Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

This Quarterly Report on Form 10-Q contains forward‑looking statements relating to future events and our future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Stockholders are cautioned that such statements involve risks and uncertainties, including: We may not be able to successfully market Ampyra, Inbrija or any other products under development; the COVID-19 pandemic, including related restrictions on in-person interactions and travel, and the potential for illness, quarantines, and vaccine mandates ~~to affect~~affecting our management, employees or consultants or those that work for other companies we rely upon, could have a material adverse effect on our business operations or product sales; our ability to attract and retain key management and other personnel, or maintain access to expert advisors; our ability to raise additional funds to finance our operations, repay outstanding indebtedness or satisfy other obligations, and our ability to control our costs or reduce planned ~~expenditures;~~expenditures and take other actions which are necessary for us to continue as a going concern; risks associated with the trading of our common stock, ~~and~~; risks related to the successful implementation of our ~~reverse stock split;~~business plan, including the accuracy of its key assumptions; risks related to our corporate restructurings, including our ability to outsource certain operations, realize expected cost savings and maintain the workforce needed for continued operations; risks associated with complex, regulated manufacturing processes for pharmaceuticals, which could affect whether we have sufficient commercial supply of Inbrija to meet market demand; our reliance on third-party manufacturers for the production of commercial supplies of Ampyra and Inbrija; third-party payers (including governmental agencies) may not reimburse for the use of Inbrija at acceptable rates or at all and may impose restrictive prior authorization requirements that limit or block prescriptions; reliance on collaborators and distributors to commercialize Inbrija and Ampyra outside the U.S.; our ability to satisfy our obligations to distributors and collaboration partners outside the U.S. relating to commercialization and supply of INBRIJA and AMPYRA; competition for Inbrija and Ampyra, including increasing competition and accompanying loss of revenues in the U.S. from generic versions of Ampyra following our loss of patent exclusivity; the ability to realize the benefits anticipated from acquisitions because, among other reasons, ~~because~~ acquired development programs are generally subject to all the risks inherent in the drug development process and our knowledge of the risks specifically relevant to acquired programs generally improves over time; the risk of unfavorable results from future studies of Inbrija or from other research and development programs, or any other acquired or in-licensed programs; the occurrence of adverse safety events with our products; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or ~~class action~~class-action litigation; failure to protect our intellectual property, to defend against the intellectual property claims of others or to obtain ~~third party~~third-party intellectual property licenses needed for the commercialization of our products; and failure to comply with regulatory requirements could result in adverse action by regulatory agencies. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs and assumptions. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make, and investors should not place undue reliance on these statements. In addition to the risks and uncertainties described above, we have included important factors in the cautionary statements included in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, particularly in the “Risk Factors” section (as updated by the disclosures in our subsequent quarterly reports, including this report), that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. Forward-looking statements in this report are made only as of the date hereof, and we ~~do not assume~~disclaim any intent or obligation to ~~publicly~~ update any forward-looking statements as a result of developments occurring after the date of this ~~report.~~report except as may be required by law.

We and our subsidiaries own several registered trademarks in the U.S. and in other countries. These registered trademarks include, in the U.S., the marks “Acorda Therapeutics,” our stylized Acorda Therapeutics logo, “Biotie Therapies,” “Ampyra,” “Inbrija,” and “ARCUS.” Also, our marks “Fampyra” and “Inbrija” are registered marks in the European Community Trademark Office and we have registrations or pending applications for these marks in other jurisdictions. Our trademark portfolio also includes several registered trademarks and pending trademark applications in the U.S. and worldwide for potential product names or for disease awareness activities. Third party trademarks, trade names, and service marks used in this report are the property of their respective owners.

(In thousands, except share data)	September 30, 2021			December 31, 2020
							September 30, 2022			December 31, 2021
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	36,168		$	71,369		$	20,696		$	45,634
Restricted cash		13,353			12,917			13,232			13,400
Trade accounts receivable, net of allowances of $1,245 and $1,266, as of September 30, 2021 and December 31, 2020, respectively		13,587			20,193
Trade accounts receivable, net of allowances of $888 and $1,012, as of September 30, 2022 and December 31, 2021, respectively								14,690			17,002
Prepaid expenses		11,192			14,807			5,111			6,574
Inventory, net		20,595			28,677			15,252			18,548
Assets held for sale		—			71,795
Other current assets		2,174			1,577			2,711			999
Total current assets		97,069			221,335			71,692			102,157
Property and equipment, net of accumulated depreciation		5,016			7,263			2,825			4,382
Intangible assets, net of accumulated amortization		343,731			366,981			312,779			335,980
Right of use asset, net of accumulated amortization		7,861			18,481			5,541			6,751
Restricted cash		12,399			18,609			255			6,189
Other assets		11			11			247			11
Total assets	$	466,087		$	632,680		$	393,339		$	455,470
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,500		$	12,155		$	11,505		$	10,845
Accrued expenses and other current liabilities		34,158			38,167			26,705			28,605
Current portion of loans payable		—			68,631
Current portion of liability related to sale of future royalties		7,452			8,731			—			4,460
Current portion of lease liabilities		9,316			7,944			1,454			8,186
Current portion of acquired contingent consideration		1,845			1,624			2,359			1,929
Total current liabilities		68,271			137,252			42,023			54,025
Convertible senior notes		147,447			137,619			162,760			151,025
Derivative liability		325			1,193			—			37
Non-current portion of acquired contingent consideration		41,155			46,576			35,241			47,671
Non-current portion of lease liabilities		4,287			17,200			4,612			4,086
Non-current portion of loans payable		27,929			28,555			24,929			27,645
Deferred tax liability		11,912			19,116			42,228			13,930
Non-current portion of liability related to sale of future royalties		—			6,526
Other non-current liabilities		286			688			5,780			5,914
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value. Authorized 1,000,000 shares at September 30, 2021 and December 31, 2020; 0 shares issued as of September 30, 2021 and December 31, 2020, respectively		—			—
Common stock, $0.001 par value. Authorized 61,666,666 shares at September 30, 2021 and December 31, 2020; issued 11,193,741 and 9,475,631 shares, including those held in treasury, as of September 30, 2021 and December 31, 2020, respectively		11			9
Treasury stock at cost (5,543 shares at September 30, 2021 and December 31, 2020)		(638	)		(638	)
Preferred stock, $0.001 par value per share. Authorized 1,000,000 shares at September 30, 2022 and December 31, 2021; no shares issued as of September 30, 2022 and December 31, 2021, respectively								—			—
Common stock, $0.001 par value per share. Authorized 61,666,666 shares at September 30, 2022 and December 31, 2021; issued 24,338,195 and 13,249,802 shares, including those held in treasury, as of September 30, 2022 and December 31, 2021, respectively								24			13
Treasury stock at cost (5,543 shares at September 30, 2022 and December 31, 2021)								(638	)		(638	)
Additional paid-in capital		1,016,448			1,007,790			1,029,705			1,023,136
Accumulated deficit		(849,789	)		(766,403	)		(955,415	)		(870,357	)
Accumulated other comprehensive loss		(1,557	)		(2,803	)		2,090			(1,017	)
Total stockholders’ equity		164,475			237,955			75,766			151,137
Total liabilities and stockholders’ equity	$	466,087		$	632,680		$	393,339		$	455,470

(In thousands, except per share data)	Three-month period ended September 30, 2021			Three-month period ended September 30, 2020			Nine-month period ended September 30, 2021			Nine-month period ended September 30, 2020			Three-month period ended September 30, 2022			Three-month period ended September 30, 2021			Nine-month period ended September 30, 2022			Nine-month period ended September 30, 2021
Revenues:
Net product revenues	$	27,851		$	34,687		$	81,297		$	90,153		$	29,964		$	27,851		$	76,023		$	81,297
Milestone revenues		—			15,000			—			15,000
Royalty revenues		3,605			3,403			10,807			9,654		$	3,047		$	3,605		$	10,573		$	10,807
License Revenue													$	500		$	-		$	500		$	-
Total net revenues		31,456			53,090			92,104			114,807			33,511			31,456			87,096			92,104
Costs and expenses:
Cost of sales		13,303			12,170			36,589			22,670			11,005			13,303			25,772			36,589
Research and development		1,931			5,729			9,054			18,689			1,383			1,931			4,602			9,054
Selling, general and administrative		29,623			39,935			95,959			119,700			22,997			29,623			80,002			95,959
Amortization of intangible assets		7,691			7,691			23,073			23,073			7,691			7,691			23,073			23,073
Asset impairment		—			—			—			4,131
Change in fair value of derivative liability		(288	)		(4,864	)		(868	)		(40,320	)		—			(288	)		(37	)		(868	)
Changes in fair value of acquired contingent consideration		2,205			(23,608	)		(4,224	)		(33,455	)		(4,576	)		2,205			(10,709	)		(4,224	)
Total operating expenses		54,465			37,053			159,583			114,488			38,500			54,465			122,703			159,583
Operating loss		(23,009	)		16,037			(67,479	)		319			(4,989	)		(23,009	)		(35,607	)		(67,479	)
Other income (expense), net:
Interest and amortization of debt discount expense		(7,167	)		(7,760	)		(22,697	)		(22,810	)		(7,465	)		(7,167	)		(22,501	)		(22,697	)
Interest income		1			317			4			807			17			1			38			4
Other income (expense)		—			19			1			(16	)		—			—			1,250			1
Gain on disposal of property and equipment		—			200			—			200
Realized loss on foreign currency transactions		(1	)		(1	)		(4	)		(8	)		(1	)		(1	)		(1	)		(4	)
Total other expense, net		(7,167	)		(7,225	)		(22,696	)		(21,827	)		(7,449	)		(7,167	)		(21,214	)		(22,696	)
Income (loss) before taxes		(30,176	)		8,812			(90,175	)		(21,508	)
Benefit from (Provision for) income taxes		3,105			(1,465	)		6,788			4,962
Net income (loss)	$	(27,071	)	$	7,347		$	(83,387	)	$	(16,546	)
Loss before taxes														(12,438	)		(30,176	)		(56,821	)		(90,175	)
(Provision for) benefit from income taxes														(1,416	)		3,105			(28,237	)		6,788
Net loss													$	(13,854	)	$	(27,071	)	$	(85,058	)	$	(83,387	)

Net income (loss) per share—basic	$	(2.43	)	$	0.92		$	(8.17	)	$	(2.08	)
Net income (loss) per share—diluted	$	(2.43	)	$	0.32		$	(8.17	)	$	(2.08	)
Net loss per share—basic													$	(0.57	)	$	(2.43	)	$	(4.69	)	$	(8.17	)
Net loss per share—diluted													$	(0.57	)	$	(2.43	)	$	(4.69	)	$	(8.17	)
Weighted average common shares outstanding used in computing net loss per share—basic		11,131			7,960			10,204			7,960			24,290			11,131			18,148			10,204
Weighted average common shares outstanding used in computing net loss per share—diluted		11,131			27,700			10,204			7,960			24,290			11,131			18,148			10,204

(In thousands)	Three-month period ended September 30, 2021			Three-month period ended September 30, 2020			Nine-month period ended September 30, 2021			Nine-month period ended September 30, 2020			Three-month period ended September 30, 2022			Three-month period ended September 30, 2021			Nine-month period ended September 30, 2022			Nine-month period ended September 30, 2021
Net income (loss)	$	(27,071	)	$	7,347		$	(83,387	)	$	(16,546	)
Net loss													$	(13,854	)	$	(27,071	)	$	(85,058	)	$	(83,387	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		276			(1,018	)		1,246			(1,096	)		1,352			276			3,107			1,246
Unrealized loss on available for sale debt securities		—			(45	)		—			(21	)
Other comprehensive income (loss), net of tax		276			(1,063	)		1,246			(1,117	)		1,352			276			3,107			1,246
Comprehensive income (loss)	$	(26,795	)	$	6,284		$	(82,141	)	$	(17,663	)	$	(12,502	)	$	(26,795	)	$	(81,951	)	$	(82,141	)

	Common stock																		Common stock
(In thousands)	Number of shares		Par value		Treasury stock			Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive (loss) income			Total stockholders equity			Number of shares		Par value		Treasury stock			Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive (loss) income			Total stockholders equity
Balance at December 31, 2020		9,476	$	9	$	(638	)	$	1,007,790	$	(766,403	)	$	(2,803	)	$	237,955
Balance at December 31, 2021																				13,250	$	13	$	(638	)	$	1,023,136		$	(870,357	)	$	(1,017	)	$	151,137
Compensation expense for issuance of stock options to employees		—		—		—			483		—			—			483			—		—		—			181			—			—			181
Compensation expense for issuance of restricted stock to employees		—		—		—			224		—			—			224			35		—		—			304			—			—			304
Other comprehensive income, net of tax		—		—		—			—		—			1,069			1,069			—		—		—			—			—			449			449
Net loss		—		—		—			—		(33,451	)		—			(33,451	)		—		—		—			—			(24,522	)		—			(24,522	)
Balance at March 31, 2021		9,476	$	9	$	(638	)	$	1,008,497		(799,854	)	$	(1,734	)	$	206,279
Balance at March 31, 2022																				13,285	$	13	$	(638	)	$	1,023,621			(894,879	)	$	(568	)	$	127,549
Compensation expense for issuance of stock options to employees																				—		—		—			471			—			—			471
Interest payment for convertible notes																				10,992		11		—			5,252			—			—			5,263
Other comprehensive income, net of tax																				—		—		—			—			—			1,306			1,306
Net loss																				—		—		—			—			(46,682	)		—			(46,682	)
Balance at June 30, 2022																				24,277	$	24	$	(638	)	$	1,029,344		$	(941,561	)	$	738		$	87,907
Compensation expense for issuance of stock options to employees		—		—		—			498		—			—			498			—		—		—			364			—			—			364
Compensation expense for issuance of restricted stock to employees		—		—		—			456		—			—			456			61		—		—			(3	)		—			—			(3	)
Interest payment for convertible notes		1,636		2		—			6,208		—			—			6,210
Other comprehensive loss, net of tax		—		—		—			—		—			(99	)		(99	)
Net loss		—		—		—			—		(22,864	)		—			(22,864	)
Balance at June 30, 2021		11,112	$	11	$	(638	)	$	1,015,659	$	(822,718	)	$	(1,833	)	$	190,481
Compensation expense for issuance of stock options to employees		—		—		—			455		—			—			455
Compensation expense and issuance of restricted stock to employees		82		—		—			334		—			—			334
Other comprehensive (loss) income, net of tax		—		—		—			—		—			276			276			—		—		—			—			—			1,352			1,352
Net income (loss)		—		—		—			—		(27,071	)		—			(27,071	)		—		—		—			—			(13,854	)		—			(13,854	)
Balance at September 30, 2021		11,194	$	11	$	(638	)	$	1,016,448	$	(849,789	)	$	(1,557	)	$	164,475
Balance at September 30, 2022																				24,338	$	24	$	(638	)	$	1,029,705		$	(955,415	)	$	2,090		$	75,766

	Common stock																		Common stock
(In thousands)	Number of shares		Par value		Treasury stock			Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive (loss) income			Total stockholders equity			Number of shares		Par value		Treasury stock			Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive (loss) income			Total stockholders equity
Balance at December 31, 2019		7,964	$	8	$	(638	)	$	979,428	$	(666,809	)	$	(1,169	)	$	310,820
Balance at December 31, 2020																				9,476	$	9	$	(638	)	$	1,007,790	$	(766,403	)	$	(2,803	)	$	237,955
Compensation expense for issuance of stock options to employees		—		—		—			1,976		—			—			1,976			—		—		—			483		—			—			483
Compensation expense for issuance of restricted stock to employees		1		��		—			—		—			—			—			—		—		—			224		—			—			224
Other comprehensive income, net of tax		—		—		—			—		—			350			350			—		—		—			—		—			1,069			1,069
Net loss		—		—		—			—		(6,472	)		—			(6,472	)		—		—		—			—		(33,451	)		—			(33,451	)
Balance at March 31, 2020		7,965	$	8	$	(638	)	$	981,404	$	(673,281	)	$	(819	)	$	306,674
Balance at March 31, 2021																				9,476	$	9	$	(638	)	$	1,008,497	$	(799,854	)	$	(1,734	)	$	206,279
Compensation expense for issuance of stock options to employees		—		—		—			2,056		—			—			2,056			—		—		—			498		—			—			498
Compensation expense for issuance of restricted stock to employees																				—		—		—			456		—			—			456
Interest payment for convertible notes																				1,636		2		—			6,208		—			—			6,210
Other comprehensive loss, net of tax		—		—		—			—		—			(404	)		(404	)		—		—		—			—		—			(99	)		(99	)
Net loss		—		—		—			—		(17,421	)		—			(17,421	)		—		—		—			—		(22,864	)		—			(22,864	)
Balance at June 30, 2020		7,965		8		(638	)		983,460		(690,702	)		(1,223	)		290,905
Balance at June 30, 2021																				11,112		11		(638	)		1,015,659		(822,718	)		(1,833	)		190,481
Compensation expense for issuance of stock options to employees		—		—		—			2,480		—			—			2,480			—		—		—			455		—			—			455
Compensation expense for issuance of restricted stock to employees		—		—		—			—		—			—			—			82		—		—			334		—			—			334
Reclassification of derivative liability to equity, net of tax of $4.4 million		—		—		—			13,862		—			—			13,862
Other comprehensive (loss) income, net of tax		—		—		—			—		—			(1,063	)		(1,063	)		—		—		—			—		—			276			276
Net income (loss)		—		—		—			—		7,347			—			7,347			—		—		—			—		(27,071	)		—			(27,071	)
Balance at September 30, 2020		7,965	$	8	$	(638	)	$	999,802	$	(683,355	)	$	(2,286	)	$	313,531
Balance at September 30, 2021																				11,194	$	11	$	(638	)	$	1,016,448	$	(849,789	)	$	(1,557	)	$	164,475

(In thousands)	Nine-month period ended September 30, 2021			Nine-month period ended September 30, 2020			Nine-month period ended September 30, 2022			Nine-month period ended September 30, 2021
Cash flows from operating activities:
Net loss	$	(83,387	)	$	(16,546	)	$	(85,058	)	$	(83,387	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Share-based compensation expense		2,515			6,512			1,320			2,515
Amortization of net premiums and discounts on investments		—			(28	)
Amortization of debt discount and debt issuance costs		12,672			12,219			12,356			12,672
Depreciation and amortization expense		25,482			30,919			24,770			25,482
Asset impairment		—			4,131
Change in acquired contingent consideration obligation		(4,224	)		(33,455	)		(10,709	)		(4,224	)
Non-cash royalty revenue		(8,889	)		(8,496	)		(4,762	)		(8,889	)
Deferred tax (benefit) provision		(6,788	)		8,801
Deferred tax provision (benefit)								28,300			(6,788	)
Change in derivative liability		(868	)		(40,320	)		(37	)		(868	)
Gain on disposal of property and equipment		—			(200	)
Changes in assets and liabilities:
Decrease in accounts receivable		6,606			8,698			2,312			6,606
Decrease (increase) in prepaid expenses and other current assets		2,629			(16,712	)
Decrease (increase) in inventory		5,813			(4,899	)
Decrease in other assets		—			17
Increase (decrease) in accounts payable, accrued expenses and other current liabilities		4,875			(13,391	)
Increase (decrease) in other non-current liabilities		(1,024	)		296
(Increase) decrease in prepaid expenses and other current assets								(258	)		2,629
Decrease in inventory								3,297			5,813
Increase in other assets								(237	)		—
(Decrease) increase in accounts payable, accrued expenses and other current liabilities								(844	)		4,875
Decrease in other non-current liabilities								(439	)		(1,024	)
Net cash used in operating activities		(44,588	)		(62,454	)		(29,990	)		(44,588	)
Cash flows from investing activities:
Proceeds from sale of Chelsea facility, net								—			73,969
Purchases of property and equipment		(164	)		(4,074	)		(136	)		(164	)
Purchases of intangible assets		(26	)		—			(123	)		(26	)
Proceeds from maturities of investments		—			58,415
Net cash (used in) provided by investing activities		(190	)		54,341			(259	)		73,779
Cash flows from financing activities:
Repayment of Convertible Senior Notes Due 2021		(69,000	)		—			—			(69,000	)
Debt issuance costs		—			(1,071	)
Proceeds from sale of Chelsea facility, net		73,969			—
Repayment of loans payable		(655	)		(597	)		—			(655	)
Net cash provided by (used in) financing activities		4,314			(1,668	)
Net cash used in financing activities								—			(69,655	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(511	)		519			(790	)		(511	)
Net decrease in cash, cash equivalents and restricted cash		(40,975	)		(9,262	)		(31,040	)		(40,975	)
Cash, cash equivalents and restricted cash at beginning of period		102,895			105,192			65,223			102,895
Cash, cash equivalents and restricted cash at end of period	$	61,920		$	95,930		$	34,183		$	61,920
Supplemental disclosure:
Cash paid for interest	$	6		$	6,067		$	947		$	6
Cash paid for taxes		46			250			133			46

Acorda Therapeutics, Inc. (“Acorda” or the “Company”) is a biopharmaceutical company focused on developing therapies that restore function and improve the lives of people with neurological disorders.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information, Accounting Standards Codification (ASC) Topic 270-10 and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments considered necessary for a fair presentation have been included in the interim periods presented and all adjustments are of a normal recurring nature. The Company has evaluated subsequent events through the date of this filing. Operating results for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. When used in these notes, the terms “Acorda” or “the Company” mean Acorda Therapeutics, Inc. The December 31, ~~2020~~2021 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed consolidated financial statements in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K, for the year ended December 31, ~~2020.~~2021.

