SUPERNUS PHARMACEUTICALS, INC. (SUPN) FY 2021 MD&A

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto, appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, some of the information in this discussion and analysis contains forward-looking statements reflecting our current expectations and involving risk and uncertainties. For example, statements regarding our expectations as to our plans and strategy for our business, future financial performance, expense levels, and liquidity sources are forward-looking statements. Our actual results and the timing of those events could differ materially from those discussed in our forward-looking statements because of many factors, including those set forth under the "Risk Factors" section and elsewhere in this report.

77

Table of Contents

Overview

We are a biopharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases. Our diverse neuroscience portfolio includes approved treatments for epilepsy, migraine, attention-deficit hyperactivity disorder (ADHD), hypomobility in Parkinson’s Disease (PD), cervical dystonia, chronic sialorrhea, dyskinesia in PD patients receiving levodopa-based therapy, and drug-induced extrapyramidal reactions in adult patients. We are developing a broad range of novel CNS product candidates including new potential treatments for hypomobility in PD, epilepsy, depression, and other CNS disorders.

On February 18, 2022, the U.S. Food and Drug Administration (FDA) accepted for review the New Drug Application (NDA) for SPN-830 (apomorphine infusion device) for the continuous treatment of motor fluctuations ("off" episodes) in PD and assigned a Prescription Drug User Fee Act (PDUFA) target action date of October 7, 2022.

On October 10, 2021, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Adamas Pharmaceuticals, Inc. (Adamas) and Supernus Reef, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("Purchaser"). On November 24, 2021, the Purchaser was merged with and into Adamas (Merger), with Adamas continuing as the surviving corporation in the Merger as a wholly owned subsidiary of the Company (Adamas Acquisition). At the time of the Adamas Acquisition, Adamas held two established commercial products in its portfolio, GOCOVRI®, Osmolex ER®, and had royalty rights to Namzaric®. Allergan plc markets and sells Namzaric in the U.S.

Following the Adamas Acquisition, during the fourth quarter of 2021 and continuing into the first quarter of 2022, Adamas was reorganized with the interests of Adamas Pharmaceuticals, LLC, formerly Adamas Pharmaceuticals, Inc, in GOCOVRI and Osmolex ER effectively transferred to Adamas Operations, LLC (Adamas Operations), which, alongside Adamas Pharmaceuticals, LLC, is a wholly-owned subsidiary of Adamas Holdings, LLC (collectively, the "Adamas Subsidiaries"), which is itself a wholly-owned subsidiary of Supernus Pharmaceuticals, Inc. During the first quarter of 2022, Supernus Pharmaceuticals, Inc. was granted a license by Adamas Operations to market and sell GOCOVRI and Osmolex ER (such reorganization and licensing agreement, the "Adamas Reorganization"). Each of the Adamas Subsidiaries are distinct legal entities that contract with Supernus Pharmaceuticals, Inc. for the provision of certain corporate and other support services.

On April 2, 2021, the FDA approved Qelbree for the treatment of ADHD in pediatric patients 6 to 17 years of age. In May 2021, we launched Qelbree in the U.S. On September 2, 2021, the FDA has acknowledged receipt of the supplemental new drug application (sNDA) for adult patients with ADHD and assigned a PDUFA date of April 29, 2022.

On April 28, 2020, we entered into a Sale and Purchase Agreement with US WorldMeds Partners, LLC to acquire the CNS portfolio of USWM Enterprises, LLC (USWM Enterprises) (USWM Acquisition). With the acquisition, completed on June 9, 2020, the Company added three established commercial products, APOKYN, XADAGO, and MYOBLOC, and a product candidate in late-stage development to its portfolio, through its subsidiaries. In the second quarter of 2021 and within one year from the Closing Date, the Company finalized its accounting for the business combination, including the purchase price allocation.

On April 21, 2020, we entered into a Development and Option Agreement (Development Agreement) with Navitor Pharmaceuticals, Inc. (Navitor Inc.) and also acquired an ownership position in Navitor Inc. Under the terms of the Development Agreement, the Company and Navitor Inc. will jointly conduct a Phase II clinical program for NV-5138 (SPN-820) in treatment resistant depression (TRD). In March 2021, Navitor Inc. underwent a legal restructuring whereby Navitor Inc. became a wholly owned subsidiary of a newly formed limited liability company, Navitor Pharmaceuticals, LLC (Navitor LLC) (Navitor Restructuring) and our ownership position in Navitor Inc. was exchanged for an equivalent ownership position in Navitor LLC. In December 2021, we received a $12.9 million cash distribution pursuant to our ownership position in Navitor LLC following its sale of its subsidiary.

We, including through our subsidiaries, have a portfolio of commercial products and product candidates.

Commercial Products

•Trokendi XR is the first once-daily extended release topiramate product indicated for the treatment of epilepsy and the prophylaxis of migraine headache in the United States (U.S.) market.

•Oxtellar XR is indicated as therapy of partial onset seizures in adults and children 6 years to 17 years of age and is the first once-daily extended release oxcarbazepine product indicated for the treatment of epilepsy in the U.S.

•Qelbree, a novel non-stimulant product candidate for the treatment of ADHD in pediatric patients 6 to 17 years of age.

78

Table of Contents

•APOKYN is a product indicated for the acute, intermittent treatment of hypomobility or "off" episodes ("end-of-dose wearing off" and unpredictable "on-off" episodes) in patients with advanced PD.

•XADAGO is a once-daily product indicated as adjunctive treatment to levodopa/carbidopa in patients with Parkinson's disease experiencing "off" episodes.

