ZVRA 10-K & 10-Q changes, risk factors and insider trading

If we are unable to establish effective sales, marketing and distribution capabilities for our approved products, including any of our product candidates that may receive marketing approval, we may not be successful in commercializing such products in the United States or any other jurisdictions.

We currently have limited marketing and sales experience. In order to commercialize our approved products, we have added marketing, sales, medical affairs, distribution, managerial and other non-technical capabilities, or have made arrangements with third parties to perform these services. For any of our other product candidates that receive marketing approval, we may have to augment our commercial capabilities or make arrangements with third parties to perform additional services. Building and maintaining a targeted specialty sales force is expensive and time consuming. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact our commercialization efforts. We may choose to collaborate with third parties that have their own sales forces and established distribution systems, in lieu of or to augment any sales force and distribution systems we may create. If we are unable to enter into collaborations with third parties for the commercialization of approved products on acceptable terms or at all, or if any such collaborator does not devote sufficient resources to the commercialization of our products or otherwise fails in commercialization efforts, we may not be able to successfully commercialize our approved products.

Our approved products, as well as any of our product candidates that may receive marketing approval, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

Our approved products, as well as any of our product candidates that may receive marketing approval, may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. The degree of market acceptance of our approved products will depend on a number of factors, including:

•the efficacy and potential advantages compared to alternative treatments, including less expensive generic treatments;

•the ability to obtain differentiating claims in the labels for approved products;

•the clinical indications for which our products are approved;

•the convenience and ease of administration compared to alternative treatments;

•the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

•the cost of treatment in relation to alternative treatments;

•the strength of marketing and distribution support;

•the availability of third-party coverage and adequate reimbursement or willingness of patients to pay out of pocket in the absence of third-party coverage; and

•the prevalence and severity of any side effects.

If our approved products do not achieve an adequate level of market acceptance, they may not generate significant product revenue and we may not become profitable.

Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.

Sales of pharmaceutical products depend in significant part on the availability of coverage and adequate reimbursement by third-party payors, such as state and federal governmental authorities, including those that administer the Medicare and Medicaid programs, and private managed care organizations and health insurers. Decisions regarding the extent of coverage and amount of reimbursement to be provided for each of our products and product candidates is and will be made on a plan-by-plan basis. One payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Each third-party payor determines whether or not it will provide coverage for a drug, what amount it will pay providers for the drug, and on what tier of its formulary the drug will be placed. These decisions are influenced by the existence of multiple drug products within a therapeutic class and the net cost to the plan, including the amount of the prescription price, if any, rebated by the drug’s manufacturer. Typically, generic versions of drugs are placed in a preferred tier. The position of a drug on the formulary generally determines the co-payment that a patient will need to make to obtain the drug and can strongly influence the adoption of a drug by patients and physicians. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of our products. Additionally, a third-party payor’s decision to provide coverage for a drug does not imply that an adequate reimbursement rate will be approved. Also, third-party payors are developing increasingly sophisticated methods of controlling healthcare costs. As a result, coverage, reimbursement and placement determinations are complex and are often the subject of extensive negotiations between the payer and the manufacturer of the drug. Increasingly, both purchasers and payors are also conducting comparative clinical and cost effectiveness analyses involving application of metrics, including data on patient outcomes, provided by manufacturers.

Within the Medicare program, as self-administered drugs, our product and product candidates would be reimbursed under the expanded prescription drug benefit known as Medicare Part D. This program is a voluntary Medicare benefit administered by private plans that operate under contracts with the federal government. These plans develop formularies that determine which products are covered and what co-pay will apply to covered drugs. The plans have considerable discretion in establishing formularies and tiered co-pay structures, negotiating rebates with manufacturers and placing prior authorization and other restrictions on the utilization of specific products, subject to review by the Centers for Medicare & Medicaid Services (“CMS”), for discriminatory practices. These Part D plans negotiate discounts with drug manufacturers, which are passed on, in whole or in part, to each of the plan’s enrollees through reduced premiums.