~~Our~~The Company’s significant accounting policies are detailed in ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Effective January 1, 2021, the Company adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740). ~~Other than~~Effective January 1, 2022, the ~~adoption~~Company adopted ASU 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of ~~the new accounting guidance, our~~Freestanding Equity-Classified Written Call Options”. The Company’s significant accounting policies have not changed materially from December 31, ~~2020.~~2021.

~~On December 31, 2020, we filed an amendment to our Certificate of Incorporation which effected, as of 4:01 p.m. Eastern Time on December 31, 2020, a 1-for-6 reverse stock split~~The Company reclassified the net proceeds from the sale of the ~~shares~~Chelsea facility of ~~our outstanding common stock and proportionate reduction~~$74.0 million for the nine-month period ended September 30, 2021 from financing activities to investing activities in the ~~number~~accompanying Consolidated Statement of authorized shares of our common stock from 370,000,000 to 61,666,666. Our common stock began trading on a split-adjusted basis on The Nasdaq Global Select Market commencing upon market open on January 4, 2021. The common stock continued to trade under the symbol “ACOR” after the reverse stock split became effective. The reverse stock split applied equally to all outstanding shares of the common stock and did not modify the rights or preferences of the common stock. As such, all figures in this report relating to shares of our common stock (such as share amounts, per share amounts, and conversion rates and prices), including in the financial statements and accompanying notes to the financial statements, have been retroactively restated to reflect the 1-for-6 reverse stock split of our common stock.Cash Flows.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the statement of cash flows:

	Nine-month period ended September 30, 2021				Nine-month period ended September 30, 2020				Nine-month period ended September 30, 2022				Nine-month period ended September 30, 2021
(In thousands)	Beginning of period		End of period		Beginning of period		End of period		Beginning of period		End of period		Beginning of period		End of period
Cash and cash equivalents	$	71,369	$	36,168	$	62,085	$	57,910	$	45,634	$	20,696	$	71,369	$	36,168
Restricted cash		12,917		13,353		12,836		13,200		13,400		13,232		12,917		13,353
Restricted cash non-current		18,609		12,399		30,270		24,819		6,189		255		18,609		12,399
Total Cash, cash equivalents and restricted cash per statement of cash flows	$	102,895	$	61,920	$	105,191	$	95,929	$	65,223	$	34,183	$	102,895	$	61,920

Restricted cash represents an escrow account with funds to maintain the interest payments for an amount equal to all remaining scheduled interest payments on the outstanding convertible senior secured notes due 2024 through the interest payment date of June 1, 2023; and a bank account with funds to cover the Company’s self-funded employee health insurance. At September 30, ~~2021,~~2022, the Company also held $0.3 million of restricted cash related to cash collateralized standby letters of credit in connection with obligations under facility ~~leases and $12.1 million related~~leases. See Note 10 to the ~~escrow account~~Company’s Consolidated Financial Statements included in this report for a discussion of interest payments ~~included in restricted cash non-current in~~on the ~~consolidated balance sheet~~outstanding convertible senior secured notes due to ~~the long-term nature of the letters of credit and interest payments. (see Note 10).~~2024.

The following table provides the major classes of ~~inventory were as follows:~~inventory:

(In thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Raw materials	$	969	$	3,434	$	3,333	$	3,338
Work-in-progress		—		6,602
Finished goods		19,626		18,641		11,919		15,210
Total	$	20,595	$	28,677	$	15,252	$	18,548

The Company reviews inventory, including inventory purchase commitments, for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate. On February 10, 2021, wethe Company completed the sale of ~~our~~its Chelsea, Massachusetts manufacturing operations to Catalent Pharma Solutions. In connection with the sale of the manufacturing operations, wethe Company transferred approximately $2.3 million of raw materials to ~~Catalent (see~~Catalent. See Note ~~12).~~12 to the Company’s Consolidated Financial Statements included in this report for a discussion of assets transferred upon the sale. Additionally, in reviewing the inventory for slow moving or obsolete amounts wethe Company recorded a charge of $1.3 million for the remaining work-in-progress inventory that was scrapped or discarded during the nine-month period ended September 30, 2021.

The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiary, Biotie, are translated into United States dollars using the period-end exchange rate; and income and expense items are translated using the average exchange rate during the period; and equity transactions are translated at historical rates. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction gains and losses are charged to operations and ~~gains are recognized~~reported in ~~the period incurred and are reported as~~ other income (expense) ~~income, net~~ in ~~the statement~~consolidated statements of operations.

The Company is managed and operated as 1one business which is focused on developing therapies that restore function and improve the lives of people with neurological disorders. The entire business is managed by a single management team that reports to the Chief Executive ~~Officer, who is the chief operating decision maker.~~Officer. The Company does not operate separate lines of business with respect to any of its products or product candidates and the Company does not prepare discrete financial information ~~with respect~~to allocate resources to separate products or product candidates or by location. Accordingly, the Company views its business as 1one reportable operating segment. Net product revenues reported are substantially derived from the sales of ~~Inbrija~~Ampyra and ~~Ampyra~~Inbrija in the U.S. for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020.~~2021.

The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful lives of its long-lived assets,, including identifiable intangible assets subject to amortization and property plant and equipment, may warrant revision or that the carrying value of the assets may be impaired. The Company evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related assets. Factors the Company considers important that could trigger an impairment review include significant changes in the use of any assets, changes in historical trends in operating performance, changes in projected operating performance, ~~results of clinical trials,~~ stock price,

loss of a major customer and significant negative economic trends. The decline in the trading price of the ~~Company’s~~Company's common stock

during the ~~quarter~~nine-month period ended ~~June~~September 30, ~~2021,~~2022, and related decrease in the ~~Company’s~~Company's market capitalization, was determined to be a triggering event in connection with the ~~Company’s~~Company's review of the recoverability of its long-lived assets for the ~~three-month~~nine-month period ended ~~June~~September 30, ~~2021.~~2022. The Company performed a recoverability test as of ~~June~~September 30, ~~2021~~2022 using the undiscounted cash flows, which are the sum of the future undiscounted cash flows expected to be derived from the direct use of the long-lived assets to the carrying value of the long-lived assets. Estimates of future cash flows were based on the Company’s own assumptions about its own use of the long-lived assets. The cash flow estimation period was based on the long-lived assets’ estimated remaining useful life to the Company. After performing the recoverability test, the Company determined that the undiscounted cash flows exceeded the carrying value and the long-lived assets were not impaired. Changes in these assumptions and resulting valuations ~~or further declines in our stock price~~ could result in future long-lived asset impairment charges. During the nine-month period ended September 30, 2022, no other impairment indicators were noted by the Company. Management will continue to monitor any changes in circumstances for indicators of impairment. Any ~~write-downs~~write‑downs are treated as permanent reductions in the carrying amount of the assets.

The Company’s ability to meet its future operating requirements, repay its liabilities, ~~and~~ meet its other obligations, and continue as a going concern are dependent upon a number of factors, including its ability to generate cash from product sales, reduce ~~planned~~ expenditures, and obtain additional financing. If the Company is unable to generate sufficient cash flow from the sale of its products, itthe Company will be required to adopt one or more alternatives, subject to the restrictions contained in the indenture governing its convertible senior secured notes due 2024, such as further reducing expenses, selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous and which are likely to be highly dilutive. Also, the Company’s ability to raise additional capital and repay or restructure its indebtedness will depend on the capital markets and its financial condition at such time, among other factors. In addition, financing may not be available when needed, at all, on terms acceptable to usthe Company or in accordance with the restrictions described above. As a result of these factors, the Company may not be able to engage in any of the alternative activities, or engage in such activities on desirable terms, which could harm the Company’s business, financial condition and results of operations, as well as result in a default on the Company’s debt obligations. If the Company is unable to take these actions, it may be forced to significantly alter its business strategy, substantially curtail its current operations, or cease operations altogether.

At September 30, ~~2021,~~2022, the Company had ~~$36.2~~$20.7 million of cash and cash equivalents, compared to ~~$71.4~~$45.6 million at December 31, ~~2020.~~2021. The Company’s September 30, ~~2021~~2022 cash and cash equivalents balance does not include $12.4 million of restricted cash that is currently held in escrow under the terms of its convertible senior secured notes due 2024, which may potentially be released from escrow if the Company pays interest on those notes using shares of its common ~~stock.~~stock (the amount released would correspond to the amount of interest paid using shares). The Company incurred a net loss of ~~$83.4~~$85.1 million for the nine-month period ended September 30, ~~2021.~~2022.On October 18, 2022, the Company announced that it will not use common stock to make the approximately $6.2 million interest payment due on December 1, 2022. In addition, in October 2022, the Company received $16.5 million following a final decision of an arbitration panel regarding a dispute over licensing royalties relating to Ampyra.

~~Based on~~The Company assesses and determines its ability to continue as a going concern in accordance with the ~~Company’s cash and cash equivalents at September 30, 2021,~~ ~~and~~provisions of ASC Topic 205-40, “Presentation of Financials Statements—Going Concern” (“ASC Topic 205-40”), which requires the ~~Company’s obligations~~Company to evaluate whether there are conditions or events that ~~are due within the next twelve months, management has concluded that there is no~~raise substantial doubt ~~regarding~~about its ability to continue as a going concern within one year after the date that its annual and interim consolidated financial statements are issued. Certain additional financial statement disclosures are required if such conditions or events are identified. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting. Determining the extent, if any, to which conditions or events raise substantial doubt about the Company’s ability to ~~meet its obligations~~continue as a going concern, or the extent to which mitigating plans sufficiently alleviate any such substantial doubt, as well as whether or not liquidation is imminent, requires significant judgement by management. The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements ~~included~~contained in this report are issued.

consecutive business days during this 180-day period, unless the Staff exercises its discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the Company’s common stock is delisted, holders of the 2024 Notes would have the right to require the Company to repurchase the 2024 Notes for 100% of their principal amount. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, the Company would be unable to pay, which would result in a default under the Indenture. Such a default could, in turn, result in the Company’s bankruptcy or liquidation. On November 11, 2022, the Company held a special meeting of stockholders in order authorize the Company’s Board of Directors to approve the amendment and restatement of the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio of any whole number in the range of 1-for-2 to 1-for-20 within one year following the conclusion of the special meeting. At the special meeting, the Company’s stockholders voted to authorize the Board of Directors to effect a reverse stock split. The Company believes that this approval by stockholders of the reverse stock split proposal, will, if necessary as determined by the Board of Directors, enable the Company to maintain its listing on the Nasdaq Global Select Market, which forms the basis of the Company’s long-term strategic planning.

The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements for at least the next twelve months from the issuance date of these financial statements. However, the Company’s future requirements may change and will depend on numerous factors, some of which may be beyond the Company’s control.

Subsequent events are defined as those events or transactions that occur after the balance sheet date, but before the financial statements are filed with the Securities and Exchange Commission. The Company completed an evaluation of the impact of any subsequent events through the date these financial statements were issued, and determined there were no subsequent events that required disclosure or adjustment in these financial statements. See Note 15 to the Company’s Consolidated Financial Statements included in this report for a discussion of subsequent events.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740 and removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2021. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB is issuing this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2022. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This update simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models which require separate accounting for embedded conversion features. This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. ASU 2020-06 is effective for smaller reporting companies for fiscal periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In ~~May 2021,~~March, 2022, the FASB issued ASU ~~2021-04, Earnings Per Share (Topic 260),~~2022-02, Financial Instruments – Credit Losses: Troubled Debt ~~– Modifications~~Restructurings and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB is issuing this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.Vintage Disclosures. The amendments in this Update eliminate the accounting guidance for Troubled Debt Restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. This update ~~are~~also includes amendments which require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The ASU is effective for ~~all~~ entities that have adopted the amendments in Update 2016-13 for fiscal years beginning after December 15, ~~2021,~~2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In September, 2022, the FASB issued ASU 2022-04, Liabilities – Supplier Finance Programs: Disclosure of Supplier Finance Program Obligations. The amendments in this update address investor and other financial statement user requests for additional information about the use of supplier finance programs (the programs) by the buyer party to understand the effect of those programs on an entity’s working capital, liquidity, and cash flows. The ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The ASU is effective for entities that have fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In accordance with ASC 606, the Company recognizes revenue when the customer obtains control of a promised good or service, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the good or service. ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g., receivable), before the entity transfers a good or service to the customer. We

As of September 30, 2022, the Company had contract liabilities of $6.1 million, as compared to $5.9 million as of December 31, 2021, which is the upfront payment received as part of the Esteve Germany distribution agreement entered into in 2021, and pre-payment of product ordered as part of the Esteve Spain supply agreement entered into in 2021. The Company did not have ~~any contract assets or~~ any contract liabilities as of September 30, ~~2021~~2021. The Company did not have any contract assets as of September 30, 2022 or 2021. The Company entered into distribution and ~~2020.~~supply agreements with Esteve Pharmaceuticals, which launched Inbrija in Germany in June 2022. The Companyrecognized $2.9 million of revenues during the period ended September 30, 2022 from the supply agreement with Esteve Pharmaceuticals.

The following table disaggregates ~~our~~the Company’s revenue by major source. The Company’s Royalty Revenue set forth below relates to Fampyra royalties payable under the Company’s License and Collaboration Agreement with Biogen. See Note 9 for additional information on the Company’s related payment obligation to HealthCare Royalty Partners, or HCRP, in connection with a 2017 royalty purchase agreement with HCRP.

(In thousands)	Three-month period ended September 30, 2021		Three-month period ended September 30, 2020		Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Three-month period ended September 30, 2022		Three-month period ended September 30, 2021		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Revenues:
Net product revenues:
Ampyra	$	20,026	$	27,343	$	62,035	$	73,546	$	21,110	$	20,026	$	54,192	$	62,035
Inbrija		7,804		5,833		19,240		14,901
Inbrija U.S.										7,848		7,804		18,957		19,240
Inbrija ex-U.S.										1,006		—		2,874		—
Other		21		1,511		22		1,706		—		21		—		22
Total net product revenues		27,851		34,687		81,297		90,153		29,964		27,851		76,023		81,297
Milestone revenues		—		15,000		—		15,000
Royalty revenues		3,605		3,403		10,807		9,654
Royalty Revenue										3,047		3,605		10,573		10,807
License Revenue										500		—		500		—
Total net revenues	$	31,456	$	53,090	$	92,104	$	114,807	$	33,511	$	31,456	$	87,096	$	92,104

During the three‑month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recognized share-based compensation expense of ~~$0.9~~$0.4 million and ~~$2.5~~$0.9 million, respectively. During the nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recognized share-based compensation expense of ~~$2.5~~$1.3 and ~~$6.5~~$2.5 million, respectively. Activity in options and restricted stock during the nine-month period ended September 30, ~~2021~~2022 and related balances outstanding as of that date are reflected below. The weighted average fair value per share of options granted to employees for the three-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 were approximately ~~$2.56~~$0.31 and ~~$2.31,~~$2.56, respectively. The weighted average fair value per share of options granted to employees for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 were approximately ~~$2.58~~$0.84 and ~~$3.96,~~$2.58, respectively.

The following table summarizes share-based compensation expense included within the Company’s consolidated statements of operations:

	For the three-month period ended September 30,				For the nine-month period ended September 30,				For the three-month period ended September 30,					For the nine-month period ended September 30,
(In thousands)	2021		2020		2021		2020		2022			2021		2022		2021
Research and development expense	$	225	$	555	$	599	$	1,418	$	14		$	225	$	66	$	599
Selling, general and administrative expense		627		1,832		1,898		4,834		351			627		1,254		1,898
Cost of Sales		2		93		18		260		(1	)		2		0		18
Total	$	854	$	2,480	$	2,515	$	6,512	$	364		$	854	$	1,320	$	2,515

A summary of share-based compensation activity for the nine-month period ended September 30, ~~2021~~2022 is presented below:

Number of
Shares
(In thousands)

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Intrinsic
Value
(In thousands)

Balance at January 1, 2021

1,331

$
127.13

Granted

61

3.78

Cancelled

(309
)

109.27

Exercised

—

—

Balance at September 30, 2021

1,083

$
125.27

4.2

$
43

Vested and expected to vest at
September 30, 2021

1,082

$
125.33

4.2

$
42

Vested and exercisable at
September 30, 2021

1,001

$
133.65

3.9

$
13

	Number of Shares (In thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Intrinsic Value (In thousands)
Balance at January 1, 2022		1,186		$	94.38
Granted		97			1.19
Cancelled		(230	)		128.93
Exercised		—			—
Balance at September 30, 2022		1,053		$	78.24		6.0	$	—
Vested and expected to vest at September 30, 2022		1,053		$	78.24		6.0	$	—
Vested and exercisable at September 30, 2022		713		$	113.62		4.5	$	—

Unrecognized compensation cost for unvested stock options, restricted stock awards, and restricted stock units as of September 30, ~~2021~~2022 totaled ~~$2.6~~$0.8 million and is expected to be recognized over a weighted average period of approximately ~~0.9~~2.7 years.

During the ~~three and~~ nine‑month periods ended September 30, ~~2021,~~2022, the Company did 0tnot make any repurchases of shares.