•MYOBLOC is a product indicated for the treatment of cervical dystonia and sialorrhea in adults, and it is the only Type B toxin available on the market.

•GOCOVRI is the first and only FDA-approved medicine indicated for the treatment of dyskinesia in patients with PD receiving levodopa-based therapy, with or without concomitant dopaminergic medications, and as an adjunctive treatment to levodopa/carbidopa in patients with Parkinson's disease experiencing "off" episodes.

•Osmolex ER extended release tablets is for the treatment of Parkinson's disease and drug-induced extrapyramidal reactions in adult patients.

Product Candidates

We have various product candidates in different stages of development. Our late-stage product candidates include:

•Qelbree, a novel non-stimulant product candidate for the treatment of ADHD in adult patients with ADHD.

•SPN-830 is a late-stage drug/device combination product candidate for the continuous prevention of "off" episodes in PD.

Intellectual property portfolio

We continue to expand our intellectual property portfolio to provide additional protection for our technologies, products, and product candidates. See Part I, Item I—Business, Intellectual Property, and Exclusivity, for a complete description of our intellectual property position.

Operational Highlights

Qelbree Launch Update

•Total IQVIA prescriptions were 34,328 in the fourth quarter of 2021, an increase of 122% compared to total prescriptions of 15,453 in the third quarter of 2021. In February 2022, total prescriptions reached 14,767.

•Total prescriptions are showing a quarter-to-date (first seven weeks) sequential growth rate of 42% in the first quarter 2022 versus the corresponding same seven-week period in the fourth quarter of 2021.

•Qelbree continues to expand its base of prescribers, with over 5,600 prescribers in the fourth quarter of 2021, up from 3,470 prescribers from the third quarter of 2021.

•Continued progress in securing and improving managed care coverage.

•Preparations for the potential launch in the adult market are well underway, assuming timely approval by the FDA of the sNDA for the adult indication.

Acquisition of Adamas Pharmaceuticals, Inc.

•We completed the acquisition of Adamas in late November 2021, and the Adamas Reorganization in the first quarter of 2022, strengthening our Parkinson's disease portfolio with two marketed products, including GOCOVRI extended release capsules, the first and only FDA-approved medicine indicated for the treatment of both "off" episodes and dyskinesia in patients with Parkinson's disease receiving levodopa-based therapy. In addition, the acquisition diversifies and increases the Company’s revenue base and cash flow.

•Total prescriptions for GOCOVRI in January 2022 grew by 30% compared to January 2021.

79

Table of Contents

Product Pipeline Update

Qelbree (viloxazine, extended-release capsules) - Novel non-stimulant for the treatment of ADHD in adults

•In September 2021, the FDA acknowledged it received the sNDA for Qelbree for the treatment of ADHD in adult patients. The sNDA has a PDUFA date in late April 2022.

SPN-830 (apomorphine infusion device) - Continuous treatment of motor fluctuations ("on-off" episodes) in Parkinson's disease

(PD)

•The Company received notice from the FDA that its New Drug Application (NDA) resubmission for SPN-830 for the continuous treatment of motor fluctuations ("off" episodes) in Parkinson's disease is considered a Standard Review, thereby assigning a timeline of 10 months for review by the FDA and establishing a PDUFA target action date of October 7, 2022.

•The Company will work closely with the FDA as it reviews the SPN-830 NDA. The Company is preparing for the commercial launch of SPN-830 in the first quarter of 2023, assuming timely approval by the FDA.

SPN-820 - Novel first-in-class activator of mTORC1

•The Company has initiated a Phase II multicenter, randomized double-blind placebo-controlled parallel design study of SPN-820 in adults with treatment resistant depression. The study will examine the efficacy and safety of SPN-820 over a course of five weeks of treatment in approximately 400 patients. The primary outcome measure is the change from baseline to end of treatment period on the Montgomery-Asberg Depression Rating Scale (MADRS) Total Score, a standard depression rating scale.

SPN-817 – A novel product candidate for the treatment of epilepsy

•A randomized Phase II clinical study of SPN-817 for the treatment of focal seizures is expected to start in the second half of 2022.

COVID-19 Impact

In March 2020, we began to observe the impact of the COVID-19 pandemic in the U.S and globally and the impact it may have on our business operations and our financial results. The macroeconomic impacts of COVID-19 are significant and continue to evolve, as exhibited by, among other things, a rise in unemployment, changes in consumer behavior, and market volatility.

The full impact of the COVID-19 pandemic on our business remains uncertain and subject to change. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business operations and have assessed the impact of the COVID-19 pandemic on our consolidated financial statements. Although the COVID-19 pandemic has not significantly impacted our consolidated financial statements as of and for the year ended December 31, 2021, it may have a future impact, especially if the severity worsens, the duration lengthens, or the nature of the effects changes.

The effects of the pandemic may vary significantly across different aspects of our business operations. We do not and cannot yet know the full extent of the potential impact on our execution of clinical trials, new product launches, including Qelbree, our manufacturing and supply chain, or related impacts on our business or financial condition. These effects could include the adverse impact on research and development activities as a result of a disruption in clinical projects; adverse impact on selling and marketing efforts as a result of temporarily halting in-person interactions by our sales force with healthcare providers; adverse impact on net product sales as a result of decreased new prescriptions due to fewer patient visits to physicians to begin treatment; potential changes in payor segment mix; increased use of co-pay programs due to rising unemployment; and potential future disruption to our supply chain and manufacturing operations.

These effects could have a material impact on our liquidity, cash flows, capital resources, and business operations. Financial effects could include impairment of intangible and long-lived assets, increased sales deductions that could adversely impact our net product sales, and cash collections and adjustments for market volatility for items subject to fair value measurement, such as marketable securities. See "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K for additional information on risk factors that could impact our business and our results.