In order for reimbursement to be available for our products under Medicare or Medicaid, we participate in and have rebate obligations under the Medicaid Drug Rebate Program and are enrolled in the 340B drug pricing program, as well as the U.S. Department of Veterans Affairs Federal Supply Schedule pricing program. The programs we participate in, as well as our obligations under these programs, are described under the risk factor “If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in which we participate, we could be subject to additional reimbursement requirements, penalties, sanctions and fines.”

Third-party payers, including the U.S. government, continue to apply downward pressure on the reimbursement of pharmaceutical products. Also, the trend towards managed health care in the United States and the concurrent growth of organizations such as health maintenance organizations may result in lower reimbursement for pharmaceutical products. We expect that these trends will continue as these payors implement various proposals or regulatory policies, including various provisions of the recent health reform legislation that affect reimbursement of these products. There are currently, and we expect that there will continue to be, a number of federal, state and foreign proposals to implement controls on reimbursement and pricing, directly and indirectly.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. For example, in the EU, pricing and reimbursement schemes vary widely from country to country. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies. This Health Technology Assessment (“HTA”) which is currently governed by the national laws of the individual EU member states, is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted. The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU member states. The downward pressure on healthcare costs in general, particularly prescription medicines, has become very intense. Pharmaceutical products may face competition from lower-priced products in foreign countries that have placed price controls on pharmaceutical products and may also compete with imported foreign products. Furthermore, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available or that the third-party payors’ reimbursement policies will not adversely affect the ability for manufacturers to sell products profitably. Historically, products launched in the EU do not follow the price structures which prevail in the United States, and generally, prices tend to be significantly lower.

Because the target patient population for our products and product candidates is small, we must achieve significant market share and obtain relatively high per-patient prices for our products to achieve meaningful gross margins.

We are focused on diseases with a small patient population. A key component of the successful commercialization of an approved product for these indications includes identification of patients and a targeted prescriber base for such product. Due to small patient populations for our products and product candidates, we believe that we would need to have significant market penetration to achieve meaningful revenues and identifying patients and targeting the prescriber base are key to achieving significant market penetration. Typically, drugs for conditions with small prevalence have higher prices in order to generate a return on investment, and as a result, the per-patient prices at which we sell our products are relatively high in order for us to generate an appropriate return for the investment in these product development programs and achieve meaningful gross margins. There can be no assurance that we will be successful in achieving a sufficient degree of market penetration and/or obtaining or maintaining high per-patient prices for products for diseases with small patient populations. Further, even if we obtain significant market share for our products, because the potential target populations are very small, we may not be able to maintain profitability despite obtaining such significant market share. Additionally, patients who discontinue therapy or do not fill prescriptions are not easily replaced by new patients, given the limited patient population.

Our industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We will face competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, drug delivery companies and academic and research institutions. Our competitors may develop or market drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products or product candidates, and these competitors may also have significantly more resources than us and be more successful than us in manufacturing and marketing their products.

See Part I. Item 1. “Business—Competitors” of this Annual Report on Form 10-K for additional information regarding our competitors.

The FDA and foreign regulatory bodies closely regulate promotional materials and other promotional activities. Even if the FDA initially approves product labeling, the FDA may object to our marketing claims and product advertising campaigns. Failure to comply with the FDA’s promotional, marketing and advertising laws and regulations could lead to the issuance of warning letters, cyber letters, or untitled letters, adverse publicity, the requirement for dear-health-care-provider letters or other corrective information, fines and other monetary penalties, civil or criminal prosecution, including False Claims Act liability, restrictions on our operations and other operating requirements through consent decrees or corporate integrity agreements, debarment, exclusion from participation in federal health care programs and refusal of government contracts or future orders under existing contracts, among other consequences. Similar risks exist in foreign jurisdictions. Any of these consequences would harm the commercial success of our products.

