,354
Sales and marketing		3,343		2,354
Research and development		7,201		9,835
Professional fees, consulting, and other services		2,053		2,195
Other expenses		2,285		2,495
	$	91,644	$	99,494

DEBT (Tables)

6 Months Ended

Jun. 30, 2024

DEBT

Schedule of long-term debt, net

Long-term debt, net consists of the following:


	June 30,		December 31,
	2024		2023
Principal amount	$	188,750	$	196,250
Unamortized debt discount associated with debt financing costs		(2,328)		(2,684)
Total debt, net		186,422		193,566
Less current portion		(15,000)		(15,000)
Long-term debt, net	$	171,422	$	178,566

Schedule of future minimum payments relating to total debt

Future minimum payments relating to total debt, net as of June 30, 2024, for the periods indicated below consists of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	7,500
2025		16,250
2026		20,000
2027		20,000
2028		125,000
Thereafter		—
Total	$	188,750

Schedule of interest expense related to the company's long-term debt


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Interest on principal balance	$	4,228	$	5,794	$	8,583	$	11,109
Amortization of deferred financing costs		176		424		356		840
Total term loan interest expense	$	4,404	$	6,218	$	8,939	$	11,949

LEASES (Tables)

6 Months Ended

Jun. 30, 2024

LEASES

Schedule of supplemental balance sheet and cash flow information related to operating leases

Supplemental balance sheet information related to operating leases was as follows:


Leases	Classification		June 30, 2024		December 31, 2023
Assets
Operating lease right-of-use assets	Other noncurrent assets	$	2,508	$	2,344
Liabilities
Operating lease liability, current portion	Other current liabilities	$	1,786	$	1,437
Operating lease liability, long-term	Other long-term liabilities		854		1,082
Total operating lease liabilities		$	2,640	$	2,519

Supplemental cash flow information related to operating leases was as follows:


		June 30, 2024		June 30, 2023
Operating cash flows from operating leases	$	1,075	$	922
Right of use assets obtained in exchange for operating lease obligations	$	1,254	$	615

Schedule of future payments under noncancelable operating leases

Future payments under noncancelable operating leases with initial terms of one year or more as of June 30, 2024, consisted of the following:


Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$	1,047
2025		1,250
2026		495
2027		12
2028		—
Thereafter		—
Total lease payments		2,804
Less: imputed interest		(164)
Total lease liabilities	$	2,640

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2024

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

Summary of changes in stock options granted

The following table summarizes stock option activity for the six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	6,316,422	$	32.47	7.17
Awards issued	1,307,396	$	30.51
Awards exercised	(46,996)	$	8.97
Awards forfeited	(27,791)	$	37.14
Awards outstanding—June 30, 2024	7,549,031	$	32.26	7.20	$	27,893
Awards exercisable—June 30, 2024	3,772,766	$	30.50	6.30	$	21,050

Summary of changes in SARs granted

The following table summarizes SARs activity for the six months ended June 30, 2024:


				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Awards	Price		Term		Value ($000's)
Awards outstanding—December 31, 2023	43,208	$	9.38	5.32
Awards issued	—	$	—
Awards exercised	—	$	—
Awards forfeited	—	$	—
Awards outstanding—June 30, 2024	43,208	$	9.38	4.83	$	887
Awards exercisable—June 30, 2024	39,556	$	8.98	4.72	$	827

Summary of changes in RSUs granted

The following table summarizes RSU activity for the six months ended June 30, 2024:



		Weighted-
		Average
	Number of	Grant Date
	Awards	Fair Value
Awards outstanding—December 31, 2023	330,000	$	31.53
Awards issued	464,600	$	30.62
Awards vested	(15,000)	$	29.03
Awards forfeited	(3,250)	$	30.69
Awards outstanding—June 30, 2024	776,350	$	31.03

Summary of assumptions used to value awards


	As of
	June 30,		December 31,
	2024		2023
Dividend yield	0.00	%	0.00	%
Expected volatility	69.84 - 72.98	%	74.87 - 80.78	%
Risk-free interest rate	4.06 - 4.65	%	3.42 - 4.62	%
Lack of marketability discount	0.00	%	0.00	%
Expected term (years)	2.04 - 6.11		2.26 - 10.77