80

Table of Contents

For the year ended December 31, 2021, except for the effects already cited, there has been no material impact on our operations, liquidity, and financial position due to the COVID-19 pandemic. We expect to continue to generate positive cash flows and to meet our short-term liquidity needs.

Ransomware Incident

On November 24, 2021, we announced we were the target of a ransomware attack. The Company currently believes unauthorized activity on its information technology systems began in late September 2021. Abnormal behavior on the Company's information technology systems was first detected by the Company in mid-November 2021. Based on the investigation, we believe the criminal ransomware groups (the "criminal groups") copied certain data from our systems, encrypted certain data on our systems and then deployed malware designed to impede access to our IT systems. Thereafter the criminal groups contacted the Company and threatened to publish certain data copied from our systems. Upon detection of the ransomware attack, we notified government authorities, engaged third-party cybersecurity experts through our outside counsel, and commenced its recovery process. We maintain redundant off-site data backups, which were verified to have not been compromised by the ransomware attack and were utilized to restore the data encrypted by the criminal groups. At this time, we have successfully recovered the impacted files and have taken additional steps designed to protect our networks and files.

We have not paid any ransom amounts and do not currently anticipate paying any ransom amounts. While we remain unaware of any actual or attempted misuse of information copied from our IT systems, our investigation into the incident remains ongoing and there can be no assurance that the information has not already been misused and will not be misused in the future.

While the attack had no significant impact on the business and did not cause any long-term disruption to our operations, the encryption of certain data did impact our use of our enterprise resource planning system (the "legacy ERP"). Following the attack, we:

(i) restored securely backed-up data from our redundant off-site data backups into our legacy ERP,

(ii) manually processed certain functions which were previously automated by our legacy ERP, and

(iii) simultaneously accelerated our planned transition to a more modern ERP software.

Although the ransomware attack has not significantly impacted our business and there was no long-term disruption to our operations, there can be no assurance that further attacks may not significantly impact our business or disrupt operations and that information improperly obtained by the criminal groups may not be exploited by the criminal groups or other third parties. For additional information on the risks we face related to cybersecurity refer to Part I, Item 1A—Risk Factors–Cybersecurity incidents may adversely impact our financial condition, results of operations, and reputation for risks associated with cybersecurity.

While we have not been the subject of any legal proceedings involving the ransomware attack, it is possible we could be the subject of claims from persons alleging they suffered damages from the incident or actions by governmental authorities.

At the time of the ransomware attack we self-insured by assuming the full risk of costs related to cybersecurity incidents. Following the attack and a re-assessment of our likelihood of being the target of a cybersecurity attack, we are in the process of obtaining cyber insurance in addition to our business insurance coverage, however, it will not cover the 2021 ransomware attack. No claim has been made to date. We have incurred costs in 2021 and expect to continue to incur costs in the future, which may be significant, in connection with efforts designed to enhance our data security and take further steps designed to protect against unauthorized access to, or manipulation of, our systems and data. These costs were primarily comprised of certain employee related expenses and various third party consulting services, including forensic experts, legal counsel and other IT and accounting professional expenses and enhancements to our cyber security measures. We expect to incur additional costs related to the ransomware incident in the future, including costs related to our response to the ransomware incident and our efforts designed to enhance our security measures.

Critical Accounting Policies and the Use of Estimates

The significant accounting policies and basis of presentation for our consolidated financial statements are described in Part II, Item 8—Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements. Our consolidated financial statements are prepared in accordance with the U.S. generally accepted accounting principles (U.S. GAAP), requiring us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and other related disclosures. Some judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

81

Table of Contents

We believe the judgments, estimates, and assumptions associated with the following critical accounting policies have the greatest potential impact on our consolidated financial statements:

•Revenue recognition;

•Business combination accounting and valuation of acquired assets;

•Impairment of intangible assets;

•Valuation of contingent consideration; and

• Income taxes.

Revenue Recognition

Our principal source of revenue is product sales. Revenue from product sales is recognized when physical control of our products is transferred to our customers, who are primarily pharmaceutical wholesalers, specialty pharmacies, and distributors. Product sales are recorded net of various forms of variable consideration, including: estimated rebates; sales discounts; and an estimated liability for future product returns (collectively, "sales deductions").

The variability in the net transaction price for our products arises primarily from the aforementioned sales deductions. Significant judgment is required in estimating certain sales deductions. In making these estimates, we consider: historical experience; product price increases; current contractual arrangements under applicable payor programs; unbilled claims; processing time lags for claims; inventory levels in the wholesale, specialty pharmacy, and retail distribution channel; and product life cycle. We adjust our estimates at the earlier of when the most likely amount of consideration we expect to receive changes, or when the consideration becomes fixed. Variable consideration on product sales is only recognized when it is probable that a significant reversal will not occur. If actual results in the future vary from our estimates, we adjust our estimates in the period identified. These adjustments could materially affect net product sales and earnings in the period in which the adjustment(s) is recorded. Refer to Part II, Item 8—Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements, for further discussion on each of the different sales deductions.

Rebates

Rebate amounts are typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer. For each type of rebate, the factors used in the calculations of the accruals for that rebate include the identification of the products subject to the rebate, applicable price terms and estimated lag time between sale and payment of the rebate, which can be significant. In order to establish the rebate accruals, we use both internal and external data to estimate the level of inventory in the distribution channel and the rebate claims processing lag time for each type of rebate. To estimate the rebate percentage or net price, we track sales by product and by customer or payer. We evaluate inventory data reported by wholesalers, available prescription volume information, product pricing, historical experience and other factors in order to determine the adequacy of our accruals. We regularly monitor our accruals and record adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in reserve is appropriate. Historically, adjustments to rebate accruals have not been material to net earnings.