Further, our promotional materials, statements and training methods must comply with regulatory prohibitions of the promotion of unapproved, or off-label, use. Any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by FDA. Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s independent choice of treatment within the practice of medicine. However, if the FDA or any other federal, state or foreign enforcement authority determines that our promotional materials, statements or training constitutes promotion of an off-label use, it could request that we modify our promotional materials, statements or training methods or subject us to regulatory or enforcement actions, such as the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine, disgorgement of money, operating restrictions or criminal penalties. We may also be subject to actions by other governmental entities or private parties, such as the False Claims Act, civil whistleblower or “qui tam” actions. In that event, our reputation could be damaged and adoption of the products could be impaired. In addition, the off-label use of our products may increase the risk of product liability claims.

We face an inherent risk of product liability exposure related to commercializing drug products and testing our product candidates in human clinical trials. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

•decreased demand for our products;

•injury to our reputation and significant negative media attention;

•termination of clinical trial sites or entire trial programs;

•withdrawal of clinical trial participants;

•initiation of investigations by regulators;

•significant costs to defend the related litigation;

•a diversion of management’s time and our resources;

•substantial monetary awards paid to trial participants or patients;

•product recalls, withdrawals or labeling revisions and marketing or promotional restrictions; and

•loss of revenue.

Although we maintain product liability insurance coverage, we cannot be sure that our insurance coverage will be adequate or otherwise protect us from or adequately mitigate liabilities or damages with respect to product liability claims, or that such coverage will continue to be available on acceptable terms at all. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of a large deductible or co-insurance requirements), could have an adverse effect on our business. We may need to increase our insurance coverage as products become commercially successful. Insurance coverage is increasingly expensive, and we may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

Significant political, trade, regulatory developments, and other circumstances beyond our control could delay, prevent or impair our development or commercialization efforts.

Trade policies, geopolitical disputes and other international conflicts can result in tariffs, sanctions and other measures that restrict international trade, and can materially adversely affect our business, particularly if these measures affect regions where manufacturing and product development activities take place or raw materials are sourced. The extent and duration of any tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the United States and other countries, the response of such countries, and exemptions or exclusions that may be granted. Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact supply chains. As these tensions continue to rise, more targeted approaches on certain products, industries or companies could significantly impact our development and commercialization efforts. Further, such actions by the United States could result in other retaliatory actions by those countries which could impact our ability to profitably commercialize our products in those jurisdictions. As a result, our business, operations, and financial condition could be materially harmed.

Our product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.

Adverse events or other undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approvals by the FDA or other comparable foreign regulatory authorities. If any serious adverse events occur, clinical trials could be suspended or terminated, and our business could be seriously harmed. Regulatory authorities could order us to cease further development of or deny approval of product candidates. If we are required to delay, suspend or terminate any clinical trial, the commercial prospects of our products or product candidates may be harmed, and our ability to generate product revenues may be delayed or eliminated.

Any side effects or adverse events caused by approved products following regulatory approval, could result in a number of potentially significant negative consequences.

For approved products, if we or others later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

•regulatory authorities may suspend, limit or withdraw approvals of such product, or seek an injunction against its manufacture or distribution;

•regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product;

•we may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies;

•we may be required to create a risk evaluation and mitigation strategy, or REMS, which could include a medication guide outlining the risks of such side effects for distribution to patients;

•we may be subject to fines, injunctions or the imposition of criminal penalties;

•we could be sued and held liable for harm caused to patients; and

•our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of approved products and could seriously harm our business.

