Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in "Risk Factors." See also the "Cautionary Note Regarding Forward-Looking Statements" set forth at the beginning of this report.

You should read the following discussion and analysis in conjunction with the unaudited interim consolidated financial statements, and the related footnotes thereto, appearing elsewhere in this report, and in conjunction with management's discussion and analysis and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the U.S. Securities and Exchange Commission, or SEC, on February 18, 2025.

Overview

We are a biopharmaceutical company dedicated to the development and commercialization of innovative medicines for people living central nervous system ("CNS") conditions.

Commercial Products

Pipeline

We are advancing a diversified, late-stage pipeline of novel product candidates for serious neurological and psychiatric conditions.

AXS-05 (dextromethorphan-bupropion) is a novel, oral, investigational NMDA receptor antagonist, sigma-1 receptor agonist, aminoketone, and CYP2D6 inhibitor being developed for the treatment of Alzheimer's disease agitation, or AD agitation, and smoking cessation. AXS-05 utilizes a proprietary formulation and dose of dextromethorphan and bupropion, and Axsome's metabolic inhibition technology, to modulate the delivery of the components. We have submitted a supplemental NDA (sNDA) to the FDA for AXS-05 in AD agitation supported by four completed Phase 3, placebo-controlled efficacy trials and a long-term safety trial. AXS-05 has been granted FDA Breakthrough Therapy designation for AD agitation.

Solriamfetol is a novel, oral, investigational DNRI, TAAR1 agonist, and 5-HT1A agonist being developed for the treatment of attention deficit hyperactivity disorder ("ADHD"), major depressive disorder (MDD) with EDS, binge eating disorder ("BED") and excessive sleepiness associated with shift work disorder ("SWD"). In March 2025, we announced topline results from the FOCUS Phase 3 trial of solriamfetol in ADHD in adults, and in April 2025, we announced topline results from the PARADIGM Phase 3 trial of solriamfetol in MDD. Enrollment for the ENGAGE and SUSTAIN Phase 3 trials of solriamfetol in BED and SWD, respectively, are ongoing.

AXS-12 (reboxetine) is a novel, oral, investigational, highly selective and potent norepinephrine reuptake inhibitor and cortical dopamine modulator being developed for the treatment of narcolepsy. We have successfully completed three Phase 2 and Phase 3, placebo-controlled efficacy trials and a long-term safety trial. AXS-12 has been granted FDA Orphan Drug Designation for narcolepsy.

AXS-14 (esreboxetine) is a novel, oral, investigational, highly selective and potent norepinephrine reuptake inhibitor being developed for the management of fibromyalgia. Esreboxetine, the SS-enantiomer of reboxetine, is more potent and selective than racemic reboxetine. In May 2025, we announced that we submitted an NDA to the FDA for AXS-14 for the management of fibromyalgia. In June 2025, we received a Refusal to File letter from the FDA for the NDA. To address the FDA's feedback, Axsome will conduct an additional controlled trial, which will use a fixed-dose paradigm and a 12-week primary endpoint as requested by the FDA.

Since our incorporation in January 2012, our operations to date have included organizing and staffing our company, business planning, raising capital, developing our compounds, engaging in other discovery and preclinical activities, and the commercial launches of Auvelity, Sunosi, and Symbravo. Subsequent to our IPO, we financed our operations primarily through proceeds from sales of our common stock to equity investors and debt borrowings. For a further discussion, see the section entitled "Liquidity and Capital Resources" below.

Our ability to become profitable depends on our ability to generate revenue. We have begun commercial sales of Auvelity, Sunosi, and Symbravo, but we have limited experience with commercializing these, or any, products.

We have incurred significant operating and net losses since inception. We incurred net losses of $154.6 million and $212.3 million for the nine months ended September 30, 2025 and 2024, respectively. Our accumulated deficit as of September 30, 2025 was $1,277.4 million, and we expect to incur significant expenses and continuing operating losses. We expect our expenses to increase in connection with our ongoing activities, as we continue the commercialization of our on-market products and the development and clinical trials of, and seek regulatory approval for, our current product candidates and any other product candidates that we develop or in-license and advance to clinical development. Further, we have incurred and will continue to incur additional costs associated with operating as a public company. Accordingly, we may need additional financing to support our continuing operations. We may seek to fund our operations through public or private equity, debt financings, or other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.