Summary of stock-based compensation expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development expense	$	1,683	$	956	$	3,054	$	1,932
Sales and marketing expense		2,100		1,146		4,094		2,219
General and administrative expense		7,180		5,691		14,249		10,203
	$	10,963	$	7,793	$	21,397	$	14,354

EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2024

EARNINGS PER SHARE

Summary of computation of basic and diluted net income (loss) per share

The following table sets forth the computation of basic and diluted net income per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator
Net income	$	11,591	$	34,300	$	49,925	$	63,785
Denominator
Net income per share of common stock - basic	$	0.20	$	0.57	$	0.88	$	1.07
Net income per share of common stock- diluted	$	0.20	$	0.56	$	0.87	$	1.05
Weighted average number of shares of common stock - basic		56,802,357		59,974,123		56,786,873		59,853,808
Weighted average number of shares of common stock - diluted		57,541,696		60,743,953		57,571,570		60,997,410

Securities outstanding that were included in the computation above, utilizing the treasury stock method are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

739,339

769,830

784,697

1,143,602

Summary of antidilutive securities excluded from computation of earnings per share

Potential shares of common stock issuable that were excluded from the computation of diluted weighted-average shares outstanding excluded from the numerator, are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Stock options, SARs, and RSUs to purchase common stock

7,629,250

5,520,235

7,583,892

5,146,464

INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2024

INCOME TAXES

Schedule of reconciliation between statutory federal income tax rate and the Company's effective income tax rate


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Stock-based compensation	(0.7)		(0.5)		(0.2)		(1.5)
State taxes	11.2		4.0		7.4		5.1
Credits	(2.6)		(2.9)		(1.6)		(2.9)
Nondeductible IPR&D	16.5		—		4.9		—
Valuation allowance	0.6		—		0.3		—
Other	0.6		0.6		0.3		0.4
Total	46.6	%	22.2	%	32.1	%	22.1	%

LIQUIDITY AND CAPITAL RESOURCES (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
LIQUIDITY AND CAPITAL RESOURCES
Accumulated deficit	$ 93,352	$ 143,277
Cash, cash equivalents and investments	$ 434,088

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents	$ 317,296	$ 311,660
Restricted cash	270	270
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$ 317,566	$ 311,930	$ 317,665	$ 244,534

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2024 segment product Institution customer	Jun. 30, 2023 customer	Dec. 31, 2023 customer
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Number of approved commercial products \| product	1
Number of operating segments \| segment	1
Number of reportable segments \| segment	1
Number Of financial institutions \| Institution	5
Three Customers \| Accounts Receivable \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Number of customers \| customer	3		3
Concentration risk percentage	100.00%		100.00%
Three Customers \| Product Revenues \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Number of customers \| customer	3	3
Concentration risk percentage	100.00%	100.00%
Accredo Health Group, Inc \| Accounts Receivable \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	35.00%		39.00%
Accredo Health Group, Inc \| Product Revenues \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	33.00%	32.00%
Caremark LLC \| Accounts Receivable \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	41.00%		32.00%
Caremark LLC \| Product Revenues \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	40.00%	35.00%
PANTHERx Specialty Pharmacy LLC \| Accounts Receivable \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	24.00%		29.00%
PANTHERx Specialty Pharmacy LLC \| Product Revenues \| Customer Concentration Risk
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Line Items]
Concentration risk percentage	27.00%	33.00%

ACQUISITIONS (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended
ACQUISITIONS (Details) $ / shares in Units, $ in Thousands	Apr. 30, 2024 USD ($)	Oct. 31, 2023 USD ($) Right $ / shares	Jun. 30, 2024 USD ($)	Jun. 30, 2024 USD ($)
ACQUISITIONS
Transaction costs		$ 2,645
Acquired in-process research and development expense				$ 42,595
Zynerba Acquisition
ACQUISITIONS
Cash consideration per common stock \| $ / shares		$ 1.1059
Aggregate consideration		$ 60,000
Number of contingent value right per common stock \| Right		1
Contingent consideration per common stock \| $ / shares		$ 2.5444
Epygenix Acquisition
ACQUISITIONS
Aggregate consideration	$ 32,686
Transaction costs	450
Asset acquisition, upfront consideration paid	35,000
Amount of fee payable upon achieving development and regulatory milestones	130,000
Amount of fees payable upon achieving sale-based milestones	$ 515,000
Acquired in-process research and development expense			$ 17,095	$ 17,095