Rebates are discounts which the Company pays under either public sector or private sector health care programs. Rebates paid under public sector programs are generally mandated under law, whereas private sector rebates are generally contractually negotiated by the Company with managed care providers. Both types of rebates vary over time. A significant portion of rebates we pay are on state Medicaid programs. We participate in state Medicaid programs wherein the lag time from the date of sale of our product when we accrue for provision for rebates and the ultimate invoicing by the individual state Medicaid program can occur up to several quarters after the sale of our product. Because of the time lag for Medicaid, in any particular quarter, our adjustments may incorporate revisions of accruals for prior periods. Estimates associated with our participation in state Medicaid programs are particularly susceptible to adjustment given the extensive time lag.

Returns

Consistent with industry practice, we maintain a return policy that allows our customers to return products within a specified period of time. Sales of our products are not subject to a general right of return; however, we will accept return of expired product 6 months prior to and up to 12 months subsequent to the product's expiry date for certain products. Our products have a shelf life of up to 48 months from date of manufacture. The product return accrual is estimated principally based on historical experience, the level and estimated shelf life of inventory in the distribution channel, our return policy and expected market events, including generic competition. The time lag from date of sale of our products when we accrue our provision for product returns and the time at which we issue credit for expired product can occur up to several years after the sale of our

82

Table of Contents

product. Estimates associated with our provision for product returns are particularly susceptible to adjustment given the extensive time lag. In regards to Trokendi XR, the Company has entered into settlement agreements with third parties, permitting the sale of a generic version of Trokendi XR on or after January 1, 2023, or earlier under certain circumstances. The Company is actively monitoring returns activity in light of the expected patent expiration and potential sales decline based on timing of generic entry. The entry of a generic competitor may cause our future Trokendi XR product return rates to change from historical trends, and this change could have a material effect on the future provision for product returns.

Sales discounts

The estimated sales discounts have historically been predictable and less subjective due to the limited number of assumptions involved, the consistency of historical experience and the fact that we generally settle these amounts upon receipt of payment from the customer.

For a roll-forward of the sales deductions, see the section entitled Results of Operations - Revenues - Sales deductions and related accruals.

Business Combination Accounting and Valuation of Acquired Assets

The Company completed the USWM Acquisition on June 9, 2020, and the Adamas Acquisition on November 24, 2021. Each transaction was accounted for as a business combination. To determine whether the acquisition should be accounted for as a business combination or as an asset acquisition, the Company made certain judgments regarding whether the acquired set of activities and assets met the definition of a business. Judgment is required in assessing whether the acquired processes or activities, along with their inputs, would be substantive to constitute a business, as defined by U.S. GAAP.

The acquisition method of accounting requires that we recognize the assets acquired and liabilities assumed at their acquisition date fair values. Goodwill is measured as the excess of consideration transferred over the acquisition date net fair values of the assets acquired and the liabilities assumed. The purchase price allocation is a critical accounting policy because the estimation of fair values of acquired assets and assumed liabilities is judgmental and requires various assumptions. Further, the amounts and useful lives assigned to depreciable and amortizable assets versus amounts assigned to Goodwill, which is not amortized, can significantly affect the results of operations in the period of and for periods subsequent to a business combination.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction, and therefore represents an exit price. When identifiable intangible assets, including in-process research and development (IPR&D) assets, are acquired, we determine the fair values of the assets as of the acquisition date. An income approach, which generally relies upon projected cash flow models, is used in estimating the fair value of the acquired intangible assets. These cash flow projections are based on management's estimates of economic and market conditions including: the timing and probability of success of clinical events or regulatory approvals for the IPR&D assets; the estimated future cash flows from revenues of acquired assets; the timing and projection of costs and expenses, including the costs to complete the IPR&D assets; discount rates; and tax rates.

While we use our best estimates and assumptions as part of the process to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. During the measurement period, which occurs before finalization of the purchase price allocation, changes in assumptions and estimates that result in adjustments to the fair values of assets acquired and liabilities assumed, if based on facts and circumstances existing at the acquisition date, are recorded on a retroactive basis as of the acquisition date, with the corresponding offset to Goodwill. Any adjustments not based on facts and circumstances existing at the acquisition date, or if subsequent to the conclusion of the measurement period, will be recorded to our consolidated statements of earnings.

Impairment of Intangible Assets

Intangible assets with indefinite lives are not amortized but are tested for impairment at least annually or when indicators of impairment are identified. Our annual evaluation is generally based on an assessment of qualitative factors to determine whether it is more likely than not the fair value of the asset is less than its carrying amount. Significant judgment is required in assessing the qualitative factors. In performing the qualitative assessment, we consider events and circumstances, focusing on the significant inputs affecting the fair value of an indefinite-lived intangible asset to determine whether it is necessary to perform the quantitative impairment test. If the Company is unable to conclude that the indefinite intangible asset is not impaired during its qualitative assessment, the Company will perform a quantitative assessment by estimating the fair value of the indefinite-lived intangible asset and comparing the fair value to the carrying amount.

In connection with the USWM acquisition in June 2020, we acquired the right to further develop and commercialize SPN-830 (apomorphine infusion device), a late-stage product candidate (IPR&D intangible asset). The significant inputs and assumptions used to estimate the fair value of the IPR&D intangible asset include: the timing and probability of success of clinical and regulatory approvals for the IPR&D asset, the estimated future cash flows from product sales, the timing and projection of

83

Table of Contents

costs and expenses. We believe that the timing and probability of success of clinical and regulatory approval for the IPR&D asset is key and directly drives the timing and realization of the estimated future cashflows from product sales and the incurrence of costs and expenses. The drug regulatory approval process is inherently uncertain, lengthy, and difficult. The FDA has substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. In addition, the actual review and approval process time required may vary substantially based upon the type, complexity, and novelty of the product or disease. Any adverse action by the FDA can potentially impact our estimated fair value of the IPR&D intangible asset. In February 2022, the NDA for SPN-830 was accepted for review by the FDA. The FDA assigned a PDUFA target action date of October 7, 2022. We consider the positive results of clinical trials, industry benchmarks, available market data, and recent communications with the FDA regarding SPN-830 in determining the probability of technical and regulatory success input and assumption. The carrying amount of the indefinite-lived intangible asset was $124.0 million as of December 31, 2021.

Intangible assets with definite useful lives are amortized over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When performing our impairment assessment for definite-lived intangible assets, we rely upon cash flow projections attributable to the asset group to determine if the carrying value of the asset group is recoverable, on an undiscounted cash flow basis. If the carrying value of a definite-lived intangible asset is not recoverable, we will recognize impairment in the amount by which the carrying value of the asset exceeds its fair value. Some of the more significant inputs and assumptions in estimating fair value are the same inputs and assumptions described in the business combinations section above for estimating fair value of the acquired intangible assets in a business combination. The carrying amount of the definite-lived intangible assets, net was $660.7 million as of December 31, 2021.

The assumptions and estimates used in evaluating and estimating impairment can be complex and often subjective. These can include a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy or our internal forecasts. Although we believe the assumptions, judgments, and estimates we have used in our assessments are reasonable and appropriate, a material change in any of our assumptions or external factors could lead to impairment charges.

Valuation of Contingent Consideration

We record contingent consideration resulting from a business combination at its fair value on the acquisition date. During the measurement period, if we obtain new information regarding facts and circumstances that existed as of the respective USWM or Adamas Closing Dates that, if known, would have resulted in revised estimates of fair values of acquired assets, assumed liabilities or contingent consideration, the Company will accordingly revise its estimates of fair values and purchase price allocation. In addition, on a quarterly basis, we will revalue the contingent consideration liability and record increases or decreases in their fair value as an adjustment to operating earnings. The determination of the initial and subsequent fair value of the contingent consideration liability requires significant judgment by management. Changes in any of the inputs not related to facts and circumstances existing as of the acquisition date may result in a significant fair value adjustment, which can impact the results of operations in the period in which the adjustment is made.

As of December 31, 2021 and December 31, 2020, the Company reported $80.5 million and $76.7 million, respectively, in its consolidated balance sheets related to the USWM Acquisition and the Adamas Acquisition.

The USWM contingent consideration of $70.2 million and $76.7 million as of December 31, 2021 and December 31, 2020, respectively, is primarily associated with the fair value of the regulatory and developmental contingent consideration payments. The key assumptions considered in estimating the fair value include the estimated probability and timing of milestone achievement, such as the probability and timing of obtaining regulatory approval. The drug regulatory approval process is inherently uncertain, and any adverse action taken by the FDA can potentially impact our estimated fair value of these regulatory and commercial activities milestones. The possible outcomes for the contingent consideration range $0 to $230.0 million on an undiscounted basis.

The remaining $10.3 million of contingent consideration liabilities as of December 31, 2021 is associated with the estimated fair value of contingent consideration related to the Adamas Acquisition. The contingent consideration is related to two non-tradable contingent value rights (CVRs) which represents the contractual right to receive a contingent payment upon the achievement of the applicable sales-based milestones. The estimated fair value of the contingent consideration was determined using the Monte Carlo simulation. The key assumptions considered include the estimated amount and timing of projected cash flows, volatility, estimated discount rates and risk-free interest rate. The possible outcomes for the contingent consideration range from $0 to $50.9 million on an undiscounted basis.

Refer to Note 6, Fair Value of Financial Instruments and Contingent Consideration, for further information.

84

Table of Contents

Income taxes

A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax assets will not be realized. We periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe a portion will not be realized based on all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, results of recent operations, and our historical earnings experience by taxing jurisdiction. Significant judgment is required in determining whether it is probable that sufficient future taxable income will be available against which a deferred tax asset can be utilized. In determining future taxable income, we are required to make assumptions including the amount of taxable income in the various jurisdictions in which we operate. These assumptions require significant judgment about forecasts of future taxable income. Actual operating results in future years could differ from our current assumption of the recoverability of deferred tax assets.

We recorded a valuation allowance of $70.5 million as of December 31, 2021, of which $69.7 million is associated with the Adamas Acquisition. The valuation allowance is primarily related to federal and state net operating losses carryforwards acquired from the Adamas Acquisition that are not expected to be realizable in the future.

Results of Operations

In this section, we discuss the results of our operations for the year ended December 31, 2021, compared to the year ended December 31, 2020. Our Annual Report on Form 10-K for the year ended December 31, 2020, includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2019, in Part II,

Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations.

Revenues

Our primary source of revenue is from the sale of our commercial products. The table below lists our net product sales by product and royalty revenues from our collaborative licensing arrangements (dollars in thousands):

Net Product Sales

Net product sales increased by $58.2 million from $509.4 million in 2020 to $567.5 million in 2021. The increase in net product sales was primarily due to a $51.1 million increase in net product sales of the acquired commercial products from both the USWM Acquisition in June 2020 and Adamas Acquisition in November 2021, as well as a $12.0 million increase in net product sales of Oxtellar XR and $9.9 million net product sales from Qelbree, which was launched in May 2021. Partially offsetting this increase was $14.8 million decrease in net product sales of Trokendi XR.