The following table sets forth the computation of basic and diluted loss per share for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020:~~2021:

(In thousands, except per share data)

Three-month period ended September 30, 2021

Three-month period ended September 30, 2020

Nine-month period ended September 30, 2021

Nine-month period ended September 30, 2020

Basic and diluted

Net income (loss)—basic

$
(27,071
)

$
7,347

$
(83,387
)

$
(16,546
)
Plus: Dilutive effect of convertible notes, net of tax

1,476

—

—

Net income (loss)—diluted

$
(27,071
)

$
8,823

$
(83,387
)

$
(16,546
)

Weighted average common shares outstanding used in
   computing net loss per share—basic

11,131

7,960

10,204

7,960

Plus: net effect of dilutive stock options and restricted
   common shares

—

19,740

—

—

Weighted average common shares outstanding used in
   computing net loss per share—diluted

11,131

27,700

10,204

7,960

Net income (loss) per share—basic

$
(2.43
)

$
0.92

$
(8.17
)

$
(2.08
)
Net income (loss) per share—diluted

$
(2.43
)

$
0.32

$
(8.17
)

$
(2.08
)

(In thousands, except per share data)	Three-month period ended September 30, 2022			Three-month period ended September 30, 2021			Nine-month period ended September 30, 2022			Nine-month period ended September 30, 2021
Basic and diluted
Net loss—basic	$	(13,854	)	$	(27,071	)	$	(85,058	)	$	(83,387	)
Net income (loss)—diluted	$	(13,854	)	$	(27,071	)	$	(85,058	)	$	(83,387	)

Weighted average common shares outstanding used in computing net loss per share—basic		24,290			11,131			18,148			10,204
Plus: net effect of dilutive stock options and restricted common shares		—			—			—			—
Weighted average common shares outstanding used in computing net loss per share—diluted		24,290			11,131			18,148			10,204
Net loss per share—basic	$	(0.57	)	$	(2.43	)	$	(4.69	)	$	(8.17	)
Net loss per share—diluted	$	(0.57	)	$	(2.43	)	$	(4.69	)	$	(8.17	)

Securities that could potentially be dilutive are excluded from the computation of diluted loss per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company’s common stock during the period, because their inclusion would result in an anti-dilutive effect on per share amounts.

The following amounts were not included in the calculation of net loss per diluted share because their effects were anti-dilutive:

(In thousands)	Three-month period ended September 30, 2021		Three-month period ended September 30, 2020		Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Three-month period ended September 30, 2022		Three-month period ended September 30, 2021		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Denominator
Stock options and restricted common shares		1,370		1,465		1,368		1,423		1,134		1,370		1,089		1,368

Performance share units are excluded from the calculation of net loss per diluted share as the performance criteria has not been met for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020. The~~2021. Additionally, the impact of the convertible senior notes was determined to be anti-dilutive and excluded from the calculation of net loss per diluted share for the ~~three~~three- and ~~nine-~~

~~month~~nine-month periods ended September 30, ~~2021. Additionally, for the three~~2022 and ~~nine month periods ended September 30, 2020, the impact of our outstanding convertible notes was determined to be dilutive and anti-dilutive, respectively.~~ 2021.

The Company’s effective income tax rate differs from the U.S. statutory rate primarily due to an increase in the valuation allowance and expense recorded on the equity forfeiture.

For the three-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded a ~~benefit~~provision of ~~$3.1~~$1.4 million and a ~~provision~~benefit of ~~$(1.5)~~$3.1 million for income taxes, respectively. The effective income tax rates for the Company for the three-month periods ended September 30, 2022 and 2021 were (11.3)% and ~~2020 were~~ 10.2% ~~and 16.6%~~, respectively. The variances in the effective tax rates for the three-month period ended September 30, ~~2021~~2022, as compared to the three-month period ended September 30, ~~2020~~2021, was primarily due ~~primarily~~ to an increase in the existing valuation allowance recorded on the Company’s deferred tax assets for which no tax benefit can be recognized, ~~and~~which increase includes the ~~benefit recorded on the net operating loss carryback under the CARES Act recorded at 21%~~valuation allowance due to ~~recover taxes paid at the previous statutory rate of 35%.~~a deemed ownership change described below.

For the nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded a ~~benefit~~provision from income taxes of ~~$6.8~~$28.2 million and a benefit of ~~$5.0~~$6.8 million, ~~for income taxes,~~ respectively. The effective income tax rates for the ~~Company for the~~ nine-month periods ended September 30, 2022 and 2021 were (49.69)% and ~~2020 were~~ 7.53% ~~and 23.1%~~, respectively. The variance in the effective tax rates for the nine-month period ended September 30, ~~2021~~2022 as compared to the nine-month period ended September 30, ~~2020~~2021 was due primarily to forfeitures of equity of which no tax deduction is recorded and an increase in the existing valuation allowance recorded on the Company’s deferred tax assets for which no tax benefit can be recognized, ~~forfeitures~~which increase includes the valuation allowance due to a deemed ownership change described below.

The Internal Revenue Code of ~~equity based awards and the benefit recorded on the~~1986 contains certain provisions that can limit a taxpayer's ability to utilize net operating loss ~~carryback~~and tax credit carryforwards in any given year resulting from cumulative changes in ownership interests in excess of 50 percent over a three-year period (“ownership change”). In the event of such a deemed ownership change, Section 382 imposes an annual limitation on pre-ownership change tax attributes. In the nine-month period ended September 30, 2022, the Company experienced an ownership change under Section 382 due to cumulative changes in the ~~CARES Act~~Company’s ownership over three years. Accordingly, the Company's ability to utilize NOL’s and tax credit carryforwards attributable to periods prior to the deemed ownership change is subject to the annual limitation. As a result of the impact of this limitation, the Company recorded ~~at 21%~~a cumulative tax provision of approximately $25.0 million, which is reflected in the increase to ~~recover taxes paid at~~ the ~~previous statutory rate of 35%.~~valuation allowance on deferred tax assets in the nine-month period ended September 30, 2022, with respect to the Section 382 impact.

The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any changes to the valuation allowance or deferred tax assets and liabilities in the future would impact the Company's income taxes.

The Company was notified during the first quarter of 2021 that it is being audited by the state of Massachusetts for the tax years 2018 and 2019. There have been no proposed adjustments at this stage of the examination.

~~The Company also~~ has an ongoing state ~~examination~~examinations in Massachusetts and New Jersey which ~~for the tax periods, 2015 – 2018.~~cover multiple years. There have been no proposed adjustments at this stage of the examination. The Minnesota ~~examinations for 2016 and 2017 were closed~~examination was finalized during the second quarter of 2022 for years 2018 and 2019 with no ~~changes.~~adjustments.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, exchange rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability. The Company’s Level 1 assets consist of investments in a Treasury money market fund and U.S. government securities. The Company’s level 2 assets consist of investments in corporate bonds and commercial paper which are categorized as short-term investments for investments with original maturities between three months and one year. The Company’s Level 3 liabilities represent acquired contingent consideration related to the acquisition of Civitas which are valued using a probability weighted discounted cash flow valuation approach and derivative liabilities related to conversion options for the convertible senior notes due December

2024 which are valued using a binomial model. For assets and liabilities not accounted for at fair value, the carrying values of these accounts approximates their fair values at September 30, ~~2021,~~2022, except for the fair value of the Company’s convertible senior notes due December 2024, which was approximately ~~$167.7~~$157.3 million as of September 30, ~~2021.~~2022. The Company estimates the fair value of its notes utilizing market quotations for the debt (Level 2).

(In thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
September 30, 2021
September 30, 2022
Assets Carried at Fair Value:
Money market funds	$	12,192	$	—	$	—	$	2,216	$	—	$	—
Corporate bonds		—		—		—
Liabilities Carried at Fair Value:
Acquired contingent consideration		—		—		43,000		—		—		37,600
Derivative liability - conversion option		—		—		325		—		—		—
December 31, 2020
December 31, 2021
Assets Carried at Fair Value:
Money market funds	$	36,693	$	—	$	—	$	12,192	$	—	$	—
Commercial paper		—		—		—
Corporate bonds		—		—		—
Liabilities Carried at Fair Value:
Acquired contingent consideration		—		—		48,200		—		—		49,600
Derivative liability - conversion option		—		—		1,193		—		—		37

The following table presents additional information about liabilities measured at fair value on a recurring basis and for which the Company utilizes Level 3 inputs to determine fair value.

The Company estimates the fair value of its acquired contingent consideration using a probability weighted discounted cash flow valuation approach based on estimated future sales expected from Inbrija (levodopa inhalation powder), an FDA approved drug for the treatment of OFF periods in Parkinson’s disease. Using this approach, expected ~~probability adjusted~~ future cash flows are calculated over the expected life of the agreement and discounted to estimate the current value of the liability at the period end date. Some of the more significant assumptions made in the valuation include (i) the estimated revenue forecast for Inbrija, and (ii) ~~probabilities of success, and (iii)~~ discount ~~periods~~period and rate. The milestone payments ranged from ~~$1.0~~$0 million to ~~$22.0~~$18.1 million for Inbrija. The discount rate used in the valuation was 23% for the three- and nine-month periods ended September 30, 2022, as compared to 20.5% for the ~~three~~three- and nine-month periods ended September 30, 2021. The valuation is performed quarterly and changes in the fair value of the contingent consideration are included in the statement of operations. For the ~~three and~~ nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, changes in the fair value of the acquired contingent consideration were primarily due to ~~updates to certain~~change in projected revenue and ~~expense forecast assumptions.~~the recalculation of cash flows for the passage of time.

The acquired contingent consideration is classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the various inputs to the valuation approach, including but not limited to, assumptions involving sales estimates for Inbrija and estimated discount rates, the estimated fair value could be significantly higher or lower than the fair value determined.

The following table represents a reconciliation of the derivative liability recorded in connection with the issuance of the convertible senior secured notes due 2024:

(In thousands)	Three-month period ended September 30, 2021			Three-month period ended September 30, 2020			Nine-month period ended September 30, 2021			Nine-month period ended September 30, 2020			Three-month period ended September 30, 2022		Three-month period ended September 30, 2021			Nine-month period ended September 30, 2022			Nine-month period ended September 30, 2021
Derivative Liability-Conversion Option
Balance, beginning of period	$	613		$	23,953		$	1,193		$	59,409		$	—	$	613		$	37		$	1,193
Fair value adjustment		(288	)		(4,864	)		(868	)		(40,320	)		—		(288	)		(37	)		(868	)
Fair value re-classification to shareholder's equity		—			(18,257	)		—			(18,257	)
Balance, end of period	$	325		$	832		$	325		$	832		$	—	$	325		$	—		$	325

During 2019, a derivative liability was initially recorded as a result of the issuance of the 6.00% Convertible Senior Secured Notes due 2024 ~~(see~~(See Note ~~10)~~10 to the Consolidated Financial Statements included in this report for more information on the Convertible Senior Notes due 2024). The fair value measurement of the derivative liability is classified as Level 3 under the fair value hierarchy as it has been valued using certain unobservable inputs. These inputs include: (1) share price as of the valuation date, (2) assumed timing of conversion of the Notes, (3) historical volatility of the share price, and (4) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement. The fair value of the derivative liability was determined using a binomial model that calculates the fair value of the Notes with the conversion feature as compared to the fair value of the Notes without the conversion feature, with the difference representing the value of the conversion feature, or the derivative liability. There are several embedded features within the Notes which, upon issuance, did not meet the conditions for equity classification. As a result, these features were aggregated together and recorded as a derivative liability conversion option. The derivative liability conversion feature is measured at fair value on a quarterly basis and changes in the fair value will be recorded in the consolidated statement of operations. The Company received stockholder approval on August 28, 2020 to increase the number of authorized shares of the Company’s common stock from 13,333,333 shares to 61,666,666 shares. As a result of the share approval, the Company determined that multiple embedded conversion options met the conditions for equity classification. The Company performed a valuation of these conversion options as of September 17, 2020, which was the date the Company completed certain securities registration obligations. The resulting fair value of these conversion options was calculated to be $18.3 million which was reclassified to equity and presented in the statement of stockholder’s equity as of September 30, 2020 net of the $4.4 million tax impact. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The Company performed a valuation of the derivative liability related to certain embedded conversion features that are precluded from equity classification. The fair value of these conversion features was calculated to be ~~$0.3 million~~negligible as of September 30, ~~2021.~~2022. Key inputs used in the calculation of the fair value include stock price, volatility, risky (bond) rate, and the last observed bond price during the nine-month period ended September 30, ~~2021.~~2022.

There were 0no available-for-sale investments at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Short-term investments with maturities of three months or less from date of purchase have been classified as cash equivalents, and amounted to approximately ~~$12.2~~$2.2 million and ~~$36.7~~$12.2 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were 0no short-term investments ~~will~~with original maturities of greater than 3 months but less than 1 year as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Additionally, there were no short-term investments in an unrealized loss position as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Long-term investments have original maturities of greater than 1 year. There were 0no investments classified as long-term at September 30, ~~2021~~2022 or December 31, ~~2020.~~2021. The Company has determined that there were no other-than-temporary declines in the fair values of its investments as of September 30, ~~2021~~2022 as the Company does not ~~intend to sell its~~have any short or long-term investments ~~and it is not more likely than not that the Company will be required to sell its investments prior to the recovery~~as of ~~its amortized cost basis.~~

Unrealized holding gains and losses, which relate to debt instruments, are reported within accumulated other comprehensive income (AOCI) in the statements of comprehensive income. There were no changes in AOCI associated with unrealized holding gains or losses on available-for-sale investments during the nine-month period ended September 30, ~~2021.~~ 2022.

~~As of~~On October 1, 2017, the Company completed a royalty purchase agreement with HealthCare Royalty Partners, or HCRP ~~(“Royalty~~(the “Royalty Agreement”). In exchange for the payment of $40 million to the Company, HCRP obtained the right to receive Fampyra royalties payable by Biogen under the ~~License and~~Biogen Collaboration Agreement ~~between the Company and Biogen,~~ up to an agreed upon threshold of royalties. ~~When this~~This threshold iswas met ~~if ever,~~during the ~~Fampyra royalty revenue will revert back~~second quarter of 2022 and our obligations to HCRP expired upon Biogen’s payment of royalties for that quarter.

Since the Company ~~and the Company will continue to receive the Fampyra royalty revenue from Biogen until the revenue stream ends (see Note 3). The transaction does not include potential future milestones to be paid.~~

~~The Company~~ maintained ~~the~~ rights under the ~~license and collaboration agreement with~~ Biogen Collaboration Agreement, therefore, the Royalty Agreement has been accounted for as a liability that will be amortized using the effective interest method over the life of the arrangement, in accordance with the relevant accounting guidance. The Company recorded the receipt of the $40 million payment from HCRP and established a corresponding liability in the amount of $40 million, net of transaction costs of approximately $2.2 million. The net liability is classified between the current and non-current portion of liability related to the sale of future royalties in the consolidated balance sheets based on the recognition of the interest and principal payments to be received by HCRP in the ~~next~~ 12 months ~~from~~following the financial statement reporting date. The total net royalties to be paid, less the net proceeds received, ~~will be~~is recorded to interest expense using the effective interest method over the life of the Royalty Agreement. The Company ~~will estimate~~estimates the payments to be made to HCRP over the term of the Royalty Agreement based on forecasted royalties and ~~will calculate~~calculates the interest rate required to discount such payments back to the liability balance. Over the course of the Royalty Agreement, the actual interest rate will be affected by the amount and timing of net royalty revenue recognized and changes in forecasted revenue. On a quarterly basis, the Company ~~will~~ reassess the effective interest rate and adjust the rate prospectively as necessary.

The Company has a liability related to the sale of future royalties of $0 and $7.5 million for the periods ending September 30, 2022 and 2021, respectively.

The following table shows the activity within the liability account for the nine-month period ended September 30, ~~2021~~2022 and ~~December 31, 2020,~~2021, respectively:

(In thousands)	September 30, 2021			December 31, 2020			September 30, 2022			September 30, 2021
Liability related to sale of future royalties - beginning balance	$	15,257		$	24,401		$	4,460		$	15,257
Deferred transaction costs amortized		193			401			33			193
Non-cash royalty revenue payable to HCRP		(8,889	)		(11,486	)		(4,739	)		(8,889	)
Non-cash interest expense recognized		891			1,941			246			891
Liability related to sale of future royalties - ending balance	$	7,452		$	15,257		$	—		$	7,452

On December 24, 2019, the Company completed the private exchange of $276.0 million aggregate principal amount of ~~then-outstanding~~its outstanding 1.75% Convertible Senior Notes due 2021 (the “2021 Notes”) for a combination of ~~newly-issued~~newly issued 6.00% Convertible Senior Secured Notes due 2024 (the “2024 Notes”) and cash. For each $1,000 principal amount of exchanged 2021 Notes, the Company issued $750 principal amount of the 2024 Notes and made a cash payment of $200 (the “Exchange”). In the aggregate, the Company issued approximately $207.0 million aggregate principal amount of the 2024 Notes and paid approximate $55.2 million in cash to participating holders. The Exchange was conducted with a limited number of institutional holders of the 2021 Notes pursuant to Exchange Agreements dated as of December 20, ~~2019 (each, an “Exchange Agreement”).~~2019. The 2021 Notes received by the Company in the Exchange were cancelled in accordance with their terms. Accordingly, upon completion of the Exchange, $69.0 million of the 2021 Notes remained outstanding. On June 15, 2021, the Company repaid the outstanding balance of the 2021 Notes at their maturity date using cash on hand.

The 2024 Notes were issued pursuant to an Indenture, dated as of December 23, 2019, among the Company, its wholly owned subsidiary, Civitas Therapeutics, Inc. (along with any domestic subsidiaries acquired or formed after the date of issuance, the “Guarantors”), and Wilmington Trust, National Association, as trustee and collateral agent (the “2024 Indenture”). The 2024 Notes are senior obligations of the Company and the Guarantors, secured by a first priority security interest in substantially all of the assets of the Company and the Guarantors, subject to certain exceptions described in the Security Agreement, dated as of December 23, 2019, between the grantors party thereto and Wilmington Trust, National Association, as collateral ~~agent (the “Security Agreement”).~~agent.

The 2024 Notes will mature on December 1, 2024 unless earlier converted in accordance with their terms prior to such date. Interest on the 2024 Notes is payable semi-annually in arrears at a rate of 6.00% per annum on each June 1 and December 1, beginning on June 1, 2020. ~~The~~Under the 2024 Indenture, the Company may elect to pay interest in cash or shares of the Company’s common stock, subject to the satisfaction of certain conditions. If the Company elects to pay interest in shares of common stock, such common stock will have a per share value equal to 95% of the daily volume-weighted average price for the 10 trading days ending on and including the trading day immediately preceding the relevant interest payment date. ~~In June 2021,~~Based on the ~~Company issued 1,635,833~~current market price of the Company’s common stock and the Company’s remaining authorized shares of common stock ~~in satisfaction of~~that are not reserved for other purposes, the Company believes that for the foreseeable future interest ~~payable to holders of~~payments on the 2024 ~~Notes on June 1, 2021. In connection with this stock-based interest payment approximately $6.2 million of accrued interest was released from restricted cash and became available~~notes will have to ~~the Company for other purposes.~~be made in cash.

The 2024 Notes are convertible at the option of the holder into shares of common stock of the Company at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. The adjusted conversion rate for the 2024 Notes is 47.6190 shares of the Company’s common stock per $1,000 principal amount of 2024 Notes, representing an adjusted conversion price of approximately $21.00 per share of common stock. The conversion rate was adjusted to reflect the 1-for-6 reverse stock split effected on December 31, 2020 and is subject to additional adjustments in certain circumstances as described in the 2024 Indenture.