Financial Overview

Revenue

We generated total revenues of $171.0 million and $104.8 million in the three months ended September 30, 2025 and 2024, respectively, and $442.5 million and $266.9 million in the nine months ended September 30, 2025 and 2024, respectively.

We expect that Auvelity, Sunosi, and Symbravo revenues are likely to fluctuate based on demand quarter to quarter. We will not generate revenue from other products unless and until we successfully develop, obtain regulatory approval of, and commercialize one of our current or future product candidates. We have incurred significant operating losses since inception. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue from such product candidates, and our results of operations and financial position, would be materially and adversely affected. If we enter into licensing or collaboration arrangements, such agreements may or may not generate revenue in the future.

License Agreement with Pharmanovia

In February 2023, we entered into the Pharmanovia License Agreement with Pharmanovia to commercialize and further develop Sunosi in the Territory. Pharmanovia is a UK-based global life cycle management healthcare company that focuses on four core therapeutic areas - Oncology, Endocrinology, Neurology and Cardiovascular.

We are eligible to receive sales-based and other milestone payments totaling up to €94.5 million. We will receive a royalty percentage in the mid-twenties on net sales of the Licensed Products (as defined in the Pharmanovia License Agreement) in the Territory. We recognized royalty revenue of $1.2 million and $1.0 million for the three months ended September 30, 2025 and 2024, respectively, and $3.4 million and $2.6 million for the nine months ended September 30, 2025 and 2024, respectively, related to Pharmanovia's sales of Sunosi.

Cost of revenue

Cost of revenue includes direct costs of formulating, manufacturing and packaging drug product, overhead costs consisting of labor, customs, stock-based compensation, shipping, outside inventory management, royalty expense, and other miscellaneous operating costs.

Research and development expenses

Research and development expenses primarily include preclinical studies, clinical trials, manufacturing costs, employee-related expenses including salaries, benefits, travel, and stock-based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as contract research organizations, or CROs, facilities costs, overhead costs, depreciation, and other related costs.

Research and development activities are central to our business model. We have and will incur substantial costs beyond our present and planned clinical trials in order to file an NDA for any of our product candidates. It is difficult to determine with certainty the costs and duration of our current or future clinical trials and preclinical studies, or to what extent we will generate revenue from the commercialization and sale of Auvelity, Sunosi, Symbravo or our product candidates if we obtain regulatory approval. The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical trials and preclinical studies, uncertainties in clinical trial enrollment rate, and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability, and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate's commercial potential.

Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made.

Selling, general and administrative expenses

Selling, general and administrative expenses consist of salaries and related costs for personnel in executive, commercial, finance, and operational functions, including stock-based compensation and travel expenses. Also included in selling, general and administrative expenses are marketing costs, other commercial costs, pre-commercialization costs, facility-related costs, insurance expense, professional fees for legal and accounting services, and patent filing and prosecution costs. Selling, general and administrative expenses are expensed when incurred.

Interest expense, net

Interest expense, net primarily consists of cash interest and non-cash costs related to our term loans (see "Liquidity and Capital Resources" below for a further discussion). We amortize these costs over the term of our debt agreements as interest expense in our consolidated statement of operations. Interest expense, net also includes interest income earned on cash and cash equivalents.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Reserves for Variable Consideration

Medicare Part D Program Redesign- Effective January 1, 2025, the Medicare Part D coverage gap program was replaced with a redesigned program under the Inflation Reduction Act of 2022. The standard Part D benefit now comprises three phases: the deductible phase, the initial coverage phase and the catastrophic coverage phase. Applicable dispensed drugs will be subject to manufacturer discounts of 10% during the initial coverage phase and 20% during the catastrophic coverage phase. We estimate the percentage of goods sold to patients in the initial coverage and catastrophic coverage phases and adjusts the transaction price for such discount at the time of sale resulting in a reduction to product sales as well as a component of accrued expenses and other current liabilities.