ACQUISITIONS - Purchase Consideration (Details) - USD ($) $ in Thousands		1 Months Ended
	Apr. 30, 2024	Oct. 31, 2023
ACQUISITIONS
Transaction costs		$ 2,645
Epygenix Acquisition
ACQUISITIONS
Cash consideration paid to selling shareholders and to settle restricted stock units ("RSUs")	$ 32,686
Transaction costs	450
Total purchase consideration	$ 33,136

ACQUISITIONS - Net Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Apr. 30, 2024	Dec. 31, 2023
Assets acquired
Deferred tax asset	$ 180,186		$ 144,162
TOTAL ASSETS	858,383		811,448
Total liabilities assumed	$ 319,800		$ 344,456
Epygenix Acquisition
Assets acquired
Acquired in-process research and development		$ 17,095
Deferred tax asset		18,268
Other assets		590
TOTAL ASSETS		35,953
Total liabilities assumed		2,817
Net assets acquired		$ 33,136

INVESTMENTS - Carrying Value and Amortized Cost of Available-For-Sale Debt Securities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Minimum
Investment securities
Non current investment maturity term	1 year
Maximum
Investment securities
Non current investment maturity term	2 years
Short-term
Investment securities
Amortized Cost	$ 29,618	$ 41,740
Unrealized Gains	5	64
Unrealized Losses	(9)	(4)
Fair Value	29,614	41,800
Short-term commercial paper
Investment securities
Amortized Cost	16,175	23,832
Unrealized Gains	1	36
Unrealized Losses	(5)	(3)
Fair Value	16,171	23,865
Short-term corporate debt securities
Investment securities
Amortized Cost	13,443	15,968
Unrealized Gains	4	28
Unrealized Losses	(4)
Fair Value	13,443	15,996
Short-term U.S. government securities
Investment securities
Amortized Cost		1,940
Unrealized Losses		(1)
Fair Value		1,939
Long-term
Investment securities
Amortized Cost	87,408	72,227
Unrealized Gains	37	88
Unrealized Losses	(267)	(146)
Fair Value	87,178	72,169
Long-term commercial paper
Investment securities
Amortized Cost		744
Fair Value		744
Long-term corporate debt securities
Investment securities
Amortized Cost	59,793	42,688
Unrealized Gains	37	81
Unrealized Losses	(87)	(28)
Fair Value	59,743	42,741
Long-term U.S. government securities
Investment securities
Amortized Cost	27,615	28,795
Unrealized Gains		7
Unrealized Losses	(180)	(118)
Fair Value	$ 27,435	$ 28,684

FAIR VALUE MEASUREMENTS - Assets Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets
Assets	$ 387,781	$ 358,538
Cash equivalents
Assets
Assets	270,989	244,569
Commercial paper
Assets
Assets	16,171	24,609
Corporate debt securities
Assets
Assets	73,186	58,737
U.S. government securities
Assets
Assets	27,435	30,623
Level 1
Assets
Assets	270,989	243,685
Level 1 \| Cash equivalents
Assets
Assets	270,989	243,685
Level 2
Assets
Assets	116,792	114,853
Level 2 \| Cash equivalents
Assets
Assets		884
Level 2 \| Commercial paper
Assets
Assets	16,171	24,609
Level 2 \| Corporate debt securities
Assets
Assets	73,186	58,737
Level 2 \| U.S. government securities
Assets
Assets	$ 27,435	$ 30,623

INVENTORY (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
INVENTORY
Raw materials	$ 1,135	$ 1,060
Work in process	1,744	2,020
Finished goods	2,764	2,283
Total inventory, net	$ 5,643	$ 5,363

INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended				3 Months Ended		6 Months Ended
	Mar. 31, 2022	Feb. 28, 2022	Oct. 31, 2020	Aug. 31, 2019	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Intangible Assets
Net product revenue					$ 172,814	$ 134,216	$ 327,429	$ 253,342
Amortization expense					$ 5,961	$ 5,961	$ 11,922	$ 11,922
WAKIX
Intangible Assets
Useful life of intangible asset	7 years 7 months 6 days
Remaining useful life					5 years 3 months 18 days		5 years 3 months 18 days
Final payment paid	$ 40,000
WAKIX \| United States
Intangible Assets
Net product revenue		$ 500,000
WAKIX \| Daytime Sleepiness
Intangible Assets
License agreement milestone payments paid				$ 75,000
Useful life of intangible asset				10 years
Remaining useful life					5 years 3 months 18 days		5 years 3 months 18 days
NDA for WAKIX. \| Cataplexy
Intangible Assets
License agreement milestone payments paid			$ 100,000
Useful life of intangible asset			9 years
Remaining useful life					5 years 3 months 18 days		5 years 3 months 18 days

INTANGIBLE ASSETS - Schedule of Future Annual Amortization Expense for Unamortized Intangible Assets (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Future annual amortization expense
2024 (excluding the six months ended June 30, 2024)	$ 11,923
2025	23,845
2026	23,845
2027	23,845
2028	23,845
Thereafter	17,883
Total	$ 125,186

INTANGIBLE ASSETS - Schedule of Gross Carrying Amount and Net Book Value of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
INTANGIBLE ASSETS
Gross Carrying Amount	$ 215,000	$ 215,000
Accumulated Amortization	(89,814)	(77,892)
Net Book Value	$ 125,186	$ 137,108

LICENSE AGREEMENTS AND ASSET PURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands	1 Months Ended									3 Months Ended		6 Months Ended
	Apr. 30, 2024	Mar. 31, 2023	Jul. 31, 2022	Mar. 31, 2022	Aug. 31, 2021	Jan. 31, 2021	Oct. 31, 2020	Nov. 30, 2019	Aug. 31, 2019	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Feb. 28, 2019
License Agreements and Asset Purchase Agreements
Cost of product sold										$ 32,144	$ 25,008	$ 59,628	$ 45,788
Accrued Sales Based Trademark and Royalties										30,199		30,199		$ 40,419
All Countries Excluding Greater China \| HBS-102 \| Asset Purchase Agreement with ConSynance Therapeutics
License Agreements and Asset Purchase Agreements
Consideration transferred					$ 3,500
Payment for intellectual property upon preclinical milestones					1,000
Payment for intellectual property upon developmental milestones					19,000
Payment for intellectual property upon regulatory milestones					44,000
Payment for intellectual property upon sales milestones					$ 110,000
All Countries Excluding Greater China \| HBS-102 \| Asset Purchase Agreement with ConSynance Therapeutics \| Research and development expense
License Agreements and Asset Purchase Agreements
Payment related to achievement of preclinical milestone.		$ 750,000
Bioprojet
License Agreements and Asset Purchase Agreements
Licensing agreement milestone fees									$ 2,000
License agreement milestone payments paid								$ 75,000	2,000
License agreement, additional milestone payment due									102,000
Bioprojet \| Upon Acceptance by FDA of Pitolisant's
License Agreements and Asset Purchase Agreements
License agreement, milestone payment due															$ 50,000
License agreement, upfront non-refundable licensing fees paid			$ 30,000
License agreement, maximum additional milestone payment due			$ 155,000
Bioprojet \| Upon FDA Approval of WAKIX
License Agreements and Asset Purchase Agreements
License agreement, milestone payment due									77,000
Licensing agreement milestone fees									$ 2,000
License agreement milestone payments paid						$ 100,000	$ 2,000
Bioprojet \| Sales-based, trademark and tiered royalties
License Agreements and Asset Purchase Agreements
Cost of product sold										30,199	$ 22,542	54,937	$ 41,602
Accrued Sales Based Trademark and Royalties										$ 30,199		30,199		$ 40,419
Bioprojet \| Orexin-2 receptor agonist (OX2R)
License Agreements and Asset Purchase Agreements
Payment of upfront license fee	$ 25,500											$ 25,500
Amount of fee payable upon achieving development and regulatory milestones	127,500
Amount of fees payable upon achieving sale-based milestones	$ 240,000
Bioprojet \| United States
License Agreements and Asset Purchase Agreements
Amount of Aggregate Net Sales Attaining				$ 500,000
Bioprojet \| Attaining $500,000 Aggregate Net Sales \| United States \| Upon FDA Approval of WAKIX
License Agreements and Asset Purchase Agreements
Final payment paid				$ 40,000