The Company may elect to settle conversions of the 2024 Notes in cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock. Holders who convert their 2024 Notes prior to June 1, 2023 (other than in connection with a make-whole fundamental change) will also be entitled to an interest make-whole payment equal to the sum of all regularly scheduled stated interest payments, if any, due on such 2024 Notes on each interest payment date occurring after the conversion date for such conversion and on or before June 1, 2023. In addition, the Company will have the right to cause all 2024 Notes then outstanding to be converted automatically if the volume-weighted average price per share of the Company’s common stock equals or exceeds 130% of the adjusted conversion price for a specified period of time and certain other conditions are satisfied.

Holders of the 2024 Notes will have the right, at their option, to require the Company to purchase their 2024 Notes if a fundamental change (as defined in the 2024 Indenture) occurs, such as a delisting of the Company’s common stock from the Nasdaq Global Select Market, in each case, at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. If a make-whole fundamental change occurs, as described in the 2024 Indenture, and a holder elects to convert its 2024 Notes in connection with such make-whole fundamental change, such holder may be entitled to an increase in the adjusted conversion rate as described in the 2024 Indenture.

Subject to a number of exceptions and qualifications, the 2024 Indenture restricts the ability of the Company and certain of its subsidiaries to, among other things, (i) pay dividends or make other payments or distributions on their capital stock, or purchase, redeem, defease or otherwise acquire or retire for value any capital stock, (ii) make certain investments, (iii) incur indebtedness or issue preferred stock, other than certain forms of permitted debt, which includes, among other

items, indebtedness incurred to refinance the 2021 Notes, (iv) create liens on their assets, (v) sell their assets, (vi) enter into certain transactions with affiliates or (vii) merge, consolidate or sell of all or substantially all of their assets. The 2024 Indenture also requires the Company to make an offer to repurchase the 2024 Notes upon the occurrence of certain asset sales.

The 2024 Indenture provides that a number of events will constitute an event of default, including, among other things, (i) a failure to pay interest for 30 days, (ii) failure to pay the 2024 Notes when due at maturity, upon any required repurchase, upon declaration of acceleration or otherwise, (iii) failure to convert the 2024 Notes in accordance with the 2024 Indenture and the failure continues for five business days, (iv) not issuing certain notices required by the 2024 Indenture within a timely manner, (v) failure to comply with the other covenants or agreements in the 2024 Indenture for 60 days following the receipt of a notice of non-compliance, (vi) a default or other failure by the Company to make required payments under other indebtedness of the Company or certain subsidiaries having an outstanding principal amount of $30.0 million or more, (vii) failure by the Company or certain subsidiaries to pay final judgments aggregating in excess of $30.0 million, (viii) certain events of bankruptcy or insolvency and (ix) the commercial launch in the United States of a product determined by the U.S. FDA to be bioequivalent to Inbrija. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, all outstanding 2024 Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 2024 Notes may declare all the notes to be due and payable immediately.

The ~~2021 Notes received by the Company in the Exchange were cancelled in accordance with their terms. Accordingly, upon completion of the Exchange, $69.0 million of the 2021 Notes remained outstanding.~~

~~The~~ Company determined that the exchange of the 2021 Notes for 2024 Notes qualified for a debt extinguishment and recognized a gain on extinguishment of $55.1 million for the year ended December 31, 2019, representing the difference between the fair value of the liability component immediately before the exchange and the carrying value of the debt. The Company recorded an adjustment of $38.4 million to additional paid-in capital to adjust the equity component of 2021 Notes in connection with the extinguishment.

The Company assessed all terms and features of the 2024 Notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the 2024 Notes, including the conversion, put and call features. The Company concluded the conversion features required bifurcation as a derivative. The fair value of the conversion ~~feature~~features derivative was determined based on the difference between the fair value of the 2024 Notes with the conversion options and the fair value of the 2024 Notes without the conversion options using a binomial model. The Company determined that the fair value of the derivative upon issuance of the 2024 Notes was $59.4 million and recorded this amount as a derivative liability with an offsetting amount as a debt discount as a reduction to the carrying value of the 2024 Notes on the closing date, or December 24, 2019. There are several embedded features within the 2024 Notes which, upon issuance, did not meet the conditions for equity classification. As a result, these features were aggregated together and recorded as the derivative liability conversion option. The conversion feature is measured at fair value on a quarterly basis and the changes in the fair value of the conversion feature for the period will be recognized in the consolidated statements of operations.

The Company received stockholder approval on August 28, 2020 to increase the number of authorized shares of the Company’s common stock from 13,333,333 shares to 61,666,666 shares. As a result of the share approval, the Company determined that multiple embedded conversion options met the conditions for equity classification. The Company performed a valuation of these conversion options as of September 17, 2020, which was the date the Company completed certain securities registration ~~obligations.~~obligations for the shares underlying the 2024 Notes. The resulting fair value of these conversion options was $18.3 million, which was reclassified to equity and presented in the statement of stockholder’s equity as of September 30, 2020, net of the $4.4 million tax impact. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The Company performed a valuation of the derivative liability related to certain embedded conversion features that are precluded from equity classification. The fair value of these conversion features was calculated to be ~~$0.3 million representing a decrease~~ negligible as of ~~$0.9 million that is recognized in the consolidated statement of operations for the nine-month period ended~~ September 30, ~~2021.~~2022.

The outstanding 2024 Note balances as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:

(In thousands)	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Liability component:
Principal		207,000		$	207,000			207,000		$	207,000
Less: debt discount and debt issuance costs, net		(59,553	)		(69,381	)		(44,240	)		(55,975	)
Net carrying amount	$	147,447		$	137,619		$	162,760		$	151,025
Equity component	$	18,257		$	18,257		$	18,257		$	18,257
Derivative liability-conversion option	$	325		$	1,193		$	—		$	37

The Company determined that the expected life of the 2024 Notes was equal to the period through December 1, 2024 as this represents the point at which the 2024 Notes will mature unless earlier converted in accordance with their terms prior to such date. Accordingly, the total debt discount of $75.1 million, inclusive of the fair value of the embedded conversion feature derivative at issuance, is being amortized using the effective interest method through December 1, 2024. For the ~~three~~three- and nine-month periods ended September 30, 2022, ~~2021,~~ the Company recognized ~~$6.5~~$7.2 million and ~~$19.1~~$21.1 million, respectively, of interest expense related to the 2024 Notes at the effective interest rate of ~~18.1%~~18.13%. The fair value of the Company’s 2024 Notes was approximately ~~$167.7~~$157.3 million as of September 30, ~~2021.~~2022.

In connection with the issuance of the 2024 Notes, the Company incurred approximately $5.7 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs to the liability component and recorded as a reduction in the carrying amount of the debt liability on the balance sheet. The portion allocated to the 2024 Notes is amortized to interest expense over the expected life of the 2024 Notes using the effective interest method.

The following table sets forth total interest expense recognized related to the 2024 Notes for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020:~~2021:

(In thousands)	Three-month period ended September 30, 2021		Three-month period ended September 30, 2020		Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Three-month period ended September 30, 2022		Three-month period ended September 30, 2021		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Contractual interest expense	$	3,105	$	3,105	$	9,315	$	9,315	$	3,105	$	3,105	$	9,315	$	9,315
Amortization of debt issuance costs		243		204		698		585		291		243		834		698
Amortization of debt discount		3,179		2,663		9,130		7,647		3,797		3,179		10,902		9,130
Total interest expense	$	6,527	$	5,972	$	19,143	$	17,547	$	7,193	$	6,527	$	21,051	$	19,143

On June 17, 2014, the Company issued $345 million aggregate principal amount of 1.75% Convertible Senior Notes due 2021 (the “2021 Notes”). On December 24, 2019, the Company completed the private exchange of $276.0 million aggregate principal amount of its then-outstanding 2021 Notes for a combination of ~~newly-issued~~newly issued 6.00% Convertible Senior Secured Notes due 2024 (the “2024 Notes”) and cash. The 2021 Notes received by the Company in the exchange were cancelled in accordance with their terms. Accordingly, upon completion of the exchange, $69.0 million of the 2021 Notes remained outstanding. On June 15, 2021, the Company repaid the outstanding balance of the 2021 Notes at their maturity date using cash on hand.

In accounting for the issuance of the 2021 Notes, the Company separated the 2021 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2021 Notes as a whole. The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

~~The outstanding 2021 Note balances as of~~ ~~September 30, 2021 and December 31, 2020 consisted of the following:~~

In connection with the issuance of the 2021 Notes, the Company incurred approximately $7.5 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $7.5 million of debt issuance costs, $1.3 million were allocated to the equity component and recorded as a reduction to additional paid-in capital and $6.2 million were allocated to the liability component and recorded as a reduction in the carrying amount of the debt liability on the balance

sheet. The portion allocated to the liability component is amortized to interest expense over the expected life of the 2021 Notes using the effective interest method. The Company wrote off $1.2 million of issuance cost associated with the exchange of the 2021 Notes.

~~On June 15, 2021, the Company repaid the outstanding balance of the 2021 Notes at their maturity date using cash on hand.~~ ~~The effective interest rate on the liability component was approximately 4.8% for the period from the date of issuance through~~ ~~June 15, 2021.~~

The following table sets forth total interest expense recognized related to the 2021 Notes for the ~~three~~three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020:~~2021:

(In thousands)	Three-month period ended September 30, 2021		Three-month period ended September 30, 2020		Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Three-month period ended September 30, 2022		Three-month period ended September 30, 2021		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Contractual interest expense	$	—	$	302	$	428	$	906	$	—	$	—	$	—	$	428
Amortization of debt issuance costs		—		50		95		150		—		—		—		95
Amortization of debt discount		—		495		934		1,467		—		—		—		934
Total interest expense	$	—	$	847	$	1,457	$	2,523	$	—	$	—	$	—	$	1,457

Our Biotie subsidiary received fourteen non-convertible capital loans granted by Business Finland (formerly Tekes) for research and development of specific drug candidates, with an aggregate adjusted acquisition-date fair value of $20.5 million (€18.2 million) and an aggregate carrying value of $24.9 million as of September 30, 2022. The loans are to be repaid only when the consolidated retained earnings of Biotie from the development of specific loan-funded product candidates is sufficient to fully repay the loans. In light of the status of the loan-funded product candidates, we filed an application with Business Finland for waiver of the loans and accrued interest. In July 2022, Business Finland granted these waivers, which will become effective upon Biotie’s compliance with specified conditions to be completed, including a residual payment of approximately $50,000 for one of the loans. As of September 30, 2022, Biotie had approximately $14.5 million in cash.

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. ~~Our~~The Company’s leases have remaining lease terms of ~~0.75 year~~4.25 years to ~~5.25~~5.75 years. The Company has exercised the option to terminate the Ardsley lease with a termination date of June 22, 2022.

~~We lease~~The Company leases certain office space, manufacturing and ~~lab~~warehouse space under arrangements classified as leases under ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; ~~we recognize~~the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

~~In June 2011, the~~The Company ~~entered into~~was previously headquartered at a ~~15-year lease for an aggregate of~~leased facility in Ardsley, New York with approximately ~~138,000~~160,000 square feet of ~~office and laboratory space in Ardsley, New York.~~ space. In ~~2014, the Company exercised its option to expand into an additional 25,405 square feet of office space, which the Company occupied in January 2015.~~ On September ~~17,~~ 2021, the Company sent the landlord ~~of the Ardsley lease~~ notice of exercise of ~~the Company’s~~its early termination option ~~(the “Early Termination Option~~”) under the ~~lease. Pursuant to the Early Termination Option, the~~ lease, ~~will terminate~~which was effective on June 22, ~~2022 (the “Early Termination Date”), subject to~~2022. In connection with the ~~conditions that (a) on the last business day before the Early Termination Date,~~lease termination, the Company ~~pays~~paid an early termination fee of approximately $4.7 ~~million, (b) on~~million. Concurrent with the ~~day immediately prior to the Early Termination Date,~~Ardsley lease termination, in June 2022, the Company ~~is not~~relocated its corporate headquarters to a substantially smaller subleased office in ~~“Default” under~~Pearl River, New York, described below.

In June 2022, the ~~Lease beyond applicable cure periods, and (c) as~~Company entered into a 6-year sublease for an aggregate of approximately 21,000 square feet of space in Pearl River, New York. The Company has no options to extend the term of the ~~Early Termination Date, the Company has complied with its end-of-term obligations.~~

sublease. The ~~Ardsley lease~~Pearl River sublease provides for monthly payments of rent during the lease term. These payments consist of base rent, which takes into account the costs of the facility improvements funded by the facility owner prior to the Company’s occupancy, and additional rent covering customary items such as charges for utilities, taxes, operating expenses, and other facility fees and charges. The base rent is currently ~~$5.0~~$0 through December 31, 2022, with payments commencing on January 1, 2023 with a base rent of $0.3 million per year, ~~which reflects~~subject to an annual ~~2.5%~~2.0% escalation ~~factor.~~factor in each subsequent year thereafter.

~~Our~~The Company’s Civitas subsidiary leased a manufacturing facility in Chelsea, Massachusetts which weit used to manufactureInbrija through February 10, 2021. ~~Civitas leased this facility from North River Everett Ave, LLC pursuant to a lease with a term that expires on December 31, 2025, and Civitas had 2 additional extension options of five years each.~~On February 10, 2021, the Company completed the sale of its Chelsea manufacturing operations to Catalent Pharma ~~Solutions. In connection with the sale, Civitas~~Solutions and assigned the lease of the Chelsea facility to a Catalent ~~affiliate (see Note 12).~~affiliate.

In 2018, the Company initiated a renovation and expansion of a building within the Chelsea manufacturing facility that increased the size of the facility to approximately 95,000 square feet. The project added a new size 7 spray dryer manufacturing production line for Inbrija and other ARCUS products that has greater capacity than the existing size 4 spray dryer manufacturing production line, and created additional warehousing space for manufactured product. All costs to renovate and expand the facility through the date of assignment to Catalent were borne by the Company. Since the February 10, 2021 sale of the manufacturing operations, Catalent ~~is now~~has been responsible for finalizing the expansion, including obtaining needed regulatory approvals. However, given the potential importance of the expansion to the Company’s business, in December 2021 the Company agreed to fund $1.5 million of Catalent’s costs to complete the size 7 spray dryer expansion, which will be payable by the Company in four quarterly installments after the later of January 1, 2024 or FDA qualification and approval for use of the size 7 spray dryer.

In October 2016, wethe Company entered into a 10-year lease agreement with a term commencing January 1, 2017, for approximately 26,000 square feet of lab and office space in Waltham, MA. The lease provides for monthly rental payments over the lease term. The base rent under the lease is currently ~~$1.1~~$1.2 million per year.

~~Our~~The Company’s leases have remaining lease terms of ~~0.75 year~~4.25 years to ~~5.25~~5.75 years, which reflects the exercise of the early termination of ~~our~~the Company’s Ardsley, NY lease ~~as described above. The calculation of the lease liability reflects the exercise of the Ardsley early termination option~~ as described above. The weighted-average remaining lease term for ~~our~~the Company’s operating leases was ~~2.6~~4.6 years at September 30, ~~2021.~~2022. The weighted-average discount rate was ~~7.13%~~7.89% at September 30, ~~2021.~~2022.

ROU assets and lease liabilities related to ~~our~~the Company’s operating leases are as follows:

~~We have~~The Company has lease agreements that contain both lease and non-lease components. ~~We account~~The Company accounts for lease components together with non-lease components (e.g., common-area maintenance). The components of lease costs were as follows:

(In thousands)	Three-month period ended September 30, 2021		Three-month period ended September 30, 2020		Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Three-month period ended September 30, 2022		Three-month period ended September 30, 2021		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Operating lease cost	$	1,600	$	1,775	$	4,593	$	5,572	$	431	$	1,600	$	3,390	$	4,593
Variable lease cost		948		1,052		3,283		2,687		132		948		1,960		3,283
Short-term lease cost		339		443		829		1,248		1		339		7		829
Total lease cost	$	2,887	$	3,270	$	8,705	$	9,507	$	564	$	2,887	$	5,357	$	8,705

Future minimum commitments under all non-cancelable operating leases are as follows:

(In thousands)
2021 (excluding the nine months ended September 30, 2021)	$	1,553
2022		8,354
2022 (excluding the three months ended September 30, 2022)				$	295
2023		1,216			1,546
2024		1,252			1,588
2025		1,290			1,633
2026					1,678
Later years		1,327			539
Total lease payments		14,992			7,279
Less: Imputed interest		(1,389	)		(1,213	)
Present value of lease liabilities	$	13,603		$	6,066

Supplemental cash flow information related to ~~our~~the Company’s operating leases are as follows:

(In thousands)	Nine-month period ended September 30, 2021		Nine-month period ended September 30, 2020		Nine-month period ended September 30, 2022		Nine-month period ended September 30, 2021
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	4,605	$	5,818	$	295	$	4,605

On January 12, 2021 the Company and Catalent entered into an asset purchase agreement, pursuant to which the Company agreed to sell to Catalent certain assets related to the Company’s manufacturing ~~operations~~activities located at the facilities situated in Chelsea, Massachusetts (the “Chelsea Facility”) and Waltham, Massachusetts (the “Waltham Facility”), for a purchase price of $80 million, plus an additional $2.3 million for raw materials transferred, and the assumption by Catalent of certain liabilities relating to such manufacturing activities. The Company closed the transaction on February 10, 2021. The Company determined that the criterion to classify ~~the property and equipment and prepaid expenses related to~~ the Chelsea manufacturing operations as assets held for sale within the Company’s consolidated balance sheet effective December 31, 2020 were met. Accordingly, the assets were classified as current assets held for sale at December 31, 2020 as the Company, at that time, expected to divest the Chelsea manufacturing operations within the next twelve months.

The classification to assets held for sale impacted the net book value of the assets expected to be transferred upon sale. The estimated fair value of the Chelsea manufacturing operations was determined using the purchase price in the purchase agreement along with estimated broker, accounting, legal, and other selling expenses, which resulted in a fair value less costs to sell of approximately $71.8 million. The carrying value of the assets classified as held for sale was approximately $129.7 million, which included property and equipment of $129.6 million and prepaid expenses of $0.1 million. ~~The~~As a result, the Company recorded a loss on assets held for sale of $57.9 million against the Chelsea manufacturing ~~operations as~~operations. Upon completion of ~~December 31, 2020.~~the divestiture, final net proceeds were $74.0 million. Additionally, the expected divestiture of the Chelsea ~~Facility group~~manufacturing operations was not deemed to represent a fundamental strategic shift that would have a major effect on the Company’s operations, and accordingly, the operating results of the Chelsea manufacturing operations were not reported as discontinued operations in the Company’s consolidated statement of income as of December 31, 2020.

The Company closed the transaction on February 10, 2021. In addition to the property and equipment, prepaid expenses, and raw materials, the Company also assigned the lease of the Chelsea Facility to a Catalent affiliate, which had a net carrying value of $(0.5) million as of the close date. During the three-month period ended March 31, 2021, the Company recorded a gain on disposal of approximately $0.5 million based on the net assets transferred and final net proceeds received at the close.

In January 2021 and September 2021, wethe Company announced corporate restructurings to reduce costs, more closely align operating expenses with expected revenue, and focus ~~our~~its resources on Inbrija. As part of the January 2021 restructuring, wethe Company reduced headcount by approximately 16% through a reduction in force (excluding the employees that transferred to Catalent at the closing of the sale of ~~our~~the Company’s Chelsea manufacturing operations). All of the reduction in personnel in connection with the January 2021 restructuring took place during the three-month period ended March 31, 2021.