We may seek regulatory approval for our approved products and any of our product candidates, if approved, outside of the United States. For example, we have submitted an MAA to the EMA for the evaluation of arimoclomol for the treatment of NPC. Accordingly, we expect that we will be subject to additional risks related to operating in foreign countries including:

•different regulatory requirements for maintaining approval of drugs in foreign countries;

•differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls;

•the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market with low or lower prices rather than buying them locally;

•unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

•economic weakness, including inflation, labor shortages, supply chain shortages, or other economic or political uncertainties or instability in particular foreign economies and markets;

We are a commercial-stage company with a late-stage pipeline committed to redefining what is possible in bringing life-changing therapeutics to people living with rare diseases. We are focused on expanding patient access, progressing our pipeline toward key milestones, and delivering meaningful therapeutics. Our vision is realized through disciplined execution of our strategic plan and our core values — patient centricity, integrity, accountability, innovation, and courage — which guide our efforts to deliver long-term value. The commercialization of our lead product, marketed in the United States for Niemann-Pick disease type C (NPC), a rare, progressive neurodegenerative disorder, provides a strong corporate foundation and demonstrates our ability to advance therapies from development to market.

Our strategic plan is focused on transforming Zevra into a leading rare-disease company. We are prioritizing the commercialization and global expansion of our lead product, MIPLYFFA, while OLPRUVA remains commercially available. We are also advancing the development of our clinical stage asset, celiprolol, and plan to further expand our pipeline through inorganic growth. We intend to become the preferred partner for assets that we believe will allow us to leverage the expertise and infrastructure that we have built to help mitigate risk and enhance our probability of success.

On September 20, 2024, the U.S. Food and Drug Administration (“FDA”) approved the New Drug Application (“NDA”) for MIPLYFFA, for use in combination with miglustat for the treatment of neurological manifestations of NPC in adult and pediatric patients 2 years of age and older, and MIPLYFFA became commercially available for dispense in the United States in November 2024. In connection with this approval, we received a transferable rare pediatric disease priority review voucher (“PRV”). On April 1, 2025, we consummated the sale of the PRV, resulting in net proceeds of $148.3 million to us. MIPLYFFA has also been granted orphan medicinal product designation for the treatment of NPC by the European Commission. We are pursuing regulatory approval in Europe and filed a Marketing Authorization Application (“MAA”) with the European Medicines Agency (“EMA”) in July 2025; the application is currently under review.

•continue building and maintaining our ongoing commercial capabilities to support the commercialization of our approved products, MIPLYFFA and OLPRUVA, in the United States;

•continue or initiate preclinical studies, clinical trials and product development activities for our pipeline of product candidates;

•seek regulatory approvals for any product candidates that may successfully complete clinical trials;

•seek to discover, license or acquire, and develop additional product candidates;

•adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products;

•maintain, expand and protect our intellectual property portfolio;

•incur additional legal, accounting and other expenses in operating as a public company; and

•add operational systems and personnel, if needed, to support any future commercialization efforts.

XOMA License Agreement (MIPLYFFA)

In May 2022, we purchased all the assets and operations of Orphazyme A/S (“Orphazyme”) related to arimoclomol. Prior to this acquisition, Orphazyme had entered into an asset purchase agreement with LadRx Corporation, which was assigned to XOMA (US) LLC, a wholly-owned subsidiary of XOMA Corporation (“XOMA”), in June 2023 (“XOMA License Agreement”). Under the XOMA License Agreement, XOMA is entitled to a mid-single digit percentage royalty with respect to net sales of MIPLYFFA as well as milestone payments based on future potential sales and regulatory milestones, including a $4.0 million regulatory milestone payment upon approval in the E.U.

Relief License Agreement (OLPRUVA)

In connection with our acquisition of Acer, Acer and Relief entered into an exclusive license agreement on August 30, 2023 (the “Relief License Agreement”), which was assumed by Zevra. Pursuant to the Relief License Agreement, Zevra is obligated to pay royalties of 10% of U.S. net sales up to a maximum of $45.0 million, plus specified regulatory milestones, for total payments to Relief of up to $56.5 million. On April 10, 2025, the rights to this royalty were sold to Soleus Capital Management L.P.

Pursuant to the Relief License Agreement, Relief will hold exclusive development and commercialization rights for OLPRUVA in the EU, Liechtenstein, San Marino, Vatican City, Norway, Iceland, Principality of Monaco, Andorra, Gibraltar, Switzerland, United Kingdom, Albania, Bosnia, Kosovo, Montenegro, Serbia and North Macedonia (“Geographical Europe”). We have the right to receive a royalty of up to 10% of the net sales of OLPRUVA in Geographical Europe.