Trokendi XR net product sales decreased by $14.8 million, from $319.6 million in 2020 to $304.8 million in 2021. This decrease was attributable to a decline in unit demand partially offset by the favorable impact of the price increase taken in January 2021 and favorable improvements in sales deductions. Oxtellar XR net product sales increased by $12.0 million, from $98.7 million in 2020 to $110.7 million in 2021. This increase was primarily attributable to the favorable impact of both unit demand and a price increase in January 2021.

85

Table of Contents

Sales deductions and related accruals

We record accrued product rebates and accrued product returns as current liabilities on our consolidated balance sheets under Accrued product returns and rebates. We record sales discounts as a reduction against Accounts receivable on the consolidated balance sheets. The outstanding amounts are affected by changes in gross sales, the provision for net product sales deductions, and the timing of payments/credits.

The following table provides a summary of activities with respect to accrued product returns and rebates for the years ended December 31, 2021 and 2020 (dollars in thousands):

Accrued product returns and rebates

The accrued product rebates balance increased from $96.6 million as of December 31, 2020 to $97.6 million as of December 31, 2021 primarily due to Adamas liabilities assumed in 2021.

The accrued product returns balance increased from $29.6 million as of December 31, 2020 to $35.1 million as of December 31, 2021 due to timing of related return activity whereby the provision for product return exceeds actual returns by $5.3 million in 2021.

Provision for returns and rebates

The provision for product rebates increased from $350.1 million in 2020 to $371.6 million in 2021. The increase was primarily attributable to greater utilization of our patient co-pay programs primarily with the launch of Qelbree in May 2021, and higher per patient payments under both Medicaid and commercial managed care programs.

The provision for product returns decreased from $23.9 million in 2020 to $12.7 million in 2021. This decrease was primarily due to the unfavorable actual returns experienced in the first quarter of 2020 for discontinued Trokendi XR commercial blister pack configurations, for which all production and distribution ceased in 2017.

The provision for sales discounts increased from $67.9 million in 2020 to $69.4 million in 2021. The increase is due to higher gross sales.

86

Table of Contents

Adjustments related to prior year sales

Adjustments related to prior year sales in 2021 of $1.7 million was less than 1% of both net product sales and total provision, compared to $13.8 million or 3% in 2020. Adjustments related to prior year sales in 2020 was primarily due to the aforementioned unfavorable return experience for discontinued Trokendi XR commercial blister pack configurations.

Royalty Revenue

Royalty revenue includes royalties from the following products (dollars in thousands):

(1) Royalty from net product sales of Mydayis, a product of Takeda Pharmaceuticals Company Ltd.

(2) Noncash royalty revenue pursuant to an agreement with Healthcare Royalty Partners III, L.P. (HC Royalty). HC Royalty receives royalty payments from United Therapeutics Corporation (United Therapeutics), based on net product sales of United Therapeutics' product Orenitram.

(3) Namzaric is currently marketed in the U.S. by Allergan plc under an exclusive license agreement.

Royalty revenue increased by approximately $1.2 million, or 11%, in 2021 compared to 2020, primarily due to increased product sales of Orenitram and royalties from Namzaric associated with the Adamas Acquisition.

Cost of Goods Sold

The following table provides information regarding our cost of goods sold for the years indicated (dollars in thousands):

Cost of goods sold includes the cost of royalties; cost of materials, including active pharmaceutical ingredients (API); and cost to manufacture, including tableting, packaging, personnel, overhead, stability testing, and distribution. Royalty payments associated with both the acquired commercial products, APOKYN and XADAGO, made up the majority of the cost of goods sold.

Cost of good sold increased from $52.5 million in 2020 to $75.1 million in 2021. The increase was primarily due to higher cost recorded in 2021 for the acquired commercial products which is attributable to the timing of the USWM Acquisition that was completed in June 2020 and costs of $7.3 million for rejected MYOBLOC inventory lots in 2021. Refer to Part I, Item 8, Consolidated Financial Statements, Note 15, Commitments and Contingencies in the Notes to the Consolidated Financial Statements for discussion regarding annual minimum purchase quantity requirements of MYOBLOC.

Also included in cost of goods sold in 2021 are de minimis costs for Qelbree inventory sold. We manufacture Qelbree inventory for commercial sale and for use in our samples program. Manufacturing costs related to Qelbree inventory build-up incurred before FDA approval and prior to first quarter of 2020, when the Company began capitalizing pre-launch inventory, were expensed to Research and development expense. The manufactured Qelbree inventory prior to FDA approval consisted of $8.6 million raw materials inventory, which was expensed as research and development expense in 2020. Therefore, cost of goods sold for Qelbree for 2021 does not include raw material cost that was previously expensed. We have sold as commercial inventory or consumed as samples all of the reduced-cost inventory in 2021.

87

Table of Contents

Research and Development Expenses

The following table provides information regarding our research and development (R&D) expenses for the years indicated (dollars in thousands):

R&D expenses increased from $76.0 million in 2020 to $90.5 million in 2021. The increase was primarily due to the $15.0 million write-down of the investment in Navitor LLC in 2021; increased spending on SPN-820, which has advanced to a Phase II clinical program; increased spending on MYOBLOC post-marketing commitment studies; and higher regulatory activities related to the acquired products. These increases are partially offset by reduced spending on SPN-812 (Qelbree) Phase III programs and the $10 million option fee paid in 2020. Refer to Note 5, Investments in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of the write-down of the investment in Navitor LLC in 2021 and the option fee payment in 2020.