As part of the September 2021 restructuring, wethe Company reduced headcount by approximately 15% through a reduction in force. Most of this reduction in force took place in September 2021, and ~~it will be~~was materially completed as of March 31, 2022, with negligible expenses incurred in the ~~first~~second quarter of 2022.

During the nine-month period ended September 30, ~~2021,~~2022, the Company incurred ~~$4.6~~$0.3 million of restructuring charges, substantially all of which were cash expenditures for severance and other employee separation-related costs. OfAll of the restructuring charges ~~$0.6 million were recorded in research and development expenses and $4.0 million~~ were recorded in selling, general and administrative expenses for the nine-month period ended September 30, ~~2021.~~2022.

A summary of the restructuring charges for the nine-month period ended September 30, ~~2021~~2022 is as follows:

(In thousands)	Restructuring Costs			Restructuring Costs
Restructuring Liability as of December 31, 2020	$	—
Restructuring Liability as of December 31, 2021				$	1,851
Q1 Restructuring Costs		2,124			226
Q1 Restructuring Payments		(1,891	)		(1,700	)
Restructuring Liability as of March 31, 2021	$	233
Restructuring Liability as of March 31, 2022				$	377
Q2 Restructuring Costs		27			25
Q2 Restructuring Payments		(128	)		(145	)
Restructuring Liability as of June 30, 2021	$	132
Restructuring Liability as of June 30, 2022				$	257
Q3 Restructuring Costs		2,432			—
Q3 Restructuring Payments		(882	)		(257	)
Restructuring Liability as of September 30, 2021	$	1,682
Restructuring Liability as of September 30, 2022				$	(0	)

On November 9, 2020, Drug Royalty III, L.P., and LSRC III S.ar.l. (collectively, “DRI”) filed an arbitration claim against usthe Company with the American Arbitration Association under a September 26, 2003 License Agreement that weit originally entered into with Rush-Presbyterian St. Luke’s Medical Center (“Rush”). DRI previously purchased license royalty rights under the license agreement from Rush. DRI ~~alleges~~alleged a dispute over the last-to-expire patent covering sales of the drug Ampyra under the license agreement, and ~~is claiming~~claimed damages based on unpaid license royalties of $6 million plus interest. ~~We believe we have~~ On June 28, 2022, the Company settled DRI’s claim in exchange for a payment by the Company to DRI of $750,000 expressly without any admission of wrongdoing. Although the Company believed it had valid defenses ~~against~~to this claim, ~~and intend to defend ourselves vigorously. While~~it also believed that the settlement was in the best interests of the Company ~~is unable~~and its stockholders to ~~determine~~avoid the ~~ultimate outcome of~~future expense and distraction associated with continuing the dispute, and believes it has valid defenses and intends to defend itself vigorously, the Company determined that it is probable that the Company may incur a liability related to the dispute which the Company estimated could be $2 million, inclusive of its legal costs.arbitration. The Company recorded a liability of $2 million for the year ended December 31, 2020 in accrued expense and other current liabilities related to the ~~dispute, however, the Company notes that depending upon the ultimate outcome~~dispute. As a result of the ~~dispute,~~settlement, during the ~~potential liability could be more or less than the amount recorded. As of~~quarter ended September 30, ~~2021, the Company continues to believe that the recorded liability established as of December 31, 2020 is appropriate.~~

~~In addition~~2022, this accrual was reduced to the ~~arbitration described above, from~~$750,000 settlement amount and a corresponding gain of $1.3 million was recorded in the consolidated statement of operations as other income.

From time to time the Company is involved in litigation or other legal proceedings relating to claims arising out of operations in the normal course of business. The Company has assessed all litigation and legal proceedings and does not believe that it is probable that a liability has been incurred or that the amount of any potential liability or range of losses can be reasonably estimated. As a result, the Company did not record any loss contingencies for these other matters. Litigation expenses are expensed as incurred.

On February 10, 2021, wethe Company sold ~~our~~its Chelsea manufacturing operations to Catalent Pharma Solutions. In connection with the sale, wethe Company entered into a long-term, global manufacturing services (supply) agreement with a Catalent affiliate pursuant to which they have agreed to manufacture Inbrija for usthe Company at the Chelsea facility. The manufacturing services agreement provides that Catalent will manufacture Inbrija, ~~(levodopa inhalation powder),~~ to ~~our~~the Company’s specifications, and wethe Company will purchase Inbrija exclusively from Catalent during the term of the manufacturing services agreement; provided that such exclusivity requirement will not apply to Inbrija intended for sale in China. Under ~~our~~the Company’s agreement with Catalent, ~~we are~~it is obligated to make minimum inventory purchase commitments for Inbrija through the expiration of the agreement on December 31, 2030.

During the ~~three and nine-month periods~~quarter ended September 30, ~~2021,~~2022, the Company incurred approximately ~~$4.0~~$7.7 million ~~and $10.2 million, respectively,~~ of ~~minimum~~ purchase commitments with Catalent, of which $3.9 million are recognized as inventory within the Company’s balance sheet and $3.8 million are recognized as cost of sales within the Company’s consolidated statement of operations for the period. As of September 30, ~~2021,~~2022, the minimum remaining purchase commitment to Catalent was ~~$4.0~~$4.5 million through December 31, ~~2021,~~2022, and $18.0 million annually each year thereafter.

On October 16, 2022, the Company issued a press release announcing that a three-judge arbitration panel has issued a final decision in a dispute regarding licensing royalties relating to AMPYRA. The Company was awarded $15 million plus prejudgment interest of $1.5 million from Alkermes. In addition, as a result of the panel’s ruling, the Company will be permitted to cease paying Alkermes a double-digit percentage of net sales for the license and supply of AMPYRA, and the Company is now free to use alternative sources for supply of AMPYRA, which the Company has already secured. On October 21, 2022, we made a submission to the arbitration panel to correct the award to include an additional $1.6 million that was inadvertently omitted from the initial award calculation, which amount Alkermes does not dispute. We are awaiting the arbitration tribunal’s decision on this corrected award amount and the amount of pre-judgment interest to be applied to this corrected award amount.

On June 22, 2022, the Company received notice that it is no longer in compliance with Nasdaq’s continued listing requirements because the trading price of its common stock had fallen below $1.00 for a period of more than 30 consecutive business days. The Company has 180 days, or until December 19, 2022, in order to regain compliance with this requirement in order to avoid potential delisting of its common stock, which would have significant adverse consequences both for the liquidity of the Company’s common stock and under the Indenture governing the 2024 Notes. To regain compliance with the Minimum Bid Requirement, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during this 180-day period, unless the Staff exercises its discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the Company’s common stock is delisted, holders of the 2024 Notes would have the right to require the Company to repurchase the 2024 Notes for 100% of their principal amount. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, the Company would be unable to pay, which would result in a default under the Indenture. Such a default could, in turn, result in the Company’s bankruptcy or liquidation. On November 11, 2022, the Company held a special meeting of stockholders in order authorize the Company’s Board of Directors to approve the amendment and restatement of the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio of any whole number in the range of 1-for-2 to 1-for-20 within one year following the conclusion of the special meeting. At the special meeting, the Company’s stockholders voted to authorize the Board of Directors to effect a reverse stock split. The Company believes that this approval by stockholders of the reverse stock split proposal, will, if necessary as determined by the Board of Directors, enable the Company to maintain its listing on the Nasdaq Global Select Market, which forms the basis of the Company’s long-term strategic planning.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

We are a biopharmaceutical company focused on developing therapies that restore function and improve the lives of people with neurological disorders. We market Inbrija (levodopa inhalation powder), which is approved in the U.S. for intermittent treatment of OFF episodes, also known as OFF periods, in people with Parkinson’s disease treated with carbidopa/levodopa. Inbrija is for as needed use and utilizes our ARCUS pulmonary delivery system, a technology platform designed to deliver medication through inhalation that we believe has potential to be used in the development of a variety of inhaled medicines. We also market branded Ampyra (dalfampridine) Extended Release Tablets, 10 ~~mg.~~mg in the U.S. as treatment to improve walking in patients with multiple sclerosis, or MS.

Inbrija is the first and only inhaled levodopa, or L-dopa, for intermittent treatment of OFF episodes, also known as OFF periods, in people with Parkinson’s disease treated with carbidopa/levodopa regimen. Approximately one million people in the U.S. and 1.2 million Europeans are diagnosed with Parkinson’s; it is estimated that approximately 40% of people with Parkinson’s in the U.S. experience OFF periods. U.S. Food and Drug Administration (FDA) approval of Inbrija is for a single dose of 84 mg (administered as two capsules), which may be taken up to five times per day. Currently, Inbrija is available in the U.S. without the need for a medical exception for approximately 92% of commercially insured lives and approximately 18% of Medicare plan lives. U.S. net revenue for Inbrija was $7.8 million for the quarter ended September 30, 2022 and $7.8 million for the quarter ended September 30, 2021.

Inbrija is also approved for use in the European Union (EU). The European Commission (EC)-approved Inbrija dose is 66 mg (administered as two capsules) up to five times per day (per EU convention, this reflects emitted dose and is equivalent to the 84 mg labelled dose in the U.S.). Under the EU approval, Inbrija is indicated for the intermittent treatment of episodic motor fluctuations (OFF episodes) in adult patients with Parkinson’s disease treated with a levodopa/dopa-decarboxylase inhibitor. We have entered into agreements to commercialize Inbrija in Spain, Germany, and Latin America, and we are in discussions with potential partners for commercialization of Inbrija in other jurisdictions outside of the U.S. Net revenues for ex-U.S. Inbrija sales in Germany were $1.0 million for the quarter ended September 30, 2022.

Inbrija utilizes our ARCUS platform for inhaled therapeutics. Because of our limited financial resources, we previously suspended work on ARCUS and other proprietary research and development programs. However, we are discussing potential collaborations with other companies that have expressed interest in formulating their novel molecules for pulmonary delivery using ARCUS, and we have already performed feasibility studies for a number of these opportunities.

Ampyra is an extended-release tablet formulation of dalfampridine approved by the FDA as a treatment to improve walking in patients with multiple sclerosis, or MS. Ampyra became subject to competition from generic versions of Ampyra starting in late 2018 as a result of an adverse U.S. federal district court ruling that invalidated certain Ampyra Orange Book-listed patents. We have experienced a significant decline in Ampyra sales due to competition from several generic versions of Ampyra. Additional manufacturers may market generic versions of Ampyra, and we expect our Ampyra sales will continue to decline over time. U.S. net revenue for Ampyra was $21.1 million for the quarter ended September 30, 2022 and $20.0 million for the quarter ended September 30, 2021.

Ampyra is marketed as Fampyra outside the U.S. by Biogen International GmbH, or Biogen, under a license and collaboration agreement that we entered into in June 2009. Fampyra has been approved in a number of countries across Europe, Asia and the Americas. Our Fampyra patents have been challenged in Germany and could be similarly challenged in other countries where Fampyra is marketed by Biogen, and these challenges could lead to generic competition with Fampyra. For example, we understand that a generic drug manufacturer that has sought to invalidate Fampyra patents in Germany through nullity proceedings has commenced a generic launch in Germany. Refer to Legal Proceedings in Part II, Item 1 of this report for more information.

In February 2021, in connection with the sale of our former Chelsea, Massachusetts manufacturing operations, we entered into a long-term, global manufacturing services agreement with Catalent for the supply of Inbrija. The Catalent manufacturing services agreement provides that Catalent will manufacture Inbrija, to our specifications, and we will purchase Inbrija exclusively from Catalent during the term of the manufacturing services agreement; provided that such exclusivity requirement will not apply to Inbrija intended for sale in China.

Under the manufacturing services agreement, we agreed to purchase from Catalent at least $16 million of Inbrija in 2021 (pro-rated for a partial year) and $18 million of Inbrija each year from 2022 through 2030, subject to reduction in certain cases. In December 2021, we and Catalent amended the manufacturing services agreement to adjust the structure of the minimum payment terms for the period from July 1, 2021 through June 30, 2022 (the “Adjustment Period”). Under the amendment, the minimum payment obligation for the Adjustment Period was replaced with payments toCatalent for actual product delivered during the Adjustment Period subject to a cap for the Adjustment Period that corresponded to our original minimum inventory purchase obligation for that period (i.e., $17 million), and with certain payments being made in the first half of 2022 instead of during the second half of 2021. As a result of the amendment, our payments to Catalent for product delivered during the Adjustment Period were approximately $9.0 million less than the $17 million minimum inventory purchase obligation for that period. During the quarter ended September 30, 2022, the Company incurred approximately $7.7 million of purchase commitments with Catalent, of which $3.9 million are recognized as inventory within the Company’s balance sheet and $3.8 million are recognized as cost of sales within the Company’s consolidated statement of operations for the period. As of September 30, 2022, the minimum remaining purchase commitment to Catalent was $4.5 million through December 31, 2022, and $18.0 million annually each year thereafter.

Additionally, pursuant to the amendment, we agreed that we would reimburse a portion of Catalent’s costs in completing the installation and qualification of a larger size 7 spray dryer at the Chelsea manufacturing facility, which we believe will be beneficial to our future production needs, in the amount of $1.5 million. This amount will be paid quarterly over a one-year period commencing no sooner than January 1, 2024.

As of September 30, 2022, we had cash, cash equivalents, and restricted cash of approximately $34.2 million. Restricted cash includes $12.4 million in escrow related to the 6% semi-annual interest portion of our convertible senior secured notes due 2024, which interest is payable in cash or stock. If we elect to pay interest due in stock, a corresponding amount of the restricted cash will be released from escrow. The issuance of shares to pay interest on the 2024 notes is based on a formula set forth in the 2024 notes indenture. Based on the current market price of our common stock and our remaining authorized shares of common stock that are not reserved for other purposes, we believe that for the foreseeable future interest payments on the 2024 notes will have to be made in cash. In addition, on October 18, 2022, we announced that we will not use its common stock to make the approximately $6.2 million interest payment due on December 1, 2022.

Our business and financial condition have been impacted by, and are subject to risks resulting from, the COVID-19 global pandemic. The COVID-19 global pandemic has caused significant disruptions in the healthcare industry, including disruptions to the delivery of patient healthcare; for example, the pandemic has made it more difficult for some patients to visit with their physician and obtain pharmaceutical prescriptions. We also believe that the governmental and other restrictions and requirements related to the pandemic may have caused certain patients to lessen their mobility and therefore their need for certain therapeutics. We believe these factors contributed to volatility in new Inbrija prescriptions since the start of the pandemic in 2020 and have continued to impact prescriptions in 2022.

COVID-related policies, restrictions, and concerns may disrupt our operations and those of our customers and suppliers. Also, our operations could be interrupted if we or our customers or suppliers lose the services of key employees or consultants who become ill from COVID-19. These types of disruptions could potentially affect any of our critical business functions, and thus harm our business, including for example our sales and marketing operations, as well as compliance and certain general and administrative functions. The ultimate impact of the COVID-19 global pandemic, or any other health epidemic, is highly uncertain and subject to change.These factors could have a material adverse effect on our business, operating results and financial condition.

Inbrija is the first and only inhaled levodopa, or L-dopa, for intermittent treatment of OFF episodes, also known as OFF periods, in people with Parkinson’s disease treated with carbidopa/levodopa regimen. Our New Drug Application, or NDA, for Inbrija was approved by the U.S. Food and Drug Administration, or FDA, onin December ~~21,~~ 2018. The approval is for a single dose of 84 mg (administered as two capsules), which may be taken up to five times per day. Inbrija became commercially available in the U.S. onin February ~~28,~~ 2019. Currently, Inbrija is available in the U.S. without the need for a medical exception for approximately ~~96%~~92% of ~~commercial health insurance plans~~commercially insured lives and approximately ~~27%~~18% of Medicare plan lives. ~~Approximately one million people in the~~ U.S. ~~and 1.2 million Europeans are diagnosed with Parkinson’s; it is estimated that approximately 40% of people with Parkinson’s in the U.S. experience OFF periods. Net~~net revenue for Inbrija was $7.8 million for the quarter ended September 30, ~~2021~~2022 and ~~$5.8~~$7.8 million for the quarter ended September 30, ~~2020.~~ Due to uncertainties caused by past and potential future impacts of the COVID-19 pandemic and other factors, we are no longer able to provide projected peak U.S. annual net revenue of Inbrija. Actual peak U.S. Inbrija net revenue will likely be lower and could be materially lower than our prior projected peak sales range if, for example, disruptions to the healthcare system caused by the COVID-19 pandemic or other prescribing challenges continue into 2022 and beyond.2021.

In September 2019, ~~we announced that~~ the European Commission, or EC, approved our Marketing Authorization Application, or MAA, for Inbrija. The approved dose is 66 mg (administered as two capsules) up to five times per day (per European Union, or EU, convention, this reflects emitted dose and is equivalent to the 84 mg labelled dose in the U.S.). Under the MAA, Inbrija is indicated in the EU for the intermittent treatment of episodic motor fluctuations (OFF episodes) in adult patients with Parkinson’s disease treated with a levodopa/dopa-decarboxylase inhibitor. Following the ratification of the Withdrawal Agreement between the United Kingdom and the EU, the UK left the EU on January 31, 2020. Effective January 1, 2021, Acorda was granted a grandfathered Marketing Authorization (MA) by the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK subject to completion of an administrative process that was approved by the MHRA in November 2021.

In July and November 2021, we announced that we entered into distribution and supply agreements with Esteve Pharmaceuticals to commercialize Inbrija in Spain and Germany, respectively. Under the terms of the Germany distribution agreement, we will receive a ~~€5 million upfront payment, and we will receive additional sales-based milestones.~~ Under the terms of both the Spain and Germany supply agreements, we will receive a significant double-digit percent of the selling price of Inbrija in exchange for supply of the product. Esteve will have the exclusive distribution rights to Inbrija in Spain and Germany and we will supply the product to Esteve for sale. Esteve expects to launch Inbrija in Spain in the fourth quarter of 2022, and in Germany by mid-2022. We are in discussions with potential partners for commercialization of Inbrija in other jurisdictions outside of the U.S., including in Europe and other countries.

Ampyra became subject to competition from generic versions of Ampyra starting in late 2018 as a result of an adverse U.S. federal district court ruling that invalidated certain Ampyra Orange Book-listed patents. We have experienced a significant decline in Ampyra sales due to competition from several generic versions of Ampyra. Additional manufacturers may market generic versions of Ampyra, and we expect our Ampyra sales will continue to decline over time. ~~Net revenue for Ampyra was $20.0 million for the quarter ended September 30, 2021 and $27.3 million for the quarter ended September 30, 2020.~~

~~In December 2019, we announced the successful completion of a private exchange of $276 million of our convertible~~ senior notes due in 2021 in exchange for a combination of approximately $207 million aggregate principal amount of newly-issued convertible senior secured notes due 2024 and $55.2 million in cash. The convertible senior secured notes due 2024 have an adjusted conversion price of approximately $21.00 per share. As a result of the exchange, approximately $69 million of convertible senior notes due in 2021 remained outstanding. On June 15, 2021, we repaid the outstanding balance of the 2021 convertible senior notes at their maturity date using cash on hand. More information about the terms and conditions of the 2024 convertible notes is set forth in Note 10 to our Consolidated Financial Statements included in this report as well as in ~~Financing Arrangements~~ ~~in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report.~~

In February 2021, we completed the sale of our Chelsea, Massachusetts manufacturing operations to Catalent Pharma Solutions. Pursuant to the transaction, Catalent paid us $80 million in cash, resulting in net proceeds to us of approximately $74 million after transaction fees and expenses and settlement of customary post-closing adjustments. In connection with the sale of the manufacturing operations, we entered into a long-term, global manufacturing services agreement with a Catalent affiliate for the supply of Inbrija. As part of the transaction, Catalent hired substantially all of our prior employees at the Chelsea facility as well as certain of our other employees at our Waltham, Massachusetts facility. We expect to save approximately $10 million in annual operating expenses related to the operation of the manufacturing facility.