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
ACCRUED EXPENSES
Royalties due to Bioprojet	$ 30,199	$ 40,419
Rebates and other sales deductions	43,570	38,842
Interest	2,993	3,354
Sales and marketing	3,343	2,354
Research and development	7,201	9,835
Professional fees, consulting, and other services	2,053	2,195
Other expenses	2,285	2,495
Accrued liabilities	$ 91,644	$ 99,494

DEBT - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jul. 31, 2023	Jun. 30, 2024	Sep. 30, 2023
Term Loans
DEBT
Debt issuance costs		$ 2,997
Net cash received		197,003
Fair value of loan		187,863
Term Loans \| Repayment Of Debt Commencing On December 31 2023
DEBT
Periodic payment principal		3,750
Term Loans \| Repayment Of Debt Beginning On December 31 2025
DEBT
Periodic payment principal		5,000
Term Loans \| Repayment of Debt Due on Maturity Date of July 26, 2028
DEBT
Periodic payment principal		$ 115,000
Term Loans \| Base rate \| Minimum
DEBT
Basis spread on variable rate		2.50%
Term Loans \| Base rate \| Maximum
DEBT
Basis spread on variable rate		3.00%
Term Loans \| SOFR
DEBT
Credit spread adjustment rate		0.10%
Term Loans \| SOFR \| Minimum
DEBT
Basis spread on variable rate		3.50%
Term Loans \| SOFR \| Maximum
DEBT
Basis spread on variable rate		4.00%
TLA Term Loan
DEBT
Term of loan	5 years
Aggregate principal amount	$ 185,000
Incremental Term Loan
DEBT
Aggregate principal amount			$ 15,000

DEBT - Balances of Long-term Debt, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
DEBT
Principal amount	$ 188,750	$ 196,250
Unamortized debt discount associated with debt financing costs	(2,328)	(2,684)
Total debt, net	186,422	193,566
Less current portion	(15,000)	(15,000)
Long-term debt, net	$ 171,422	$ 178,566

DEBT - Future Minimum Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Future minimum payments
2024 (excluding the six months ended June 30, 2024)	$ 7,500
2025	16,250
2026	20,000
2027	20,000
2028	125,000
Total	$ 188,750	$ 196,250

DEBT - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
DEBT - Interest Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
DEBT
Interest on principal balance	$ 4,228	$ 5,794	$ 8,583	$ 11,109
Amortization of deferred financing costs	176	424	356	840
Total term loan interest expense	$ 4,404	$ 6,218	$ 8,939	$ 11,949

LEASES (Details) ft² in Thousands, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
LEASES (Details) ft² in Thousands, $ in Thousands	Jun. 30, 2018 ft²	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)
LEASES
Operating lease square feet of office space	15
Additional office space leased one	13
Additional office space leased two	7
Lessee, Operating Lease, Existence of Option to Extend [true false]				true
Lessee, Operating Lease, Existence of Option to Terminate [true false]				true
Operating lease costs \| $		$ 622	$ 444	$ 1,131	$ 822
Weighted average remaining lease term		1 year 8 months 12 days		1 year 8 months 12 days
Weighted-average discount rate for operating leases		7.56%		7.56%
Minimum
LEASES
Lease terms		1 year		1 year
Maximum
LEASES
Lease terms		3 years		3 years

LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets
Operating lease right-of-use assets	$ 2,508	$ 2,344
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets Noncurrent	Other Assets Noncurrent
Liabilities
Operating lease liability, current portion	$ 1,786	$ 1,437
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other Liabilities Current	Other Liabilities Current
Operating lease liability, long-term	$ 854	$ 1,082
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Liabilities Noncurrent	Other Liabilities Noncurrent
Total operating lease liabilities	$ 2,640	$ 2,519

LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
LEASES
Operating cash flows from operating leases	$ 1,075	$ 922
Right of use assets obtained in exchange for operating lease obligations	$ 1,254	$ 615

LEASES - Future Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Years ending December 31,
2024 (excluding the six months ended June 30, 2024)	$ 1,047
2025	1,250
2026	495
2027	12
Total lease payments	2,804
Less: imputed interest	(164)
Total lease liabilities	$ 2,640	$ 2,519

