Financial Analysis

13. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company is subject to claims and suits arising in the ordinary course of business. The Company accrues such liabilities when they are known, if they are deemed probable and can be reasonably estimated. Accruals may be adjusted from time to time, as appropriate, in light of new information. The amount of loss incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued. Any expenses, fines, fees, penalties, judgments or settlements that might be incurred by the Company in connection with proceedings could have a material adverse effect on the Companys results of operations and financial condition. As of December 31, 2025, there were no material claims or lawsuits outstanding other than the Abbreviated New Drug Application (ANDA) litigation discussed below . ANDA Litigation In September 2023, the Company and its licensor, Bioprojet, received notice from Lupin Limited (Lupin) pursuant to 21 U.S.C. 355(j) et seq. and 21 C.F.R. 314.95 et seq. (the Lupin Notice Letter) that Lupin has submitted ANDA No. 218846 (the Lupin ANDA) to the FDA and is seeking regulatory approval to market a generic version of WAKIX before the expiration of U.S. Patent Nos. 8,486,947 (947 patent) and 8,207,197 (197 patent). The 947 patent and the 197 patent are listed with respect to WAKIX in the FDAs Orange Book and will expire in September 2029 and March 2030, respectivel …

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11. DEBT Credit Agreements Term Loan A Credit Agreement On July 26, 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. On September 21, 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 Companys option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on the Companys senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit sprea …

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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 Companys named executive officers) and consultants of the Company and its subsidiaries. The 2020 Plan provides for the grant of stock options, including incentive stock options (ISOs) and non-qualified stock options (NSOs), stock appreciation rights (SARs), restricted stock, dividend equivalents, restricted stock units (RSUs) and other stock or cash-based awards. Stock options and 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 December 31, 2025, there were 8,704,203 shares of common stock available for issuance under the 2020 Plan. The number of shares that may be issued under the 2020 Plan will automatically increase on January 1 of each year in an amount equal to the lesser of (i) 4.0% of the shares of the Companys common stock outstanding on December 31 of the preceding year or ( …

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6. FAIR VALUE MEASUREMENTS Money market funds are classified as Level 1 fair value instruments. Investments in available-for-sale debt securities are classified as Level 2 and carried at fair value, which 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 December 31, 2025, or December 31, 2024. The Companys assets measured at fair value consisted of the following: December 31, 2025 December 31, 2024 Total Level 1 Level 2 Total Level 1 Level 2 Assets Cash equivalents $ 225,605 225,605 $ 303,545 303,545 Commercial paper 8,371 8,371 7,678 7,678 Corporate debt securities 104,147 104,147 93,257 93,257 U.S. government securities 17,447 17,447 22,124 22,124 Total $ 355,570 225,605 129,965 $ 426,604 303,545 123,059 …

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"18. INCOME TAXES Details of the provision for income taxes consist of the following: Year Ended December 31, 2025 2024 2023 Federal $ 41,749 $ 29,465 $ 32,136 State 14,628 16,846 12,407 $ 56,377 $ 46,311 $ 44,543 Current $ 15,678 $ 74,311 $ 57,962 Deferred 40,699 (28,000) (13,419) Total $ 56,377 $ 46,311 $ 44,543 A reconciliation of the differences between the U.S. statutory federal income tax rate of 21.0% and the Companys effective income tax rate as of December 31, 2025, after the adoption of ASU 2023-09, is as follows: Year Ended December 31, 2025 Amount Percent Federal statutory rate $ 45,163 21.0% State income taxes, net of federal tax effect* 13,601 6.3% Tax credits Orphan drug credit (7,999) (3.7)% Research and development credit (610) (0.3)% Nontaxable or nondeductible Items In-process research and development 3,150 1.5% Other 1,967 0.9% Other adjustments 1,105 0.5% Effective tax rate $ 56,377 26.2% * State taxes include the impact of the remeasurement of state deferred tax assets. There was no individual state that made up the majority (greater than 50%) of the tax effect in this category. A reconciliation of the differences between the U.S. statutory federal income tax rate of 21.0% and the Companys effective income tax rate as of December 31, 2024, and 2023, prior to the adoption of ASU 2023-09, is as follows: Year Ended December 31, 2024 2023 Federal income tax rate 21.0 % 21.0 % Stock-based compensation 0.5 (0.4) State taxes 6.4 5.7 Credits (4.7) (2.1) Nondeduc …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

12. LEASES Beginning in June 2018, the Company was party to an operating lease and subsequent amendments for three office suites of approximately fifteen thousand square feet, seven thousand square feet and thirteen thousand square feet in Plymouth Meeting, PA, which was set to expire in November 2025. In November 2025, t he Company entered into a new operating lease amendment (the PM Lease Amendment) extending the lease through March 31, 2031. The terms of the PM Lease Amendment provide for fixed rental payments on a monthly basis and on a graduated scale. Additionally, the terms of the PM Lease Amendment also provide the Company with an option to extend the lease for two additional five-year periods and an option to early terminate the lease effective on the forty-first month, which were not considered in the determination of the operating lease right-of-use asset (ROU asset) or operating lease liability as neither option is reasonably certain to be exercised by the Company. The Company also leases a fleet of automobiles that are used by its sales representatives and are classified as operating leases. As the rate implicit in the lease is not readily determinable, the Companys operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments using the Companys incremental borrowing rate, defined as the rate of interest that it would have to borrow on a collateralized basis over a similar term an amount …