In January 2021 and September 2021, we announced corporate restructurings to reduce costs, more closely align operating expenses with expected revenue, and focus our resources on Inbrija. As part of the January 2021 restructuring, we reduced headcount by approximately 16% through a reduction in force (excluding the employees that transferred to Catalent at the closing of the sale of our Chelsea manufacturing operations). As a result, we expect to realize estimated annualized cost savings related to the January 2021 headcount reduction of approximately $6 million beginning in the second quarter of 2021. As part of the September 2021 restructuring, we reduced headcount by approximately 15% through a reduction in force. Most of this reduction in force took place in September 2021, and it will be completed in the first quarter of 2022. The company expects to realize estimated annualized cost savings of approximately $20 million from the September corporate restructuring beginning in 2022. The Company estimates that it will incur approximately $5.5 million of pre-tax charges, substantially all of which are cash expenditures, for severance and other employee separation-related costs in connection with the restructurings, approximately $4.6 million of which were incurred during the nine-month period ended September 30, 2021.

In January 2021, we entered into an At The Market (ATM) Offering Agreement with H.C. Wainwright & Co., LLC as sales agent. Pursuant to the ATM agreement, we may offer and sell shares of our common stock having an aggregate value of up to $15.25 million in an at-the-market offering, subject to a 3% sales commission payable to H.C. Wainwright. If we elect to use the ATM agreement, H.C. Wainwright would be obligated to use commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell shares in accordance with our instructions (including as to price, time or size limit or other parameters or conditions that we may impose). We have not yet sold any shares under the ATM agreement.

~~On September 17, 2021, we sent to BMR-Ardsley Park LLC (“BMR”) notice of exercise of our early termination option (the “Early Termination Option”) under our Lease dated as of June 23, 2011, between us and BMR (as amended, the “Lease~~”). The Lease is for the Company’s Ardsley, N.Y. corporate headquarters, which we believe is substantially larger than our needs for the foreseeable future. Pursuant to the Early Termination Option, the Lease will terminate on June 22, 2022 (the “~~Early Termination Date~~”), subject to the conditions that (a) on the last business day before the Early Termination Date, we pay an early termination fee of approximately $4.7 million, (b) on the day immediately prior to the Early Termination Date, we are not in “Default” under the Lease beyond applicable cure periods, and (c) as of the Early Termination Date, we have complied with our end-of-term obligations.

As of September 30, 2021, we had cash, cash equivalents and restricted cash of approximately $61.9 million. Restricted cash includes $24.8 million in escrow related to the 6% semi-annual interest portion of the convertible senior secured notes due 2024, which is payable in cash or stock. As further described in Note 10 to our Consolidated Financial

~~Statements included in this report as well as in~~ ~~Financing Arrangements~~ in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report, if we are permitted under the notes indenture and we elect to pay interest due in stock, a corresponding amount of restricted cash equivalent will be released from escrow. We intend to pay the interest due on December 1, 2021 in stock.

On December 31, 2020, we filed an amendment to our Certificate of Incorporation which effected, as of 4:01 p.m. Eastern Time on December 31, 2020, a 1-for-6 reverse stock split of the shares of our outstanding common stock and proportionate reduction in the number of authorized shares of our common stock from 370,000,000 to 61,666,666. Our common stock began trading on a split-adjusted basis on The Nasdaq Global Select Market commencing upon market open on January 4, 2021. The common stock continued to trade under the symbol “ACOR” after the reverse stock split became effective. The reverse stock split applied equally to all outstanding shares of the common stock and did not modify the rights or preferences of the common stock. The reverse stock split also resulted in a corresponding adjustment to outstanding equity awards as well as shares reserved for future issuance under our incentive compensation plans. All figures in this report relating to shares of our common stock (such as share amounts, per share amounts, and conversion rates and prices), including in the financial statements and accompanying notes to the financial statements, have been retroactively restated to reflect the 1-for-6 reverse stock split of our common stock.

Our business and financial condition have been impacted by, and are subject to risks resulting from, the COVID-19 (novel coronavirus) pandemic. The COVID-19 pandemic has caused significant disruptions in the healthcare industry. The duration of the pandemic is difficult to predict, and it is likely to have ongoing impacts as it continues. The travel restrictions, “shelter in place” orders, quarantine policies, vaccine mandates and general concerns about the spread of COVID-19 have disrupted the delivery of healthcare to patients, for example making it more difficult for some patients to visit with their physician and obtain pharmaceutical prescriptions. Also, healthcare office staffing shortages may delay the administrative work, and particularly insurance-related documentation, needed to obtain reimbursement for prescriptions. We believe these factors contributed to volatility in new Inbrija prescriptions during 2020 and are continuing to impact prescriptions in 2021.

The COVID-related policies, restrictions, mandates, and concerns may disrupt our operations and those of our customers and suppliers. Also, our operations could be interrupted if we or our customers or suppliers lose the services of key employees or consultants who become ill from COVID-19. These types of disruptions could potentially affect any of our critical business functions, and thus harm our business, including for example our manufacturing, sales and marketing operations as well compliance and certain general and administrative functions. The ultimate impact of the COVID-19 pandemic, or any other health epidemic, is highly uncertain and subject to change.We do not yet know the full extent of potential delays or impacts on our business, healthcare systems or the global economy as a whole. As the pandemic continues, it may result in sustained impacts on demand for our products and our ability to access capital on reasonable terms, or at all.

Inbrija (levodopa inhalation powder) is the first and only inhaled levodopa, or L-dopa, for intermittent treatment of OFF episodes, also known as OFF periods, in people with Parkinson’s disease treated with carbidopa/levodopa regimen. Our New Drug Application, or NDA, for Inbrija was approved by the U.S. Food and Drug Administration, or FDA, on December 21, 2018. The approval is for a single dose of 84 mg (administered as two capsules), which may be taken up to five times per day. Inbrija became commercially available in the U.S. on February 28, 2019. Currently, Inbrija is available in the U.S. without the need for a medical exception for approximately 96% of commercial health insurance plans and approximately 27% of Medicare plan lives. Net revenue for Inbrija was $7.8 million for the quarter ended September 30, 2021 and $5.8 million for the quarter ended September 30, 2020. Due to uncertainties caused by past and potential future impacts of the COVID-19 pandemic and other factors, we are no longer able to provide projected peak U.S. annual net revenue of Inbrija. Actual peak U.S. Inbrija net revenue will likely be lower and could be materially lower than our prior projected peak sales range if, for example, disruptions to the healthcare system caused by the COVID-19 pandemic or other prescribing challenges continue into 2022 and beyond.

In September 2019, we announced that the European Commission, or EC, approved our Marketing Authorization Application, or MAA, for Inbrija. The approved dose is 66 mg (administered as two capsules) up to five times per day (per

European Union, or EU, convention, this reflects emitted dose and is equivalent to the 84 mg labelled dose in the U.S.). Under the MAA, Inbrija is indicated in the EU for the intermittent treatment of episodic motor fluctuations (OFF episodes) in adult patients with Parkinson’s disease treated with a levodopa/dopa-decarboxylase inhibitor. The MAA approved Inbrija for use in what were then the 27 countries of the EU, as well as Iceland, Norway and Liechtenstein. Following the ~~ratification~~exit of the ~~Withdrawal Agreement between the United Kingdom and~~UK from the EU, ~~the UK left the EU on January 31, 2020. Effective January 1, 2021, Acorda was~~we were granted a grandfathered Marketing Authorization (MA) by the Medicines and Healthcare ~~products~~Products Regulatory Agency (MHRA) in the UK ~~subject to completion of an administrative process~~ that was approved ~~by the MHRA~~ in November 2021.

~~In July and November 2021, we announced that we~~We have entered into ~~distribution and supply~~ agreements ~~with Esteve Pharmaceuticals~~ to commercialize Inbrija in Spain, Germany, and ~~Germany, respectively. Under the terms of the Germany distribution agreement, we will receive a~~ ~~€5 million upfront payment,~~Latin America, and we ~~will receive additional sales-based milestones.~~ Under the terms of both the Spain and Germany supply agreements, we will receive a significant double-digit percent of the selling price of Inbrija in exchange for supply of the product. Esteve will have the exclusive distribution rights to Inbrija in Spain and Germany and we will supply the product to Esteve for sale. Esteve expects to launch Inbrija in Spain in the fourth quarter of 2022, and in Germany by mid-2022. We are in discussions with potential partners for commercialization of Inbrija in other jurisdictions outside of the U.S., In 2021, we entered into exclusive distribution and supply agreements with Esteve Pharmaceuticals to commercialize Inbrija in Spain and Germany. Under the terms of the Germany distribution agreement, in 2021 we received a €5 million (approximately $5.9 million) upfront payment, and we are entitled to receive sales-based milestones. Under the terms of both the Spain and Germany supply agreements, we are entitled to receive a significant double-digit percentage of the Inbrija selling price in exchange for supply of the product. Esteve Pharmaceuticals launched Inbrija in Germany in June 2022 and expects to launch Inbrija in Spain in early 2023. Net revenues for ex-U.S. Inbrija sales in Germany were $1.0 million for the quarter ended September 30, 2022.

Also, in May 2022, we announced that we entered into exclusive distribution and supply agreements with Pharma Consulting Group, S.A. (known as Biopas Laboratories) to commercialize Inbrija in nine countries within Latin America, including Brazil and Mexico. Under the terms of the Biopas agreements, we are entitled to receive a significant double-digit, tiered percentage of the Inbrija selling price in ~~Europe~~exchange for supply of the product, and ~~other countries.~~we are entitled to sales-based milestones.

We market Inbrija in the U.S. using field-based teams supported by our corporate marketing personnel. Our own neuro-specialty sales representatives work in combination with sales representatives provided by a contract commercial ~~organization,~~organizations, and collectively they are currently focused on a priority list of ~~approximately 2,000~~ physicians who are high volume prescribers of ~~levodopa/carbidopa.~~carbidopa/levodopa and other products indicated to treat OFF episodes. Our field-based teams also include reimbursement and market access specialists, who provide information to physicians and payers on our marketed products, as well as market development specialists who work collaboratively with field-sales teams and corporate personnel to assist in the execution of our strategic initiatives. Our Inbrija field-based and marketing activities are focused on physician awareness and market access as well as patient awareness, education and training. Inbrija is distributed in the U.S. primarily ~~through~~:through: a specialty pharmacy associated with our e-prescribing program, described below; AllianceRx Walgreens Prime, or Walgreens, a specialty pharmacy that delivers the medication to patients by mail; and ASD Specialty Healthcare, Inc. (an AmeriSource Bergen affiliate)., a specialty distributor. In 2022, we implemented an e-prescribing program for the distribution of Inbrija in the U.S. through a specialty pharmacy that supports electronic prescriptions. We believe the convenience of electronic prescribing may be preferred by some physicians and patients.

We have established Prescription Support Services for Inbrija, ~~which we~~ sometimes ~~refer~~referred to as the Inbrija ~~hub. Prescription Support Services is designed to help~~hub, which helps patients navigate their insurance coverage and ~~offer reimbursement~~identify potential financial support ~~services,~~alternatives, when appropriate. ~~Services~~The Inbrija hub also includes a virtual nurse educator program to assist patients with proper usage of the Inbrija inhaler. Insurance coverage services fall into one of these categories: insurance verification, to research patient insurance benefits and confirm insurance coverage; prior authorization support, to identify prior authorization requirements; and appeals support. For patients that may need assistance paying for their medication, Prescription Support Services offers several support options, including: a program that provides no cost medication to patients who meet specific program eligibility requirements; co-pay support, which may help commercially insured (non-government funded) patients lower their out-of-pocket costs; and a

bridge program for ~~federally-insured~~federally insured patients who experience a delay in coverage determination. We have a no-cost sample program, available at physician offices, to enable patients and their physicians to assess the value of Inbrija before the patient incurs out-of-pocket co-pay or co-insurance costs. In addition, we have a first dispense zero-dollar copay program for ~~commercially-insured~~commercially insured patients (which ~~has~~ replaced our previous free trial program) to enable those patients to assess the value of Inbrija before incurring out-of-pocket co-pay or co-insurance costs.

Parkinson’s disease is a progressive neurodegenerative disorder resulting from the gradual loss of certain neurons in the brain. These neurons are responsible for producing dopamine and that loss causes a range of symptoms including impaired movement, muscle stiffness and tremors. The standard baseline treatment of Parkinson’s disease is oral carbidopa/levodopa, but oral medication can be associated with wide variability in the timing and amount of absorption and there are significant challenges in creating a regimen that consistently maintains therapeutic effects. As Parkinson’s progresses, people are likely to experience OFF periods, which are characterized by the return of Parkinson’s symptoms that result from low levels of dopamine between doses of oral carbidopa/levodopa. OFF periods are often highly disruptive to people with Parkinson’s. Approximately one million people in the U.S. and 1.2 million Europeans are diagnosed with Parkinson’s; it is estimated that approximately 40% of people with Parkinson’s in the U.S. experience OFF periods.

Inbrija ~~is for as needed use and~~ utilizes our ARCUS platform for inhaled therapeutics. ARCUS is a dry-powder pulmonary drug delivery technology that we believe has potential to be used in the development of a variety of inhaled medicines. The ARCUS platform allows systemic delivery of medication through inhalation, by transforming molecules into a light, porous dry powder. This allows delivery of substantially higher doses of medication than can be delivered via conventional dry powder technologies. We acquired the ARCUS technology platform as part of our 2014 acquisition of Civitas Therapeutics. We have worldwide rights to our ARCUS drug delivery technology, which is protected by extensive

know-how and trade secrets and various U.S. and foreign patents, including patents that protect the Inbrija dry powder capsules beyond 2030. We have several patents listed in the Orange Book for Inbrija, including patents expiring between 2022 and ~~2032, and~~2032. Inbrija iswas also entitled to three years of new product exclusivity ~~through December 2021, as posted~~ in the ~~Orange book.~~U.S. that expired in December 2021. We have patents in Europe for Inbrija expiring between 2022 and 2033. One of our European patents, EP 3090773B, ~~has~~had been opposed by an unnamed ~~party.~~party but in 2021 was maintained as granted by the European Opposition Board. Inbrija also has 10ten years of market exclusivity in Europe that is set to expire in September 2029.

~~FDA~~We believe there are potential opportunities for using ARCUS with central nervous system, or CNS, as well as non-CNS, disorders. Due to several corporate restructurings since 2017 and European Commission approvals of Inbrija were based on a clinical program that included approximately 900 people with Parkinson’s on a carbidopa/levodopa regimen experiencing OFF periods. The Phase 3 pivotal trial for Inbrija – SPAN-PD – was a 12-week, randomized, placebo controlled, double blind study evaluatingassociated cost-cutting measures, including the ~~effectiveness of Inbrija in patients with mild to moderate Parkinson’s experiencing OFF periods. In January 2019,~~corporate restructurings we announced in January and September 2021, we suspended work on ARCUS and other proprietary research and development programs. However, we are discussing potential collaborations with other companies that ~~The Lancet Neurology published results from the SPAN-PD clinical trial.~~have expressed interest in formulating their novel molecules for pulmonary delivery using ARCUS, and we have already performed feasibility studies for a number of these opportunities.

~~The SPAN-PD trial met its primary endpoint,~~Should we decide to proceed with patients showing a statistically significant improvement in motor function at the week 12 visit, as measured by a reduction in Unified Parkinson’s Disease Rating Scale (UPDRS) Part III score for Inbrija 84 mg (n=114) compared to placebo (n=112) at 30 minutes post-dose (-9.83 points and -5.91 points respectively; p=0.009). Onset of action was seen as early as 10 minutes. Maintenance of effect continued to 60 minutes post-dose, which is the longest time point assessed in the trial. UPDRS III is a validated scale, which measures Parkinson’s disease motor impairment.

The most common adverse reactions with Inbrija (at least 5% and greater than placebo) in the pivotal trial were cough (15% vs. 2%), upper respiratory tract infection (6% vs. 3%), nausea (5% vs. 3%) and discolored sputum (5% vs. 0%).

Inbrija was also studied in a Phase 3 long-term, active-controlled, randomized, open-label study (N=398) assessing safety and tolerability over one year. This study showed the average reduction in FEV1 (forced expiratory volume in 1 second) from baseline was the same (-0.1 L)any ARCUS development programs, we would be reliant on Catalent or another third-party supplier for the ~~Inbrija~~manufacture of product for that program. Our global supply agreement with Catalent does not provide for the terms and ~~observational cohorts. Patients~~conditions under which Catalent would supply any product or product candidate other than Inbrija. We would be unable to advance the development of any ARCUS inhaled therapeutic candidate unless Catalent is willing to manufacture the candidate for us on commercially reasonable terms, or we could identify another third-party manufacturer that would be capable and willing to manufacture the candidate for us on commercially reasonable terms.Also, due to reductions in force, employee attrition and the 2021 sale of our Chelsea manufacturing operations, we may need to hire replacement personnel or engage consultants to continue with ~~chronic obstructive pulmonary disease (COPD), asthma, or other chronic respiratory disease within the last five years were excluded from this study.~~

~~Inbrija is not to be used by patients who take or have taken a nonselective monoamine oxidase inhibitor such as phenelzine or tranylcypromine within the last two weeks.~~

~~It is not known if Inbrija is safe or effective in children.~~ARCUS research and development work beyond feasibility and similar early-stage studies.

Ampyra was approved by the FDA in January 2010 to improve walking in adults with multiple sclerosis. To our knowledge, Ampyra is the first drug approved for this indication. Efficacy was shown in people with all four major types of MS (relapsing remitting, secondary progressive, progressive relapsing and primary progressive). Ampyra became subject to competition from generic versions of Ampyra starting in late 2018 as a result of an adverse U.S. federal district court ruling that invalidated certain Ampyra Orange Book-listed patents. We have experienced a significant decline in Ampyra sales due to competition from several generic versions of Ampyra. Additional manufacturers may market generic versions of Ampyra, and we expect our Ampyra sales will continue to decline over time. U.S. n~~Net~~et revenue for Ampyra was $21.1 million for the quarter ended September 30, 2022 and $20.0 million for the quarter ended September 30, ~~2021~~2021.

Prior to October 2022 our primary source of supply of Ampyra was provided through a manufacturing and ~~$27.3~~license agreement with Alkermes PLC. In July 2020, we filed an arbitration demand with the American Arbitration Association against Alkermes after the parties were unable to resolve a dispute over license and supply royalties following the 2018 expiration of an Alkermes patent relating to Ampyra. On October 16, 2022, we announced that a three-judge arbitration panel issued a final decision in this dispute and awarded to us $15 million plus prejudgment interest of $1.5 million. In addition, as a result of the panel’s ruling, we will no longer have to pay Alkermes any royalties on net sales for license and supply of Ampyra, and we are now free to use alternative sources for supply of Ampyra, which we have already secured. We expect the ~~quarter ended September 30, 2020.~~cost savings associated with this decision to greatly benefit the product’s value to the Company.