Selling, General, and Administrative Expense

The table below provides information regarding our selling, general, and administrative (SG&A) expenses for the years indicated (dollars in thousands):

Selling and Marketing Expense

Selling and marketing expenses increased from $134.8 million in 2020 to $199.7 million in 2021. The increase was primarily attributable to increased marketing expenses and professional consulting spend for the launch of Qelbree and the acquired commercial products from the USWM Acquisition. Further, employee-related expenses also increased due to higher headcount to support the launch of Qelbree and due to non-recurring employee-related acquisition costs of approximately $5.1 million.

The reduced-cost Qelbree samples were also included in selling and marketing expenses in 2021. At full cost, these Qelbree samples would have resulted in $4.3 million higher selling and marketing expenses in 2021. At this time, we have sold as commercial inventory or consumed as samples all of the reduced-cost inventory in 2021.

General and Administrative Expense

General and administrative expenses increased from $65.9 million in 2020 to $105.1 million in 2021. The increase was primarily attributable to increased professional consulting spend and increased headcount to support the integration of MDD and Adamas and higher acquisition-related costs incurred in 2021. Acquisition-related costs incurred in 2021 was $22.3 million, which includes $6.7 million in transaction costs and approximately $8.2 million of employee-related expenses in general and administrative expense. Acquisition -related costs in 2020 was $8.4 million which primarily represents transaction costs.

Amortization of Intangible Assets

The following table provides information regarding the amortization expense for intangible assets during the periods indicated (dollars in thousands):

Amortization of intangible assets increased for the year ended December 31, 2021, primarily due to the timing of the USWM Acquisition, which was completed in June 2020 and the amortization of acquired intangibles from the Adamas Acquisition in November 2021.

88

Table of Contents

Contingent Consideration Expense

The following table provides information regarding the contingent consideration expense during the periods indicated (dollars in thousands):

Contingent consideration gain recorded for the year ended December 31, 2021 of $6.5 million reflects the reduction of the USWM Acquisition sales based contingent consideration liabilities recorded in the second quarter of 2021, offset by an increase in the estimated fair value of regulatory and developmental milestones due to the passage of time. The Company assessed that the sales-based milestones that are part of the USWM Acquisition will not be achieved based on the revised net sales projections.

Other (Expense) Income

The following table provides the components of other (expense) income during the years indicated (dollars in thousands):

Interest income includes primarily interest earned from cash, cash equivalents, and marketable securities holdings. Interest income decreased from $18.7 million 2020 to $10.6 million in 2021. The decrease in interest income was primarily due to lower interest income on marketable securities holdings in 2021 and lower gains generated from sales of our marketable securities in 2021 compared to 2020. Specifically, in 2020, we sold securities at a gain of $4.4 million to finance the up-front cash payment for the USWM Acquisition. In 2021, we sold securities at a gain of $0.3 million to finance the up-front cash payment for the Adamas Acquisition.

Both the interest expense related to the 2023 Notes issued in March 2018 and noncash interest expense related to our nonrecourse royalty liability generally remained unchanged from 2020 to 2021.

Income Tax Expense

The following table provides information regarding our income tax expense during the periods indicated (dollars in thousands):

The decrease in our income tax expense was primarily due to year over year decrease in earnings. The increase in the effective tax rate is primarily due to a larger research and development benefit in 2020 as compared to 2021 partially offset by higher stock option exercise shortfall and forfeiture in 2021.

89

Table of Contents

Net Earnings

The following table provides information regarding our net earnings during the periods indicated (dollars in thousands):

The decrease in net earnings was primarily due to higher costs associated with the Qelbree launch and integration costs related to both the USWM and Adamas acquisitions and higher acquisition-related costs incurred in 2021 . Further, overall costs and expenses were higher in 2021 compared to 2020 due to the timing of the USWM acquisition.

Summary of Cash Flows

The following table summarizes the major sources and uses of cash for the periods set forth below (dollars in thousands):

Operating Activities

Net cash provided by operating activities is comprised of two components: cash provided by operating earnings; and cash provided by (used in) changes in working capital. The net cash provided by operating activities was $127.1 million in 2021 compared to $138.4 million in 2020. The year over year change was primarily driven by decreased operating earnings, offset by an increase in working capital and non-cash items.

Investing Activities

Net cash used in investing activities was $81.9 million in 2021 compared to $34.7 million in 2020. The year over year change of $47.2 million was primarily attributed to the following:

•Cash outflows related to marketable securities activity were higher by $63.6 million in 2021 compared to 2020;

•Cash outflows related to acquisitions were higher by $13.2 million in 2021 compared to 2020;

•Cash inflow from cash distribution received in 2021 of $12.9 million, offset by cash outflow in 2020 of $15.0 million related to investment in Navitor.

Financing Activities

Net cash used in financing activities was $130.4 million in 2021 compared to $3.6 million provided in the same period in 2020. This year over year change is primarily attributable to the repayment of the acquired debt from the Adamas Acquisition partially offset by the increase in proceeds from the issuance of common stock.

Liquidity and Capital Resources

Cash and cash equivalents, marketable securities, and long term marketable securities presented below are as follows (dollars in thousands):

90

Table of Contents

We have financed our operations primarily with cash generated from product sales, supplemented by revenues from royalty and licensing arrangements, as well as proceeds from the sale of equity and debt securities. Continued cash generation is highly dependent on the success of our commercial products, as well as the success of our product candidates if approved by the FDA. While we expect continued profitability in future years, we anticipate there may be significant variability from year to year in the level of our profits particularly due to the commercial launch of Qelbree in May 2021; future commercial launches of Qelbree for the treatment of ADHD in adults and SPN-830 (apomorphine infusion device), in each case, if approved by the FDA; continued market and payor pressures for our commercial products; and the likely unfavorable impact of the upcoming loss of patent exclusivity for Trokendi XR in January 2023, or sooner under certain conditions.