Except for the Medicare Part D Program Redesign, as discussed above, there have been no material changes to the critical accounting policies disclosed in our 2024 Annual Report on Form 10-K. Our critical accounting policies are described in the notes to the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

The following table summarizes our results of operations for the periods indicated (in thousands, except share and per share amounts):

Product sales, net. Auvelity U.S. net sales were $136.1 million and $352.0 million for the three and nine months ended September 30, 2025, respectively, as compared to $80.4 million and $198.8 million for the same periods in 2024. Sunosi net sales were $31.6 million and $84.6 million for the three and nine months ended September 30, 2025, respectively, as compared to $23.4 million and $65.6 million for the same periods in 2024. We began commercial sales of Symbravo in June 2025 and had U.S. net sales of $2.1 million and $2.5 million for the three and nine months ended September 30, 2025. There were no Symbravo sales recorded in 2024, which reflects the timing of the Symbravo approval and launch. The increases in both comparable periods were primarily due to the increase in unit sales volume for both Auvelity and Sunosi, and commercial launch of Symbravo in June 2025.

The following table summarizes the activity of our sales allowance and reserves as of and for the nine months ended September 30, 2025 (in thousands):

Royalty revenue.In connection with the February 2023 Pharmanovia License Agreement to commercialize Sunosi in certain ex-U.S. markets, we recognized royalty revenue of $1.2 million and $3.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $1.0 million and $2.6 million for the same periods in 2024 attributable to Pharmanovia sales of Sunosi in the out-licensed markets. The increases in both comparable periods were in line with the increase in unit sales volume of Sunosi in certain ex-U.S. markets.

Cost of revenue.Cost of revenue was $11.9 million and $35.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $8.4 million and $22.8 million for the same periods in 2024. The increase was in line with the increase in sales of Auvelity and Sunosi, and commercial launch of Symbravo in June 2025.

Research and development.The following table summarizes our research and development expenses for our primary products for the three and nine months ended September 30, 2025 and 2024 (in thousands):

(*) Other research and development expenses primarily consist of facilities charges, third party consultant costs, costs related to other product candidates, and other unallocated costs.

Research and development expenses decreased by $5.2 million and increased by $2.4 million for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. The decrease in the three months ended comparable period was due to the completion of trials for solriamfetol in ADHD and MDD and a refund of a regulatory filing fee related to AXS-14, partially offset by ongoing supplier validation costs for AXS-07. The increase in the nine months ended comparable period was due to the ongoing supplier validation costs for AXS-07, partially offset by lower spending due to completion of trials for MDD and ADHD for solriamfetol. We expect research and development costs to moderately increase through the end of 2025 and into 2026 as new development programs commence while certain development programs near completion.

Selling, general and administrative.Selling, general and administrative expenses were $150.2 million and $401.3 million for the three and nine months ended September 30, 2025, respectively, as compared to $95.6 million and $298.1 million for the same periods in 2024. The increases in both comparable periods were related to higher commercial activities for Auvelity, including a sales force expansion and a national direct-to-consumer advertising campaign, commercial launch of Symbravo, and higher personnel costs related to organizational growth, including non-cash stock-based compensation. We anticipate modest growth in SG&A expenses through 2025 and into 2026 as we increase marketing and promotional spending for Auvelity.

Loss in Fair Value of Contingent Consideration. The $13.2 million and $6.6 million changes for the three and nine months ended September 30, 2025, respectively, as compared to $16.4 million and $17.1 million changes for the same periods in 2024, were primarily related to changes in significant unobservable inputs, including discount rates.

Intangible asset amortization. We amortize the intangible asset, which we recognized as part of the Acquisition, over its useful life of 10 years. Intangible asset amortization was $1.6 million for both the three months ended September 30, 2025 and 2024 and $4.8 million for both the nine months ended September 30, 2025 and 2024.

Interest expense, net.Interest expense, net was $1.1 million and $5.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $2.0 million and $4.4 million for the same periods in 2024. The decrease in the three months ended comparable period was due to the lower interest expense from the Blackstone Loan Agreement, which was partially offset by less interest income on lower cash balances. The increase in the nine months ended comparable period was mainly due to less interest income on lower cash balances.

Income tax expense.We did not record an income tax expense or benefit for the three months ended September 30, 2025. We recorded a tax benefit of $1.0 million for the nine months ended September 30, 2025 due to favorable return-to-provision adjustments attributable to certain foreign tax returns filed during July 2025 that were recorded as a discrete tax benefit in the second quarter of 2025. We did not record an income tax benefit or expense for the same periods in 2024.