STOCKHOLDERS' EQUITY (Details) $ in Thousands	3 Months Ended		6 Months Ended
STOCKHOLDERS' EQUITY (Details) $ in Thousands	Mar. 31, 2024 shares	Mar. 31, 2023 shares	Jun. 30, 2024 USD ($) Vote shares	Jun. 30, 2023 shares	Oct. 31, 2023 USD ($)
Equity, Class of Treasury Stock [Line Items]
Number of votes for each common stock \| Vote			1
October 2023 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Repurchase of shares of common stock approved					$ 200,000
Shares of common stock repurchased and retired \| shares	0	0	0	0
Remaining authorized repurchase amount			$ 150,000

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Stock Incentive Plan and Stock-based Compensation
Weighted average period				2 years 7 months 6 days
Employee Stock Option
Stock Incentive Plan and Stock-based Compensation
Unrecognized stock-based compensation expense		$ 68,926		$ 68,926
Restricted Stock Units
Stock Incentive Plan and Stock-based Compensation
Weighted average per share fair value of awards issued (in USD per share)				$ 30.62
Unrecognized stock-based compensation expense		$ 19,749		$ 19,749
2020 Plan
Stock Incentive Plan and Stock-based Compensation
Stock options contractual term				10 years
Total number of shares available for issuance		7,654,586		7,654,586
Percentage of increment of common stock outstanding				4.00%
2017 and 2020 Plans \| Restricted Stock Units
Stock Incentive Plan and Stock-based Compensation
Weighted average per share fair value of awards issued (in USD per share)				$ 21.24		$ 20.64
Employee Stock Purchase Plan
Stock Incentive Plan and Stock-based Compensation
Total number of shares available for issuance	629,805
Percentage of increment of common stock outstanding	1.00%
ESPP permits eligible employees to purchase shares of common stock at discount	15.00%
Shares issued under the ESPP		10,707	14,043	10,707	14,043
Amount of discount on ESSP		$ 78	$ 103	$ 158	$ 208

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Summary of Changes in Stock Options Granted (Details) $ / shares in Units, $ in Thousands		6 Months Ended
	Dec. 31, 2023 $ / shares shares	Jun. 30, 2024 USD ($) $ / shares shares
STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION
Number of Awards, Awards outstanding, Beginning balance \| shares		6,316,422
Number of Awards, Awards issued \| shares		1,307,396
Number of Awards, Awards exercised \| shares		(46,996)
Number of Awards, Awards forfeited \| shares		(27,791)
Number of Awards, Awards outstanding, Ending balance \| shares	6,316,422	7,549,031
Number of Awards, Awards exercisable \| shares		3,772,766
Weighted-Average Exercise Price, Awards outstanding, Beginning balance \| $ / shares		$ 32.47
Weighted-Average Exercise Price, Awards issued \| $ / shares		30.51
Weighted-Average Exercise Price, Awards exercised \| $ / shares		8.97
Weighted-Average Exercise Price, Awards forfeited \| $ / shares		37.14
Weighted-Average Exercise Price, Awards outstanding, Ending balance \| $ / shares	$ 32.47	32.26
Weighted-Average Exercise Price, Awards exercisable \| $ / shares		$ 30.50
Weighted-Average Remaining Contractual Term	7 years 2 months 1 day	7 years 2 months 12 days
Weighted-Average Remaining Contractual Term, Awards exercisable		6 years 3 months 18 days
Aggregate Intrinsic Value, Awards outstanding, Ending balance \| $		$ 27,893
Aggregate Intrinsic Value, Awards exercisable \| $		$ 21,050

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Summary of Changes in SARs Granted (Details) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Dec. 31, 2023	Jun. 30, 2024
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-Average Remaining Contractual Term	5 years 3 months 25 days	4 years 9 months 29 days
Weighted-Average Remaining Contractual Term, Awards exercisable		4 years 8 months 19 days
Stock Appreciation Rights (SARs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Awards, Awards outstanding, Beginning balance		43,208
Number of Awards, Awards issued		0
Number of Awards, Awards outstanding, Ending balance	43,208	43,208
Number of Awards, Awards exercisable		39,556
Weighted-Average Exercise Price, Awards outstanding, Beginning balance		$ 9.38
Weighted-Average Exercise Price, Awards issued		0
Weighted-Average Exercise Price, Awards outstanding, Ending balance	$ 9.38	9.38
Weighted-Average Exercise Price, Awards exercisable		$ 8.98
Aggregate Intrinsic Value, Awards outstanding, Ending balance		$ 887
Aggregate Intrinsic Value, Awards exercisable		$ 827

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Summary of Changes in RSUs Granted (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Awards, Awards outstanding, Beginning balance \| shares	330,000
Number of Awards, Awards issued \| shares	464,600
Number of Awards, Awards vested \| shares	(15,000)
Number of Awards, Awards forfeited \| shares	(3,250)
Number of Awards, Awards outstanding, Ending balance \| shares	776,350
Weighted-Average Grant Date Fair Value, Awards outstanding, Beginning balance \| $ / shares	$ 31.53
Weighted-Average Grant Date Fair Value, Awards issued \| $ / shares	30.62
Weighted-Average Grant Date Fair Value, Awards vested \| $ / shares	29.03
Weighted-Average Grant Date Fair Value, Awards forfeited \| $ / shares	30.69
Weighted-Average Grant Date Fair Value, Awards outstanding, Ending balance \| $ / shares	$ 31.03

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Summary of Assumptions Used to Value Awards (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividend yield	0.00%	0.00%
Expected volatility, minimum	69.84%	74.87%
Expected volatility, maximum	72.98%	80.78%
Risk-free interest rate, minimum	4.06%	3.42%
Risk-free interest rate, maximum	4.65%	4.62%
Lack of marketability discount	0.00%	0.00%
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (years)	2 years 14 days	2 years 3 months 3 days
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (years)	6 years 1 month 9 days	10 years 9 months 7 days

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 10,963	$ 7,793	$ 21,397	$ 14,354
Research and development expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,683	956	3,054	1,932
Sales and marketing expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	2,100	1,146	4,094	2,219
General and administrative expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 7,180	$ 5,691	$ 14,249	$ 10,203

EARNINGS PER SHARE - Summary of Computation of Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator
Net Income (Loss)	$ 11,591	$ 34,300	$ 49,925	$ 63,785
Denominator
Net income per share of common stock - basic	$ 0.20	$ 0.57	$ 0.88	$ 1.07
Net income per share of common stock - diluted	$ 0.20	$ 0.56	$ 0.87	$ 1.05
Weighted average number of shares of common stock - basic	56,802,357	59,974,123	56,786,873	59,853,808
Weighted average number of shares of common stock - diluted	57,541,696	60,743,953	57,571,570	60,997,410

EARNINGS PER SHARE - Summary of Securities Outstanding Included in Computation above, Utilizing Treasury Stock Method (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
EARNINGS PER SHARE
Securities outstanding included in the computation - Stock options, SARs, and RSUs to purchase common stock	739,339	769,830	784,697	1,143,602

EARNINGS PER SHARE - Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
EARNINGS PER SHARE
Potential shares of common stock issuable excluded from computation - Stock options, SARs, and RSUs to purchase common stock	7,629,250	5,520,235	7,583,892	5,146,464

INCOME TAXES - Schedule of Difference Between Statutory Federal Income Tax Rate (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
INCOME TAXES
Federal income tax rate	21.00%	21.00%	21.00%	21.00%
Stock-based compensation	(0.70%)	(0.50%)	(0.20%)	(1.50%)
State taxes	11.20%	4.00%	7.40%	5.10%
Credits	(2.60%)	(2.90%)	(1.60%)	(2.90%)
Nondeductible IPR&D	16.50%		4.90%
Valuation allowance	0.60%		0.30%
Other	0.60%	0.60%	0.30%	0.40%
Total	46.60%	22.20%	32.10%	22.10%

RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Related-party Transactions
General and administrative	$ 27,224	$ 22,809	$ 52,900	$ 44,871
Amounts due to related parties	$ 0		$ 0		$ 0
Other Liability, Related Party, Type [Extensible Enumeration]	Related party		Related party		Related party
Amounts due from related parties	$ 0		$ 0		$ 0
Other Receivable, after Allowance for Credit Loss, Related Party, Type [Extensible Enumeration]	Related party		Related party		Related party
Related party
Related-party Transactions
General and administrative	$ 72	$ 74	$ 145	$ 145