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Recently Adopted 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 was effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption was permitted. ASU 2023-07 was required to be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this guidance in the fourth quarter of 2024. This pronouncement addresses disclosures only and had no impact on its consolidated financial results. In December 2023, the FASB issued Accounting Standards Update (ASU) No 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 expands disclosures in the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption was permitted. The Company adopted this guidance in the fourth quarter of 2025 on a prospective basis. This pronouncement addresses disclosures only and had …

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20. RELATED-PARTY TRANSACTIONS The Companys related party, Paragon, is an entity that shares common ownership with the Company. In addition, the Chairman of the Companys board of directors was the President and owner of the entity. The Company is party to a right of use agreement with the related party whereby it has access to and the right to use certain office space leased by the related party in Chicago, Illinois. Additionally, the Company received consulting services from Paragon during the twelve months ended December 31, 2025. For the years ended December 31, 2025, 2024 and 2023, the Company incurred $474, $290 and $290, respectively, of expenses pursuant to the right of use agreement with this related party, which are included in general and administrative expense in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2025, and 2024, there were no amounts due to or due from related parties included within the consolidated balance sheet. In June 2025, the Company entered into the CiRC Agreement with CiRC, an entity controlled by Paragon. The Company paid a $15,000 upfront payment to CiRC pursuant to the CiRC Agreement which was recorded as an IPR&D charge in research and development in the consolidated statements of operations and comprehensive income. As of December 31, 2025, there were no amounts due to or due from CiRC under the CiRC agreement. Refer to Note 9, License Agreements , for further discussion regarding the CiR …

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16. SEGMENT INFORMATION The Company has one reportable segment: rare neurological diseases. The rare neurological diseases segment consists of the Companys commercial product, WAKIX, and its potential product candidates, that focus on patients living with rare neurological diseases who have unmet needs. The Company currently derives all of its revenue from sales of WAKIX, which is used in the treatment of EDS and cataplexy in adult patients with narcolepsy and the treatment of EDS in pediatric patients six years and older with narcolepsy and manages its business activities on a consolidated basis. The accounting policies of the rare neurological diseases segment are consistent with those described in Note 3, Summary of Significant Accounting Policies , and the measure of segment assets is reported on the consolidated balance sheets as total assets. The Companys CODM is the chief executive officer. The CODM assesses performance of the rare neurological diseases segment using net income as reported in the consolidated statements of operations and comprehensive income. Net income is assessed by the CODM to make decisions on how to allocate resources, such as reinvesting profits into the rare neurological diseases segment or pursuing potential investing activities. The following table summarizes segment revenue and significant segment expenses for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 Net product revenue $ 868,453 $ 714,734 $ 582 …

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The 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 Companys financial position for the periods presented. All intercompany accounts and transactions have been eliminated. Reclassifications Certain prior period amounts within the consolidated balance sheets have been reclassified to conform to current period presentation. In particular, restricted cash and property, plant and equipment were previously classified as separate captions and are now included within other noncurrent assets. 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 Companys 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, the results of clinical testing and trial activities of the Companys product candidates; the Companys 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 Companys products, if approved; the Companys ability to negotiate favorable licensing or other manufacturing and marketing agreements for its …

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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 Companys stockholders. The holders of common stock do not have any cumulative voting rights. Holders of common stock are entitled to receive ratably any dividends declared by the Companys board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. The Companys common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions. Share Repurchase Program In August 2023, the Companys Board of Directors approved a program providing for the repurchase of shares of common stock in an aggregate amount of up to $125,000, excluding commissions and transaction fees (the August 2023 Repurchase Program). During the year ended December 31, 2023, the Company repurchased and retired 1,439,792 shares of common stock at an aggregate cost of $50,000 under the August 2023 Repurchase Program, excluding commissions and transaction fees. In October 2023, the Companys Board of Directors terminated the August 2023 Repurchase Program and any remaining amount authorized for the repurchase of shares and simultaneously approved a new 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 commissio …

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22. SUBSEQUENT EVENTS On January 11, 2026, the Company entered into a license agreement with a third party, which includes an exclusive license to additional intellectual property that will expand the patent estate of the Company, as well as a co-exclusive license, with which the Company intends to develop a new formulation of pitolisant in broad CNS indications outside of sleep/wake. Under the license agreement, the Company paid an upfront license fee of $15,000 and will also be obligated to pay up to $10,000 upon achievement of certain development milestones, as well as low single-digit royalties on net sales of pitolisant based products. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing