The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluation could change. Actual results could differ from those estimates under different assumptions or conditions.

For purposes of the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows, cash equivalents represent highly-liquid investments with a maturity date of three months or less at the date of purchase. Cash and cash equivalents include investments in money market funds with commercial banks and financial institutions and commercial paper of high-quality corporate issuers. Restricted cash relates primarily to amounts held as collateral for letters of credit for office space leases at the Company’s Washington, D.C. headquarters.


	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Fanapt® net product sales	$	35,989	$	29,294	$	65,549	$	52,839
HETLIOZ® net product sales	5,576		16,192		21,523		37,064
PONVORY® net product sales	7,935		7,104		14,146		12,728
NEREUSTM net product sales	1,029		—		1,029		—
Total net product sales	$	50,529	$	52,590	$	102,247	$	102,631

Since the entrance of generic competition in the first quarter of 2023, HETLIOZ® dispenses have decreased. Additionally, inventory levels at the Company’s specialty pharmacy customers have been elevated relative to inventory levels prior to the entrance of generic competition. HETLIOZ® net product sales have been and may continue to fluctuate from quarter to quarter depending on when specialty pharmacy customers purchase again. During the second quarter of 2026, there was destocking of inventory by certain of our specialty pharmacy customers, as well as orders that were shipped on June 29, 2026 and arrived on July 1, 2026, both resulting in a decline in volume. These orders that did not arrive by quarter end will be recognized as revenue in the third quarter of 2026. HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

NEREUSTM became commercially available in the U.S. in May 2026. During the second quarter of 2026, there was an initial stocking of NEREUSTM by wholesalers. The Company constrained NEREUSTM net product sales to these wholesaler customers for the three and six months ended June 30, 2026 to an amount not probable of significant revenue reversal due to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at these wholesalers.

The Company recognized an increase to net product sales of $2.9 million and $4.1 million during the six months ended June 30, 2026 and 2025, respectively, for changes in estimates on variable consideration for performance obligations satisfied in previous periods across the Company’s commercial products. The elevated levels of HETLIOZ® inventory have resulted in longer periods to resolve uncertainties related to variable consideration. Furthermore, an amount of variable consideration related to Fanapt® net product sales is subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2025. An amount of variable consideration related to PONVORY® net product sales is also subject to dispute, of which approximately $3.0 million was recognized for the three months ended December 31, 2024. The Company’s balance of rebates and chargebacks was $66.4 million and $63.4 million as of June 30, 2026 and December 31, 2025, respectively. The Company’s balance of discounts, returns and other product allowances was $29.0 million and $14.7 million as of June 30, 2026 and December 31, 2025, respectively.

Fanapt® and NEREUSTM are available in the U.S. for distribution through a limited number of wholesalers and are also available in retail pharmacies. In addition, NEREUSTM is available by prescription directly through the nereus.us website. HETLIOZ® is available in the U.S. for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. PONVORY® is available in the U.S. for distribution primarily through a limited number of specialty distributors and specialty pharmacies. The Company invoices and records revenue when its customers, wholesalers, specialty pharmacies and specialty distributors, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. Revenues and accounts receivable are concentrated with these customers. Outside the U.S., the Company has a distribution agreement for the commercialization of Fanapt® in Israel and sells HETLIOZ® in Germany. There were three major customers that each accounted for more than 10% of total revenues and, as a group, represented 70% of total revenues for the six months ended June 30, 2026. There were three major customers that each accounted for more than 10% of accounts receivable and, as a group, represented 86% of total accounts receivable at June 30, 2026. Receivables are carried at the transaction price paid by wholesalers, specialty pharmacies and specialty distributors, net of estimated prompt-pay discounts and allowance for credit losses. Payment terms differ by customer but are based on customary commercial terms and typically range between thirty and sixty days. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40), which addresses the disaggregation of income statement expenses. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.