Net loss. Net loss was $47.2 million and $154.6 million for the three and nine months ended September 30, 2025, respectively, as compared to $64.6 million and $212.3 million for the same periods in 2024. The decreases in both comparable periods were primarily due to higher sales which was partially offset by higher research and development spend from ongoing clinical trial expenses, higher selling, general and administrative expenses from commercial activities related to Auvelity and Symbravo, including sales force and marketing spend, and higher personnel costs due to organizational growth, including non-cash stock compensation expense.

Liquidity and Capital Resources

Since our inception through September 30, 2025, we have financed our operations primarily through proceeds from equity offerings, debt borrowings, and proceeds from product sales. See discussion below.

Contemporaneously herewith, we filed an automatic shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units up to an unlimited amount, which we refer to as the 2025 Shelf Registration Statement. In the future, we may conduct additional offerings of one or more of these securities utilizing the 2025 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered. At the time any of our securities covered by the 2025 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

Also contemporaneously herewith, in connection with the 2025 Shelf Registration Statement, we filed a new sales agreement prospectus to replace the prior prospectus supplement filed in December 2022 associated with the 2022 Shelf Registration Statement, which would have expired in December 2025. The new sales agreement prospectus covered the issuance and sale by us of up to the same $250 million of our common stock that may be issued and sold from time to time through Leerink, as the sales agent, under the March 2022 Sales Agreement.

In March 2022, we entered into a sales agreement, or the March 2022 Sales Agreement with Leerink, and filed a prospectus supplement. The March 2022 Sales Agreement supersedes the sales agreement, dated December 5, 2019, by and between us and Leerink. We exhausted sales of shares of our common stock under our prior at-the-market offering program.

Under the March 2022 Sales Agreement, for the nine months ended September 30, 2025, we received approximately $47.2 million in gross proceeds through the sale of 411,482 shares, of which net proceeds were approximately $46.3 million.

In June 2023, we completed an underwritten public offering of our common stock and sold 3.0 million shares of our common stock at a public offering price of $75.00 per share. Net proceeds were $211.3 million, net of underwriting discounts and commissions of $13.5 million and other offering costs of $0.2 million. Additionally, in connection with this public offering, in July 2023, the underwriters fully exercised their option to purchase 450,000 additional shares of our common stock, at a public offering price of $75.00 per share. The net proceeds were $31.7 million, net of underwriting discounts and commissions of $2.0 million and other minimal offering costs.

In the future, we may conduct additional offerings of one or more of the securities covered by the 2025 Shelf Registration Statement in such amounts, prices and terms to be announced when and if the securities are offered. At the time any of our securities covered by the 2025 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

On February 21, 2023, we entered into a Sublease with Advance Magazine Publishers d/b/a Conde Nast for the entirety of the twenty-second floor of One Word Trade Center in New York, NY, or the Initial Sublease.

On January 17, 2025, we entered into an Amendment to our Sublease, or First Amendment, pursuant to which we relinquished our then existing space in One World Trade Center and commenced occupancy of different space within the building. This space is utilized as our corporate and executive offices. The First Amendment extends the Initial Sublease expiration date to January 31, 2036. We now have a one-time option to terminate the Sublease effective March 30, 2031 upon the payment of a fee to the sublandlord. The Company is responsible for base rent under the Sublease and certain additional customary variable costs, such as an allocable portion of building taxes and operating expenses. In connection with the Initial Sublease and First Amendment, we received certain rent and work concessions from the sublandlord.

The Company entered into a fleet lease program beginning the first quarter of 2024. The lease agreement includes an initial 12-month noncancelable period with monthly renewal options thereafter. Lease terms range from approximately 40 to 50 months and are classified as finance leases. See Note 9. Commitments and Contingencies for further information on future contractual obligations.

As described below in the "Loan Agreement with Blackstone" section, on May 8, 2025, we entered into a loan agreement (the "Blackstone Loan Agreement") with Blackstone Alternative Credit Advisors LP and Blackstone Life Sciences Advisors L.L.C. (collectively, the "Blackstone Representative" and referred to herein as "Blackstone"), certain subsidiaries of our party thereto as guarantors, Wilmington Trust, National Association, as agent, and the lenders from time to time party thereto (collectively, the "Lenders"). The Blackstone Loan Agreement provides for Loans in an aggregate principal amount of up to $570.0 million.