Aquestive Termination Agreement (AZSTARYS)

Under our March 2012 termination agreement with Aquestive Therapeutics (“Aquestive”), Aquestive has the right to receive a royalty amount equal to 10% of any value generated by AZSTARYS and any product candidates containing SDX. We pay Aquestive a royalty equal to 10% of the quarterly royalty payments and of the regulatory and net sales milestones we receive from Commave under the AZSTARYS License Agreement.

Our revenue is, and will be, primarily derived from sales of our approved products or any of our product candidates for which we obtain regulatory approval, and reimbursements under our global expanded access program (“EAP”) in France, and in select territories outside Europe. We expect that our other sources of revenues will be through payments arising from our license agreements, and through any other future arrangements related to one of our product candidates.

To date, we have generated revenue from product sales of MIPLYFFA and limited sales of OLPRUVA, reimbursements received under our global EAP, royalties or net sales milestone payments generated under the AZSTARYS License Agreement, and consulting agreements. We cannot guarantee that we will continue to receive reimbursements under the global EAP or the extent of our success in commercializing MIPLYFFA or OLPRUVA. While we have received milestone payments under the AZSTARYS License Agreement, we cannot guarantee that we will earn any additional milestone or royalty payments under this agreement in the future. We also do not know when, if ever, any other product candidate will be commercially available.

•salaries and personnel-related costs, including benefits and any stock-based compensation, for our scientific personnel performing research and development activities;

•costs related to executing preclinical studies and clinical trials;

•fees paid to consultants and other third parties who support our product candidate development;

•other costs in seeking regulatory approval of our products; and

•allocated facility-related costs and overhead.

Revenue, net

Revenue for the year ended December 31, 2025, was $106.5 million, compared to revenue of $23.6 million for the year ended December 31, 2024, an increase of approximately $82.9 million. The increase was primarily attributable to an increase in product sales of MIPLYFFA of $77.3 million and an increase in revenues under the global EAP of $3.9 million.

Research and development expenses decreased by $29.4 million, from $42.1 million for the year ended December 31, 2024, to $12.7 million for the year ended December 31, 2025. This decrease was primarily driven by a decrease in spending for the Phase 2 clinical study for KP1077 and a decrease in personnel-related costs.

Selling, general and administrative expenses increased by approximately $22.7 million, from $54.9 million for the year ended December 31, 2024, to $77.6 million for the year ended December 31, 2025. This increase was primarily related to an increase in personnel-related costs, professional fees, and other expenses as we continue to build our commercial organization.

Other income (expense) increased from $3.1 million of expense for the year ended December 31, 2024, to $149.6 million of income for the year ended December 31, 2025. The increase was primarily attributable to the gain on sale of the PRV of $148.3 million and an increase in interest and other income, net of $4.8 million.

In June 2026, Zevra published positive results of an open-label pediatric substudy in the peer reviewed journal Molecular Genetics and Metabolism Reports. This multicenter substudy evaluated arimoclomol, in addition to concomitant miglustat, in five children with NPC aged 12 to <24 months at enrollment over up to 36 months of treatment. Arimoclomol was generally well tolerated, with no new safety signals, and pharmacokinetic results were consistent with older pediatric populations. Developmental assessments showed variable delays, reflecting underlying phenotypic heterogeneity. Although limited by small sample size, the study provides preliminary evidence supporting initiation of MIPLYFFA in this age group.