Ampyra is marketed as Fampyra outside the U.S. by Biogen International GmbH, or Biogen, under a license and collaboration agreement that we entered into in June 2009. Fampyra has been approved in a number of countries across Europe, Asia and the Americas. ~~In May 2021,~~ Biogen ~~announced that~~recently initiated a commercial launch of Fampyra ~~was approved by~~in China, after receiving approval from the Chinese National Medical Products Administration in ~~China,~~2021. Our Fampyra patents have been challenged in Germany and ~~Biogen~~could be similarly challenged in other countries where Fampyra is ~~evaluating commercial launch options~~marketed by Biogen. The Germany nullity actions are further described below under Ampyra Patent Update. Fampyra currently faces generic competition in Germany, notwithstanding that ~~country.~~ the Germany Fampyra Patents remain in effect, and challenges to the Fampyra patents could lead to additional generic competition with Fampyra in Germany and other countries.

Under our agreement with Biogen, we are entitled to receive double-digit tiered royalties on net sales of Fampyra and we are also entitled to receive additional payments based on achievement of certain regulatory and sales ~~milestones.~~milestones, although we do not anticipate achievement of any of those milestones in the foreseeable future. In November 2017, we announced a $40 million Fampyra royalty monetization transaction with HealthCare Royalty Partners, or HCRP. In return for the payment to us, HCRP obtained the right to receive these Fampyra royalties up to an agreed-upon threshold. ~~Until this~~This threshold iswas met ~~we will not receive Fampyra~~during the second quarter of 2022 and our obligations to HCRP expired upon Biogen’s payment of royalties ~~although we retained the right to receive any potential future~~

~~milestone payments.~~for that quarter. The HCRP transaction is accounted for as a liability, as described in Note 9 to our Consolidated Financial Statements included in this report.

There are no patents listed in the Orange Book for Ampyra. Ampyra became subject to competition from generic versions of Ampyra starting in late 2018 as a result of an adverse U.S. federal district court ruling that invalidated certain Ampyra Orange Book-listed patents.

There are two European patents, EP 1732548 and EP 2377536, with claims directed to use of a sustained release dalfampridine composition (known under the trade name Fampyra in the European Union) to increase walking speed in a patient with multiple sclerosis. Both European patents are set to expire in 2025, absent any additional exclusivity granted based on regulatory review timelines. ~~Nullity actions have been filed in Germany against both of the German national patents derived from EP 1732548 and EP 2377536 by ratiopharm GmbH, a generic manufacturer affiliated with Teva.~~ Fampyra had 10ten years of market exclusivity in the European Union that expired in 2021. Accordingly, even though the European patents were upheld by the Technical Board of Appeal of the European Patent Office, generic drug manufacturers may seek to challenge Fampyra’s European patents within individual European countries, and Fampyra could potentially face competition from those generic drug manufacturers. For example, a generic drug manufacturer that has sought to invalidate Fampyra patents in Germany through nullity proceedings, as described in the following paragraph, has commenced a generic launch in Germany even though the patents have not been invalidated. Several other generics have been approved in Germany but have not yet been commercially launched, and there are also several generics that have taken steps to potentially initiate a generic launch in Spain and France although the patents have not been invalidated in those jurisdictions either.

relating to the ‘548 patent in the European Patent Office.Ratiopharm has appealed the decision on the ‘536 patent but not the decision on the ‘548 patent, and could refile the nullity actions. On January 11, 2022, STADA Arzneimittel also filed a nullity action against the ‘536 patent, and on July ~~2021.~~

27, 2022, Teva GmbH also filed a nullity action against the ‘548 patent, both in the same court as the ratiopharm nullity actions. We ~~will~~are working with Biogen to vigorously defend these actions and enforce our ~~intellectual property~~patent rights.

~~We have been exploring opportunities for other proprietary products~~ Refer to Legal Proceedings in which inhaled (pulmonary) delivery of medicine using our ARCUS drug delivery technology can provide a significant therapeutic benefit to patients. We believe there are potential opportunities with central nervous system, or CNS, as well as non-CNS, disorders.

Our ARCUS development had previously been focused on a program for acute treatment of migraine. We had been evaluating therapeutic candidates for their suitability to move forward with this program. Due to several corporate restructurings since 2017 and associated cost-cutting measures, including the corporate restructurings we announced in January and September 2021, we deferred consideration of further investment into potential new ARCUS applications in migraine or any other indication pending additional progress with the Inbrija commercial launch in the U.S. Although we have deferred internal investment in ARCUS programs, we are discussing potential collaborations with other companies that have expressed interest in formulating their novel molecules for pulmonary delivery with ARCUS, and feasibility studies are ongoing for a number of these opportunities.

Should we decide to proceed with any ARCUS development programs, we would be reliant on Catalent or another third party supplier for the manufacture of product for that program. Our global supply agreement with Catalent does not provide for the terms and conditions under which Catalent would supply any product or product candidate other than Inbrija. We would be unable to advance the development of any ARCUS inhaled therapeutic candidate unless Catalent is willing to manufacture the candidate for us on commercially reasonable terms, or we could identify another third party manufacturer that would be capable and willing to manufacture the candidate for us on commercially reasonable terms.Also, due to reductions in force, employee attrition and the 2021 sale of our Chelsea manufacturing operations, we believe we lack certain personnel needed for, and would need to hire replacements before continuing with, this research and development work.

~~We are providing the following guidance with respect to our 2021 financial performance:~~

The projected range of operating expenses in 2021 specified above was not prepared in accordance with accounting principles generally accepted in the United States (GAAP) because this guidance excludes restructuring costs and share-based compensation charges. Due to the forward looking naturePart II, Item 1 of this information, the amount of compensation charges needed to reconcile this measure to the most directly comparable GAAP financial measure is dependent on future changes in the market price of our common stock and is not available at this time. Non-GAAP financial measures are not an alternativereport for ~~financial~~

~~measures prepared in accordance with GAAP. However, we believe that the presentation of this non-GAAP financial measure, when viewed in conjunction with actual GAAP results, provides investors with a~~ more meaningful understanding of our ongoing and projected operating performance because it excludes (i) expenses that pertain to corporate restructurings that are not routine to the operation of our business, and (ii) non-cash charges that are substantially dependent on changes in the market price of our common stock. We believe this non-GAAP financial measure helps indicate underlying trends in our business and is important in comparing current results with prior period results and understanding expected operating performance. Also, our management uses this non-GAAP financial measure to establish budgets and operational goals, and to manage our business and to evaluate its performance.information.

Three-Month Period Ended September 30, ~~2021~~2022 Compared to September 30, ~~2020~~2021

~~For the three-month period ended September 30, 2020 we recognized~~We recognize product sales of Inbrija following receipt of product by companies in our distribution network, which for Inbrija primarily includes specialty ~~pharmacy providers~~pharmacies and ASD Specialty Healthcare, Inc. ~~During~~(an AmeriSource Bergen affiliate). We recognized net revenues from the ~~three-month period ended December 31, 2020, we completed the transition from a network of several specialty pharmacies to AllianceRx Walgreens Prime, or Walgreens, as the sole specialty pharmacy for~~ U.S. sales of Inbrija ~~which we believe has potential benefits to patients and our business.~~ ~~We recognized net revenue from the sale~~ of ~~Inbrija of $7.8 million and $5.8~~$7.8 million for the three-month periods ended September 30, ~~2021~~2022 and ~~2020, respectively, an increase~~2021. Consistent with trends in previous years, we anticipated declines in first quarter net sales given patient overstocking in the fourth quarter, insurance resetting at the beginning of ~~$2.0~~each year, and quarterly true-up discounts and allowances as discussed below. Additionally, we recognized revenues from our supply agreement with Esteve Pharmaceuticals for sales in Germany of $1.0 million ~~or 34.4%. The increase in Inbrija net revenue was due to an increase in net volume of $3.3 million partially offset by discount~~ and ~~allowance adjustments of $1.3 million~~$0 for the three-month ~~period~~periods ended September 30, ~~2021.~~2022 and 2021, respectively, which represents initial stocking of Inbrija.

Discounts and allowances which are included as an offset in net ~~revenue~~revenues consist of allowances for customer credits, including estimated chargebacks, rebates, returns and discounts. Discounts and allowances are recorded following shipment of our products to our customers. Adjustments are recorded for estimated chargebacks, rebates, and discounts. Discounts and allowances also consist of discounts provided to Medicare beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”). Payment of coverage gap discounts is required under the Affordable Care Act, the health care reform legislation enacted in 2010. Discounts and allowances may increase as a percentage of sales as we enter into new managed care contracts in the future.

We believe that first and fourth quarter ~~revenue~~revenues for our products isare subject to certain recurring seasonal factors relating to the commencement of a new calendar year. For example, some patients refill their prescriptions earlier ahead of the new year, in the fourth quarter, in anticipation of the year-end reset of health plan deductibles and the Medicare donut hole, or a year-end switch of their insurance plans or pharmacy benefit providers. Also, we believe that ~~AllianceRx Walgreens Prime, the~~ specialty ~~pharmacy that we use~~pharmacies used for Inbrija distribution may increase their Inbrija ~~stock,~~inventory, within contractual limits where applicable, in anticipation of the holidays and new year. ~~These~~We believe these factors ~~may seasonally~~ have had a positive impact on fourth quarter revenues and a negative impact on first quarter ~~revenues.~~revenues in the past two years. Also, discounts and allowances typically are highest in the first quarter, and lowest in the fourth quarter, and when this occurs ~~this increases~~ fourth quarter revenues increase, and ~~decreases~~ first quarter revenues decrease, on a relative basis.

We recognize product sales of Ampyra following receipt of product by companies in our distribution network, which for Ampyra primarily includes specialty ~~pharmacy providers.~~pharmacies, which deliver the medication to patients by mail. We recognized net ~~revenue~~revenues from the sale of Ampyra to these customers of ~~$20.0~~$21.1 million and ~~$27.3~~$20.0 million for the three-month periods ended September 30, 2022 and 2021, ~~and 2020,~~ respectively, ~~a decrease~~an increase of ~~$7.3~~$1.1 million, or ~~26.7%~~6%. The increase in Ampyra net ~~revenue decrease is due primarily to~~revenues of $1.1 million was composed of a decrease in ~~net~~ volume of ~~$10.8~~$2.5 million, partially offset by net price increase and discount and allowance adjustments of ~~$3.5~~$3.6 million for the three-month period ended September 30, ~~2021.~~2022. Consistent with trends in previous years, we anticipated declines in first quarter net sales given patient overstocking in the fourth quarter, insurance resetting at the beginning of each year, and quarterly true-up discounts and allowances as discussed below.

allowances also consist of discounts provided to Medicare beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”). Payment of coverage gap discounts is required under the Affordable Care ~~Act, the health care reform legislation enacted in 2010.~~Act. Discounts and allowances may increase as a percentage of sales as we enter into managed care contracts in the future.

We believe that first and fourth quarter ~~revenue~~revenues for our products isare subject to certain recurring seasonal factors relating to the commencement of a new calendar year. For example, some patients refill their prescriptions earlier ahead of the new year, in the fourth quarter, in anticipation of the year-end reset of health plan deductibles and the Medicare donut hole, or a year-end switch of their insurance plans or pharmacy benefit providers. Also, we believe specialty pharmacies may increase their ~~Ampyra stock in~~inventory anticipation of the holidays and new year. These factors ~~may seasonally~~ have had a positive impact on fourth quarter revenues and a negative impact on first quarter revenues. Also, discounts and allowances typically are highest in the first quarter, and lowest in the fourth quarter, and when this occurs ~~this increases~~ fourth quarter revenues increase, and ~~decreases~~ first quarter revenues decrease, on a relative basis.

We recognized negligible revenue from the sale of other products for the three-month period ended September 30, 2021 as compared to $1.5 million for the three-month period ended September 30, 2020, a decrease of $1.5 million, or 98.6%.

~~We recognized $0~~$3.0 million and ~~$15~~$3.6 million in ~~milestone revenue~~royalty revenues for the three-month periods ended September 30, 2022 and 2021, ~~and 2020, respectively.~~respectively, a decrease of $0.6 million or 17%.

We recognized ~~$3.6~~$0.5 million and ~~$3.4 million~~$0 in royalty ~~revenue~~revenues for the three-month periods ended September 30, 2022 and 2021, ~~and 2020, respectively, an increase of $0.2 million, or 5.9%.~~respectively.

We recorded cost of sales of $11.0 million for the three-month period ended September 30, 2022 as compared to $13.3 million for the three-month period ended September 30, ~~2021 as compared to $12.2 million~~2021. Cost of sales for the three-month period ended September 30, ~~2020.~~ 2022 consisted primarily of $10.2 million in inventory costs related to recognized revenues, $0.2 million in royalty fees based on net product shipments, and $0.6 million in other period costs. Cost of sales for the three-month period ended September 30, 2021 consisted primarily of $13.0 million in inventory costs related to recognized revenues and $0.3 million in royalty fees based on net product ~~shipments~~. Cost of sales for the three-month period ended September 30, 2020 consisted primarily of $8.8 million in inventory costs related to recognized revenues and $3.3 million in royalty fees based on net product shipments.

We recorded amortization of intangible asset related to Inbrija of $7.7 million for the three-month periods ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Research and development expenses for the three-month period ended September 30, ~~2021~~2022 were ~~$1.9~~$1.4 million as compared to ~~$5.7~~$1.9 million for the three-month period ended September 30, ~~2020,~~2021, a decrease of approximately ~~$3.8~~$0.5 million, or ~~66.7%~~26%. The decrease was primarily due to ~~reductions in Civitas spending of $2.3 million due to the commercialization of Inbrija,~~ ~~reductions of $1.6 million due to~~ restructuring and ~~decrease~~related decreases in several ~~programs to shift focus on Inbrija launch, partially offset by an~~ ~~increase~~ ~~of $0.1 million in~~ research and development ~~expenses.~~programs.

Sales and marketing expenses for the three-month period ended September 30, ~~2021~~2022 were ~~$14.5~~$9.8 million compared to ~~$21.9~~$14.5 million for the three-month period ended September 30, ~~2020,~~2021, a decrease of approximately ~~$7.4~~$4.7 million, or ~~33.8%~~32%. The

decrease was primarily due to a decrease in ~~marketing related~~marketing-related spending of ~~$5.9~~$1.7 million ~~due to launch activities~~ for Inbrija, ~~and~~ a decrease in overall salaries and benefits of ~~$2.9~~$0.5 million, ~~partially offset by~~ a ~~reclassification~~decrease in spending of ~~departmental costs from general~~$1.0 million for Ampyra and ~~administrative~~a decrease in other selling related expenses of ~~$1.4 million due to a change in the overhead expense allocation method.~~$1.5 million.

General and administrative expenses for the three-month period ended September 30, ~~2021~~2022 were ~~$15.1~~$13.2 million compared to ~~$18.1~~$15.1 million for the three-month period ended September 30, ~~2020,~~2021, a decrease of approximately ~~$3.0~~$1.9 million, or ~~16.6%~~13%. The decrease was primarily due to ~~an increase~~a decrease in ~~legal expenses~~professional fees of ~~$0.7~~$1.7 million, ~~and an~~ ~~increase~~a decrease of $2.2 million in

restructuring costs, ~~partially offset by a decrease in overall salaries~~ and ~~benefit costs of $3.7 million,~~ a decrease in Civitas spending of ~~$2.0~~$0.6 million due to the sale of the Chelsea facility manufacturing operations, ~~and a decrease~~partially offset by an increase in other departmental spending of ~~$0.2~~$2.6 million.

A derivative liability was recorded in December 2019 as a result of the issuance of the 6.00% Convertible Senior Secured Notes due 2024. The derivative liability is measured at fair value on a quarterly basis and changes in the fair value are recorded in the consolidated statement of operations. We recorded negligible income ~~of $0.3 million~~ due to the change in the fair value of the derivative liability for the three-month period ended September 30 ~~2021.~~, 2022.

As a result of the original spin out of Civitas from Alkermes, part of the consideration to Alkermes was a future royalty to be paid to Alkermes on Inbrija. ~~Acorda~~We acquired this contingent consideration as part of the Civitas acquisition. The fair value of that future royalty is assessed quarterly. We recorded ~~a loss pertaining~~income relating to changes in the fair value of our acquired contingent consideration of $4.6 million for the three-month period ended September 30, 2022 as compared to a loss of $2.2 million for the three-month period ended September 30, ~~2021~~ ~~as compared to income of $23.6 million for the three-month period ended~~ ~~September 30, 2020.~~2021. The changes in the fair-value of the acquired contingent consideration were primarily due to updates ~~to certain~~the change in projected revenue and ~~expense forecast assumptions.~~the recalculation of cash flows for the passage of time, as well as an increase in the discount rate.

Other expense, net was $7.4 million and $7.2 million for the three-month periods ended September 30,, 2022 and 2021, ~~and 2020,~~ respectively. Nearly all Other Expense, net was interest on the 6.00% Convertible Senior Secured Notes due 2024.

For the three-month periods ended September 30,, 2022 and 2021, ~~and 2020, the Company~~we recorded a ~~benefit~~provision from income taxes of ~~$3.1~~$1.4 million and a ~~provision~~benefit of ~~$(1.5)~~$3.1 million, respectively. The effective income tax rates for the ~~Company for the~~ three-month periods ended September 30,, 2022 and 2021 were (11.3)% and ~~2020 were~~ 10.2% ~~and 16.6%~~, respectively.

The variance in the effective tax rates for the three-month period ended September 30,~~, 2021~~ 2022 as compared to the three-month period ended September 30,~~, 2020~~ 2021 was due primarily to an increase in the existing valuation allowance ~~offset by~~recorded on our deferred tax assets for which no tax benefit can be recognized, which increase includes the ~~benefit~~valuation allowance due to a deemed ownership change described below.

The Internal Revenue Code of 1986 contains certain provisions that can limit a taxpayer's ability to utilize net operating loss ~~carryback under~~and tax credit carryforwards in any given year resulting from cumulative changes in ownership interests in excess of 50 percent over a three-year period (“ownership change”). In the ~~CARES Act recorded at 21% to recover taxes paid at~~event of such a deemed ownership change, Section 382 imposes an annual limitation on pre-ownership change tax attributes. The Company experienced an ownership change in the previous ~~statutory rate~~quarter under Section 382 due to cumulative changes in the Company’s ownership over three years. Accordingly, the Company's ability to utilize NOL’s and tax credit carryforwards attributable to periods prior to the deemed ownership change is subject to the annual limitation. As a result of ~~35%.~~the impact of this limitation, the Company has recorded a tax benefit of approximately $2.0 million for the three months period ended September 30, 2022 with respect to the Section 382 impact.

~~The Company continues~~We continue to evaluate the realizability of ~~its~~our deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any changes to the valuation allowance or deferred tax assets and liabilities in the future would impact ~~the Company's~~our income taxes.

~~The Company has~~We have ongoing state examinations in Massachusetts and New Jersey which cover multiple years. There have been no proposed adjustments at this stage of the examination.

The Minnesota ~~examinations for 2016 and 2017 were closed~~examination was finalized during the second quarter of 2022 for tax years 2018 and 2019 with no ~~changes.~~adjustments.