On May 8, 2025, we repaid in full our obligations under the Hercules Loan Agreement using proceeds from the Blackstone Loan Agreement. As of September 30, 2025, there are no outstanding obligations under the Hercules Loan Agreement.

We believe that our current cash is sufficient to fund anticipated operations into cash flow positivity, based on the current operating plan. Because the process of commercializing products and evaluating product candidates in clinical trials is costly and the timing of progress in these trials is uncertain, it is possible that the assumptions upon which we have based this estimate may prove to be wrong, and we could use our capital resources sooner than we currently expect.

Cash Flows

The following table summarizes our primary sources and uses of cash for the periods indicated (in thousands):

Operating Activities.Cash used in operating activities for the nine months ended September 30, 2025 was $74.8 million, as compared to $102.2 million for the same period in 2024. The decrease of $27.4 million was primarily due to higher net product revenues from Auvelity and Sunosi in 2025, which was partially offset by an increase in cash used in commercial and clinical related activities.

Investing Activities.Cash used in investing activities for the nine months ended September 30, 2025 was $409 thousand, as compared to $240 thousand for the same period in 2024. The increase was attributable to additional equipment purchases in 2025 to support our expanded office space and workforce.

Financing Activities.Cash provided by financing activities was $85.1 million for the nine months ended September 30, 2025, which included net proceeds of $256.4 million from draw-downs related to the Blackstone Loans and net proceeds of $61.1 million from issuance of common stock for financing purposes as well as proceeds of $44.2 million from the issuance of common stock upon the exercise of employee stock options and under the ESPP, which was partially offset by the repayment of the Hercules Loan and revolving loan commitments under the Blackstone Loan Agreement, for a total of $262.0 million, and payments of contingent consideration and tax withholdings on stock awards, for a total of $13.1 million. Cash provided by financing activities was $43.6 million for the nine months ended September 30, 2024, which included net proceeds of $23.9 million from issuance of common stock for financing purposes as well as proceeds of $29.5 million from the issuance of common stock upon the exercise of employee stock options and under the ESPP, which was partially offset by payments of contingent consideration and tax withholdings on stock awards, for a total of $9.2 million.

Funding Requirements

We have not achieved profitability since our inception, and we expect to continue to have losses as we continue the development of, and seek regulatory approvals for, our product candidates, while further investing in Auvelity, Sunosi, and Symbravo. We are subject to all of the risks pertinent to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may harm our business.

We may need to raise additional financing in the future to fund our operations. In the event that we need additional financing, we may incur additional debt, license certain intellectual property, and seek to sell additional equity or convertible securities that may result in dilution to our stockholders. If we raise additional funds through the issuance of equity or convertible securities, these securities could have rights or preferences senior to those of our common stock and could contain covenants that restrict our operations. There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Our future capital requirements will depend on many factors, including:

Please see "Risk Factors" for additional risks associated with our substantial capital requirements.

Contractual Obligations and Commitments

License agreement with Pfizer

In January 2020, we entered into a license agreement with Pfizer. Under the terms of our exclusive license agreement with Pfizer, Pfizer received 82,019 shares of our common stock having a stated value of $8.0 million, based on the average closing price of our common stock for the ten prior trading days of $97.54, in consideration for the license and rights. Pfizer also received an upfront cash payment of $3.0 million. We determined that the fair value of each share of common stock granted to Pfizer on the closing date of January 9, 2020 was $87.24, based on the closing price of our common stock on that date. As a result, the fair value of the stock issued was $7.2 million and, therefore, the total research and development expense recognized was $10.2 million related to the Pfizer license agreement during the year ended December 31, 2020.

Pfizer can also receive up to $323 million upon the achievement of certain regulatory and sales milestones, and tiered mid-single to low double-digit royalties on future sales of any such approved clinical products containing compounds reboxetine esreboxetine. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.

License agreements with Antecip Bioventures

Under three exclusive license agreements with Antecip, an entity owned by our Chief Executive Officer and Chairman of the Board, Herriot Tabuteau, M.D., we are obligated to make specified royalty payments ranging from 1.5% to 4.5%, subject to up to a 50% reduction depending on required payments to third parties, on net sales of our products containing the licensed technology of AXS-02, AXS-05, and AXS-04.