Results of Operations

Comparison of the six months ended June 30, 2026 and 2025 (in thousands):

Net income

Net income for the six months ended June 30, 2026, was $46.6 million, compared to a net income of $71.6 million for the six months ended June 30, 2025, a decrease to net income of $25.0 million. The decrease was primarily attributable to a gain on sale of PRV of $148.3 million in the second quarter of 2025, loss on derivative liability of $7.2 million, loss on extinguishment of debt of $2.8 million, an increase in tax expense of $7.6 million, and a decrease in fair value adjustment related to warrant and CVR liability of $9.6 million, partially offset by a gain on sale of future royalties, intellectual property, and other assets, net, of $43.3 million under the Commave Settlement Agreement in the first quarter of 2026, a decrease in impairment of intangible assets of $58.7 million, an increase of $29.6 million in revenue, a decrease in inventory obsolescence charges of $11.2 million, a decrease in intangible asset amortization of $2.6 million and an increase in interest and other income, net, of $3.2 million,

Revenue, net

Revenue for the six months ended June 30, 2026, was $75.9 million, compared to revenue of $46.3 million for the six months ended June 30, 2025, an increase of $29.6 million. The increase was primarily attributable to an increase in revenues under the global EAP of $14.1 million and an increase in product sales of MIPLYFFA of $16.3 million, partially offset by a decrease in royalty revenue of $0.7 million.

Cost of product revenue

Cost of product revenue for the six months ended June 30, 2026, was $3.4 million, a decrease of $10.3 million compared to cost of product revenue of $13.7 million for the six months ended June 30, 2025. The decrease was primarily due to a decrease in the write-down of unsaleable inventory, partially offset by an increase in royalty costs related to increased product sales of MIPLYFFA.

Intangible asset amortization

Intangible asset amortization for the six months ended June 30, 2026, was $0.6 million, a decrease of $2.6 million compared to intangible asset amortization of $3.2 million for the six months ended June 30, 2025. The decrease was a result of definite-lived intangible assets acquired in the acquisition of Acer no longer being amortized as a result of the impairment recorded as of and for the period ended June 30, 2025.

Research and development

Research and development expenses increased by $2.2 million, from $6.7 million for the six months ended June 30, 2025, to $8.9 million for the six months ended June 30, 2026. This increase was primarily driven by an increase in spending for ongoing arimoclomol efforts and the celiprolol Phase 3 study.

Selling, general and administrative

Selling, general and administrative expenses decreased by approximately $3.0 million, from $40.3 million for the six months ended June 30, 2025, to $37.3 million for the six months ended June 30, 2026. This decrease was primarily related to a decrease in third party spending and professional fees, partially offset by an increase in personnel related costs.

Other (expense) income

Other (expense) income decreased from $151.4 million of income for the six months ended June 30, 2025, to $11.3 million of expense for the six months ended June 30, 2026. The decrease in income was primarily attributable to the gain on sale of PRV of $148.3 million in the second quarter of 2025, a loss on derivative liability of $7.2 million, a loss on extinguishment of debt of $2.8 million, and a decrease in fair value adjustment related to warrant and CVR liability of $9.6 million, and other assets, partially offset by an increase in interest and other income, net, of $3.2 million and a decrease in interest expense of $2.2 million.

Income tax expense

Income tax expense increased by $7.6 million, from $3.4 million for the six months ended June 30, 2025, to $11.0 million for the six months ended June 30, 2026, due to the tax provision associated with increased income in the current period excluding the gain on sale of PRV for which income tax expense was recognized in the fourth quarter of 2024.

For the six months ended June 30, 2025, net cash used in operating activities of $11.8 million consisted of net income of $71.6 million, offset by $69.3 million in adjustments for non-cash items and changes in working capital of $14.1 million. Net income was primarily attributable to the sale of the PRV, as well as revenue received from approved product sales, royalties generated under the AZSTARYS License Agreement, and reimbursements received under the global EAP, partially offset by impairment and obsolescence charges and spend on R&D programs and operating costs. The adjustments for non-cash items primarily consisted of the gain on sale of PRV of $148.3 million, and a change in the fair value of warrant and CVR liability of $4.1 million, partially offset by impairment of intangible assets of $58.7 million, inventory obsolescence of $11.7 million, stock-based compensation expense of $5.6 million, $3.3 million of depreciation and amortization expense, and income tax expense of $3.4 million.