The Company believes its balances of cash, cash equivalents and unrestricted marketable securities, which totaled $458.8 million as of December 31, 2021, along with cash generated from ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements over the next 12 months and beyond.

We may, from time to time, consider raising additional capital through: new collaborative arrangements; strategic alliances; additional equity and/or debt financings; or financing from other sources, especially in conjunction with opportunistic business development initiatives. We will continue to actively manage our capital structure and to consider all financing opportunities that could strengthen our long-term financial profile. Any such capital raises may or may not be similar to transactions in which we have engaged in the past. There can be no assurance that any such financing opportunities will be available on acceptable terms, if at all.

Our material cash requirements include the following contractual and other obligations.

Convertible Notes due 2023

As of December 31, 2021, the outstanding principal on the 0.625% Convertible Senior Notes due 2023 (2023 Notes) was $402.5 million. No 2023 Notes were converted as of December 31, 2021. Contemporaneous with the issuance of the 2023 Notes, the Company also entered into separate convertible note hedge transactions (collectively, the Convertible Note Hedge Transactions), issuing 402,500 convertible note hedge options. The Convertible Note Hedge Transactions are expected to reduce the potential dilution of the Company's common stock upon conversion of the 2023 Notes. Concurrently with entering into the Convertible Note Hedge Transactions, we also entered into separate warrant transactions, issuing a total of 6,783,939 warrants (the Warrant Transactions). Refer to Note 8, Convertible Senior Notes Due 2023 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Leases

Our operating lease commitments include leases of fleet vehicles, leases of certain facilities, including the lease of the current headquarters office and laboratory space. As of December 31, 2021, we have fixed lease payment obligations of $57.3 million, with $7.8 million payable within 12 months. Refer to Note 12, Leases in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Manufacturing Purchase Obligations

In October 2021, we entered into an amendment to the Merz Agreement which increased the price of the annual purchase commitment of MYOBLOC from €3.0 million to approximately €3.9 million. For further discussion on the embedded operating lease related to the Merz Agreement, refer to Note 12, Leases in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

In addition, USWM Enterprises had an existing license and distribution agreement for XADAGO. This included an annual minimum promotional spend to support the marketing of XADAGO until July 2022. As of December 31, 2021, the remaining contractual commitment for XADAGO is $0.3 million for the period from June 2021 to July 2022. Refer to Note 3, Acquisitions, for further discussion on the USWM Acquisition.

Milestone Payment Obligations

The Company has contingent consideration milestones payable related to the Adamas Acquisition. The possible outcomes for the contingent consideration range, on an undiscounted basis, from $0 to $50.9 million. One Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of GOCOVRI in excess of $150 million during any consecutive 12-month period ending on or before December 31, 2024 (Milestone 2024). Another Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of GOCOVRI in excess of $225 million during any consecutive 12-month period

91

Table of Contents

ending on or before December 31, 2025 (Milestone 2025 and, together with Milestone 2024, the Milestones). Each Milestone may only be achieved once.

We also have contingent consideration milestones payable related to the USWM Acquisition. The regulatory and developmental contingent consideration payments include a $25 million milestone due upon the FDA acceptance of the SPN-830 NDA for review. On February 18, 2022, the FDA accepted the SPN-830 NDA for review and we paid the resulting $25 million milestone in the first quarter of 2022. In addition, there are two other regulatory and developmental contingent consideration milestone payments: the first is a $25 million milestone due upon the FDA's regulatory approval and $30 million upon commercial launch of SPN-830. If SPN-830 is approved by the FDA and commercially launched, we expect these milestones to become due and be paid in between 2022 and 2023.

Navitor Development Agreement

We have obligations from the Development Agreement with Navitor we entered into in April 2020. The Company can terminate the Development Agreement upon 30 days notice. Under the terms of the Development Agreement, the Company and Navitor will jointly conduct a Phase II clinical program for NV-5138 (SPN-820) for treatment-resistant depression. The Company will bear all of Phase I and Phase II development costs incurred by either party, up to a maximum of $50 million. In addition, the Company will incur certain other research and development support costs.

Royalty Payments

We obtained exclusive licenses from third parties for proprietary rights to support our commercial products and product candidates. We are obligated to pay royalties to third parties, computed as a percentage of net product sales, for each respective product under a license agreement, beginning upon commercialization. As of December 31, 2021, we have outstanding royalty liabilities of $13.8 million of which the majority was paid in the first quarter of 2022. The amount of future royalty obligations are dependent on future net product sales of each of the respective products under a license agreement.

Other Obligations

We have other obligations in which the timing, likelihood and, in some situations, the amount of such payments are not known, which include the following:

•any milestone payments which may become payable to third parties under license agreements or contractual agreements regarding our clinical trials, or those which may become payable upon achieving sales and developmental milestones per contractual agreements.

•any future royalty payments to third parties.

•liabilities related to uncertain tax positions. Due to uncertainties in the timing of potential tax audits, the timing and the amounts associated with the resolution of these positions is uncertain. As such, we are unable to make a reasonably reliable estimate regarding the timing of payments beyond 12 months.

Off-Balance Sheet Arrangements

We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Recently Issued Accounting Pronouncements

For a discussion of new accounting pronouncements, see Note 2 in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report.

92

Table of Contents