In connection with the Blackstone Loan Agreement (see below), Antecip consented to the collateral assignment of one of the license agreements, among other things, under a direct agreement among us, Antecip and Blackstone.

Loan Agreement with Blackstone

On May 8, 2025 (the "Closing Date"), we entered into a loan agreement (the "Blackstone Loan Agreement") with Blackstone Alternative Credit Advisors LP and Blackstone Life Sciences Advisors L.L.C. (collectively, the "Blackstone Representative" and referred to herein as "Blackstone"), certain subsidiaries of ours party thereto as guarantors, Wilmington Trust, National Association, as agent, and the lenders from time to time party thereto (collectively, the "Lenders"), providing for loans in an aggregate principal amount of up to $570.0 million, consisting of (i) a first lien senior secured term loan in an aggregate principal amount of $120.0 million funded to us on the Closing Date, (ii) a $180.0 million senior secured term loan which is available to us at our option, of which $90.0 million is available to us until May 31, 2026, and of which the remaining $90.0 million is available until May 31, 2027 (the "Term Loans") and (iii) a super senior revolving credit facility in an aggregate principal amount of up to $70.0 million available at our option (the "Revolver" and collectively with the Term Loans, the "Loans"). The Blackstone Loan Agreement also permits us, subject to the consent of the Lenders, to request incremental term loans in an aggregate principal amount of up to $200.0 million at any time and on the same terms as the initial Term Loans, except that any call protection will be determined at the time the incremental term loans are incurred. The proceeds of the Term Loans were used, together with cash on hand, to repay in full our obligations under the Hercules Loan Agreement, which resulted in a recording of a loss on debt extinguishment of approximately $10.4 million in the Company's consolidated statement of operations. The Term Loans bear interest at a variable SOFR plus 4.75%. The Revolver bears interest at SOFR plus 4.0%. The maturity date of the Loans is May 8, 2030. The Blackstone Loan Agreement provides for additional drawdowns at our option, subject to certain conditions, and includes customary covenants and a minimum liquidity covenant of $30.0 million. The obligations under the Blackstone Loan Agreement are secured by a first lien on certain assets of ours and our subsidiaries.

On May 8, 2025, we repaid in full our obligations under the Hercules Loan Agreement using proceeds from the Blackstone Loan Agreement. As of September 30, 2025, there are no outstanding obligations under the Hercules Loan Agreement.

Royalty Agreements

Pursuant to the Asset Purchase Agreement, dated as of March 25, 2022, or the Purchase Agreement, we agreed to make non-refundable, non-creditable royalty payments to Jazz equal to a (A) high-single digit royalty for any Current Indication or (B) mid-single digit royalty for any Future Indication, of net sales in the U.S. Territory made during the applicable Royalty Term (in each case, as those terms are defined in the Purchase Agreement). There are no royalty payments due to Jazz for net sales outside of the U.S. Territory.

At the initial closing, we assumed all of the commitments of Jazz to SK and Aerial. SK is the originator of Sunosi and retains rights in 12 Asian markets, including China, Korea, and Japan. In 2014, Jazz acquired from Aerial worldwide rights to Sunosi excluding those Asian markets stated previously. The assumed commitments to SK and Aerial include single-digit tiered royalties based on our sales of Sunosi, and we are committed to pay up to $165.0 million based on revenue milestones and $1.0 million based on development milestones.

Employees and Human Capital Management

As of October 27, 2025, we had 816 full-time employees. None of our employees are represented by a collective bargaining agreement and we have never experienced any work stoppage. We believe that we maintain good relations with our employees. Our employees are highly skilled, and many hold advanced degrees. Many of our employees have experience with drug commercialization or development. Our future performance depends significantly upon the continued service of our key scientific, technical and senior management personnel and our continued ability to attract and retain highly skilled employees. We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development programs that enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives. In addition to salaries, these programs include potential annual discretionary bonuses, stock awards, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and flexible work schedules, among other benefits. We may take further actions, in compliance with all appropriate government regulations, that we determine to be in the best interest of our employees.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined by applicable SEC regulations.

Recent Accounting Pronouncements

Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements included in Part I, Financial Information, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for a discussion of recently issued accounting pronouncements.