Nine-Month Period Ended September 30, ~~2021~~2022 Compared to September 30, ~~2020~~2021

We recognize product sales of Inbrija following receipt of product by companies in our distribution network, which primarily includes specialty ~~pharmacy providers~~pharmacies and ASD Specialty Healthcare, Inc. We recognized net ~~revenue~~revenues from the ~~sale~~U.S. sales of Inbrija of ~~$19.2~~ $19.0million and ~~$14.9~~ $19.2million for the nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively, ~~an increase~~a decrease of ~~$4.3~~ $0.2million, or ~~28.9%~~1%. The ~~increase~~decrease in Inbrija US net ~~revenue~~revenues of $0.2million was ~~due to~~composed of an increase in ~~net volume~~price of ~~$6.1~~ $1.1million, partially offset by a decrease in volume of $0.4million and an increase in discount and allowance adjustments of ~~$1.8~~ $0.9million, for the nine-month period ended September 30, ~~2021.~~

2022. Consistent with trends in previous years, we anticipated declines in first quarter net sales given patient overstocking in the fourth quarter, insurance resetting at the beginning of each year, and quarterly true-up discounts and allowances as discussed below. Additionally, we recognized revenues from our supply agreement with Esteve Pharmaceuticals for sales in Germany of $2.9 million and $0 for the nine-month periods ended September 30, 2022 and 2021, respectively, which represents initial stocking of Inbrija.

Discounts and allowances which are included as an offset in net ~~revenue~~revenues consist of allowances for customer credits, including estimated chargebacks, rebates, returns and discounts. Discounts and allowances are recorded following shipment of our products to our customers. Adjustments are recorded for estimated chargebacks, rebates, and discounts. Discounts and allowances also consist of discounts provided to Medicare beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”). Payment of coverage gap discounts is required under the Affordable Care ~~Act, the health care reform legislation enacted in 2010.~~Act. Discounts and allowances may increase as a percentage of sales as we enter into managed care contracts in the future.

Higher discounts and allowances in the nine-month period ended September 30, 2022 as compared to the nine-month period ended September 30, 2021 were a result of true-ups for the difference between estimated amounts accrued and actual amounts ultimately paid.

We recognize product sales of Ampyra following receipt of product by companies in our distribution network, which for Ampyra primarily includes specialty ~~pharmacy providers.~~pharmacies, which deliver the medication to patients by mail. We recognized net revenue from the sale of Ampyra to these customers of ~~$62.0~~ $54.2million and ~~$73.5~~ $62.0million for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, a decrease of ~~$11.5~~$7.8 million, or ~~15.6%~~13%. The decrease in Ampyra net ~~revenue~~revenues of $7.8 million was composed of a decrease ~~is due primarily to decreased net~~in volume of ~~$17.6~~$12.8 million, partially offset by net price increase and discount and allowance adjustments of ~~$6.4 million. Net revenue from sales of Ampyra decreased~~$5.0million for the nine-month period ended September 30, ~~2021 compared to~~2022. Consistent with trends in previous years, we anticipated declines in first quarter net sales given patient overstocking in the ~~nine-month period ended September 30, 2020 due to~~fourth quarter, insurance resetting at the ~~entry~~beginning of ~~generic versions of Ampyra~~each year, and quarterly true-up discounts and allowances as ~~a result of the invalidation of certain of our Ampyra patents in 2017.~~

Discounts and allowances which are included as an offset in net ~~revenue~~revenues consist of allowances for customer credits, including estimated chargebacks, rebates, returns and discounts. Discounts and allowances are recorded following shipment of our products to our customers. Adjustments are recorded for estimated chargebacks, rebates, and discounts. Discounts and allowances also consist of discounts provided to Medicare beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”). Payment of coverage gap discounts is required under the Affordable Care ~~Act, the health care reform legislation enacted in 2010.~~Act. Discounts and allowances may increase as a percentage of sales as we enter into managed care contracts in the future. Lower discounts and allowances in the nine-month period ended September 30, 2022 as compared to the nine-month period ended September 30, 2021 were a result of true-ups for the difference between estimated amounts accrued and actual amounts ultimately paid.

We believe that first and fourth quarter ~~revenue~~revenues for our products is subject to certain recurring seasonal factors relating to the commencement of a new calendar year. For example, some patients refill their prescriptions earlier ahead of the new year, in the fourth quarter, in anticipation of the year-end reset of health plan deductibles and the Medicare donut hole, or a year-end switch of their insurance plans or pharmacy benefit providers. Also, we believe specialty pharmacies may increase their ~~Ampyra stock in~~inventory anticipation of the holidays and new year. These factors ~~may seasonally~~ have had a positive impact on fourth quarter revenues and a negative impact on first quarter revenues. Also, discounts and allowances typically are highest in the first quarter, and lowest in the fourth quarter, and when this occurs ~~this increases~~ fourth quarter revenues increase, and ~~decreases~~ first quarter revenues decrease, on a relative basis.

We recognized $0 and negligible ~~revenue~~revenues from the sale of other products for the nine-month ~~period~~periods ended September 30, 2022 and 2021, ~~as compared to $1.7~~respectively.

We recognized $10.6 million and $10.8 million in royalty revenues for the nine-month periods ended September 30, 2022 and 2021, respectively, a decrease of $0.2 million, or 2%.

We recognized $0.5 million and $0 in royalty revenues for the three-month periods ended September 30, 2022 and 2021, respectively.

We recorded cost of sales of $25.8 million for the nine-month period ended September 30, ~~2020.~~

~~We recognized $0 million and $15 million in milestone revenue for the nine-month periods ended September 30, 2021 and 2020, respectively.~~

~~We recognized $10.8 million and $9.7 million in royalty revenue for the nine-month periods ended September 30, 2021 and 2020, respectively related~~2022 as compared to ~~ex-U.S. sales of Fampyra by Biogen.~~

~~We recorded cost of sales of~~ $36.6 million for the nine-month period ended September 30, ~~2021 as compared to $22.7 million~~2021. Cost of sales for the nine-month period ended September 30, ~~2020.~~2022 consisted primarily of $24.4 million in inventory costs related to recognized revenues, $0.7 million in royalty fees based on net product shipments and $0.7 million in other period costs. Cost of sales for the nine-month period ended September 30, 2021 consisted primarily of $34.4 million in inventory costs related to recognized revenues and $0.8 million in royalty fees based on net product shipments, idle capacity costs of $0.1 million, and $1.3 million in period costs related to expired inventory, freight, stability testing, and packaging. Cost of sales for the nine-month period ended September 30, 2020 consisted primarily of $18.6 million in inventory costs related to recognized revenues and $3.8 million in royalty fees based on net product shipments.

We recorded amortization of intangible asset related to Inbrija of $23.1 million for the nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020.~~

Research and development expenses for the nine-month period ended September 30, ~~2021~~2022 were ~~$9.1~~$4.6 million as compared to ~~$18.7~~$9.1 million for the nine-month period ended September 30, ~~2020,~~2021, a decrease of approximately ~~$9.6~~$4.5 million, or ~~51.3%~~49%. The decrease was ~~due~~ primarily ~~to reductions in Civitas spending of $4.9 million due to the commercialization of Inbrija, reductions of $4.6 million~~ due to restructuring and ~~decrease~~related decreases in several research and development programs to shift focus on the Inbrija ~~launch, and reductions of $0.1 million in research and development expenses.~~

Sales and marketing expenses for the nine-month period ended September 30, ~~2021~~2022 were ~~$44.4~~$30.6 million compared to ~~$65.2~~$44.4 million for the nine-month period ended September 30, ~~2020,~~2021, a decrease of approximately ~~$20.8~~$13.8 million, or ~~31.9%~~31%. The decrease was ~~attributable~~ primarily due to a decrease in marketing-related spending of $6.9 million for Inbrija, a decrease in overall salaries and benefits of ~~$7.9~~$3.3 million, a decrease in ~~Inbrija~~ spending related to Ampyra of ~~$13.2~~$2.9 million, and a decrease in ~~marketing for Ampyra of $1.1 million, partially offset by a reclassification of departmental costs from general and administrative~~other selling related expenses of ~~$1.4 million due to a change in the overhead expense allocation method.~~$0.7 million.

General and administrative expenses for the nine-month period ended September 30, ~~2021~~2022 were ~~$51.6~~$49.4 million compared to ~~$54.5~~$51.6 million for the nine-month period ended September 30, ~~2020,~~2021, a decrease of ~~$2.9~~approximately $2.2 million, or ~~5.3%~~4%. The decrease was primarily due to ~~an increase~~a decrease in ~~legal expenses~~professional fees of ~~$4.9~~$6.1 million, ~~an increase~~a decrease of $3.7 million in restructuring costs, ~~of $4.0 million, and an increase of $1.3 million in other departmental spending, partially offset by~~ a decrease in overall salaries and benefit costs of ~~$7.3~~$2.5 million, and a decrease in Civitas spending of ~~$5.8~~$1.6 million due to the sale of the Chelsea facility manufacturing ~~operations.~~

operations, partially offset by an increase in other departmental spending of $11.7 million.

are recorded in the consolidated statement of operations. We recorded negligible income ~~of $0.9 million~~ due to the change in the fair value of the derivative liability for the nine-month period ended September 30, ~~2021.~~

As a result of the original ~~Civitas~~ spin out of Civitas from Alkermes, part of the consideration to Alkermes was a future royalty to be paid to Alkermes on Inbrija. ~~Acorda~~We acquired this contingent consideration as part of the Civitas acquisition. The fair value of that future royalty is assessed quarterly. We recorded an income ~~pertaining~~relating to changes in the ~~fair-value~~fair value of our acquired contingent consideration of $10.7 million for the nine-month period ended September 30, 2022 as compared to income of $4.2 million for the nine-month period ended September 30, ~~2021 as compared to $33.5 million for the nine-month period ended September 30, 2020.~~2021. The changes in the fair-value of the acquired contingent consideration were primarily due to updates ~~to certain product~~the change in projected revenue and ~~expense forecast assumptions.~~

the recalculation of cash flows for the passage of time, as well as an increase in the discount rate.

Other expense, net was $21.2 million and $22.7 million for the nine-month ~~period~~periods ended September 30, 2022 and 2021, ~~as compared to $21.8 million for~~respectively. Nearly all Other Expense, net was interest on the ~~nine-month period ended September 30, 2020. The change was~~6.00% Convertible Senior Secured Notes due primarily to a decrease in gain on disposal of property and equipment of $0.2 million and a reduction in interest income of $0.8 million, partially offset by a decrease in amortization of debt discount expense of $0.1 million.

For the nine-month periods ended September 30, 2022 and 2021, we recorded a provision from income taxes of $28.2 million and ~~2020, the Company recorded~~ a benefit of $6.8 million, ~~and a benefit of $5.0 million for income taxes,~~ respectively. The effective income tax rates for the ~~Company for the~~ nine-month periods ended September 30, 2022 and 2021 were (49.69)% and ~~2020 were~~ 7.53% ~~and 23.07%~~, respectively. The variance in the effective tax rates for the nine-month period ended September 30, ~~2021~~2022 as compared to the nine-month period ended September 30, ~~2020~~2021, was due primarily to forfeitures of equity of which no tax deduction is recorded and an increase in the existing valuation allowance recorded on our deferred tax assets for which no tax benefit can be recognized, ~~forfeitures~~which increase includes the valuation allowance due to a deemed ownership change described below.

The Internal Revenue Code of ~~equity based awards and the benefit recorded on the~~1986 contains certain provisions that can limit a taxpayer's ability to utilize net operating loss ~~carryback under~~and tax credit carryforwards in any given year resulting from cumulative changes in ownership interests in excess of 50 percent over a three-year period (“ownership change”). In the ~~CARES Act recorded at 21% to recover taxes paid at~~event of such a deemed ownership change, Section 382 imposes an annual limitation on pre-ownership change tax attributes. The Company experienced an ownership change in the previous ~~statutory rate~~quarter under Section 382 due to cumulative changes in the Company’s ownership over three years. Accordingly, the Company's ability to utilize NOL’s and tax credit carryforwards attributable to periods prior to the deemed ownership change is subject to the annual limitation. As a result of ~~35%.~~the impact of this limitation, the Company has recorded a cumulative tax expense of approximately $25.0 million through September 30, 2022 with respect to the Section 382 impact.

~~The Company~~ ~~has~~We have ongoing state examinations in Massachusetts and New Jersey which cover multiple years. There have been no proposed adjustments at this stage of the examination.

The Minnesota ~~examinations for 2016 and 2017 were closed~~examination was finalized during the second quarter of 2022 for years 2018 and 2019 with no ~~changes.~~adjustments.

Since our inception, we have financed our operations primarily from: private placements and public offerings of our capital stock; borrowing money through loans and the issuance of debt instruments; payments received under our collaboration and licensing agreements; revenue from sales of Ampyra, Fampyra, and Inbrija, as well as our former products, Zanaflex and Qutenza; royalty monetizations and ~~our~~a revenue interest financing arrangement; and, to a lesser extent, funding from government grants. Also, in February 2021, we obtained additional capital from the sale of our Chelsea manufacturing operations.

At September 30, ~~2021,~~2022, we had ~~$36.2~~$20.7 million of cash and cash equivalents, compared to ~~$71.4~~$45.6 million at December 31, ~~2020.~~2021. Our September 30, ~~2021~~2022 cash and cash equivalents balance does not include $12.4 million of restricted cash that is currently held in escrow under the terms of our convertible senior secured notes due 2024, further described below under Financing Arrangements~~, which may potentially be released from escrow if we pay interest on those notes using shares of our common stock.~~. We incurred a net loss of ~~$83.4~~$85.1 million and ~~$99.6~~$104.0 million for the nine-month period ended September 30, ~~2021~~2022 and the year ended December 31, ~~2020.~~2021, respectively.

Our ability to meet our future operating requirements, repay our liabilities, and meet our other obligations, and continue as a going concern are dependent upon a number of factors, including our ability to generate cash from product sales, reduce planned expenditures, and obtain additional financing. If we are unable to generate sufficient cash flow from the sale of our products, we may be required to adopt one or more alternatives, subject to the restrictions contained in the indenture governing our 2024 Notes, such as further reducing expenses, selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous and which are likely to be highly dilutive. Also, our ability to raise additional capital and repay or restructure our indebtedness will depend on the capital markets and our financial condition at such time, among other factors. In addition, financing may not be available when needed, at all, on terms acceptable to us or in accordance with the restrictions described above.

On June 22, 2022, we received notice that we are no longer in compliance with Nasdaq’s continued listing requirements because the trading price of our common stock had fallen below $1.00 for a period of more than 30 consecutive business days. We have 180 days, or until December 19, 2022, in order to regain compliance with this requirement in order to avoid potential delisting of our common stock, which would have significant adverse consequences both for the liquidity of our common stock and under the Indenture governing the 2024 Notes. To regain compliance with the Minimum Bid Requirement, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during this 180-day period, unless the Staff exercises its discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If our common stock is delisted, holders of the 2024 Notes would have the right to require us to repurchase the 2024 Notes for 100% of their principal amount. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, we would be unable to pay, which would result in a default under the Indenture. Such a default could, in turn, result in our bankruptcy or liquidation. On November 11, 2022, we held a special meeting of stockholders in order authorize our Board of Directors to approve the amendment and restatement of the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio of any whole number in the range of 1-for-2 to 1-for-20 within one year following the conclusion of the special meeting. At the special meeting, our stockholders voted to authorize the Board of Directors to effect a reverse stock split. We believe that this approval by stockholders of the reverse stock split proposal, will, if necessary as determined by the Board of Directors, enable us to maintain its listing on the Nasdaq Global Select Market, which forms the basis of our long-term strategic planning.

We believe that our existing cash and cash equivalents will be sufficient to cover our cash flow requirements for at least the next twelve months from the issuance date of these financial statements. However, our future requirements may change and will depend on numerous factors, some of which may be beyond our control.

On December 24, 2019, ~~the Company~~we completed the private exchange of $276.0 million aggregate principal amount of ~~then-outstanding~~our outstanding 1.75% Convertible Senior Notes due 2021 (the “2021 Notes”) for a combination of ~~newly-issued~~newly issued 6.00% Convertible Senior Secured Notes due 2024 (the “2024 Notes”) and cash. For each $1,000 principal amount of exchanged 2021 Notes, ~~the Company~~we issued $750 principal amount of the 2024 Notes and made a cash payment of $200 (the “Exchange”). In the aggregate, ~~the Company~~we issued approximately $207.0 million aggregate principal amount of the 2024 Notes and paid approximate $55.2 million in cash to participating holders. The Exchange was conducted with a limited number of institutional holders of the 2021 Notes pursuant to Exchange Agreements dated as of December 20, ~~2019 (each, an “Exchange Agreement”).~~2019. The 2021 Notes received by us in the Exchange were cancelled in accordance with their terms. Accordingly, upon completion of the Exchange, $69.0 million of the 2021 Notes remained outstanding. On June 15, 2021, we repaid the outstanding balance of the 2021 Notes at their maturity date using cash on hand.

The 2024 Notes were issued pursuant to an Indenture, dated as of December 23, 2019, among ~~the Company, its~~us, our wholly owned subsidiary, Civitas Therapeutics, Inc. (along with any domestic subsidiaries acquired or formed after the date of issuance, the “Guarantors”), and Wilmington Trust, National Association, as trustee and collateral agent (the “2024 Indenture”). The 2024 Notes are senior obligations of ~~the Company~~us and the Guarantors, secured by a first priority security interest in substantially all of the assets of ~~the Company~~us and the Guarantors, subject to certain exceptions described in the Security Agreement, dated as of December 23, 2019, between the grantors party thereto and Wilmington Trust, National Association, as collateral ~~agent (the “Security Agreement”).~~agent.

The 2024 Notes will mature on December 1, 2024 unless earlier converted in accordance with their terms prior to such date. Interest on the 2024 Notes is payable semi-annually in arrears at a rate of 6.00% per annum on each June 1 and December 1, beginning on June 1, 2020. ~~The Company~~Under the 2024 Indenture, we may elect to pay interest in cash or shares of ~~the Company’s~~our common stock, subject to the satisfaction of certain conditions. If ~~the Company elects~~we elect to pay interest in shares of common stock, such common stock will have a per share value equal to 95% of the daily volume-weighted average price for the 10 trading days ending on and including the trading day immediately preceding the relevant interest payment date. ~~In June 2021,~~On October 18, 2022, we announced that we will not use common stock to make the ~~Company issued 1,635,833~~approximately $6.2 million interest payment due on December 1, 2022. Additionally, based on the current market price of our common stock and our remaining authorized shares of common stock ~~in satisfaction of~~that are not reserved for other purposes, we believe that for the foreseeable future interest ~~payable to holders of~~payments on the 2024 ~~Notes on June 1, 2021. In connection with this stock-based interest payment approximately $6.2 million of accrued interest was released from restricted case and became available~~notes will have to ~~the Company for other purposes.~~be made in cash.

The 2024 Notes are convertible at the option of the holder into shares of our common stock ~~of the Company~~ at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. The adjusted conversion rate for the 2024 Notes is 47.6190 shares of ~~the Company’s~~our common stock per $1,000 principal amount of 2024 Notes, representing an adjusted conversion price of approximately $21.00 per share of common stock. The conversion rate was adjusted to reflect the 1-for-6 reverse stock split effected on December 31, 2020 and is subject to additional adjustments in certain circumstances as described in the 2024 Indenture.

~~The Company~~We may elect to settle conversions of the 2024 Notes in cash, shares of ~~the Company’s~~our common stock or a combination of cash and shares of ~~the Company’s~~our common stock. Holders who convert their 2024 Notes prior to June 1, 2023 (other than in connection with a make-whole fundamental change) will also be entitled to an interest make-whole payment equal to the sum of all regularly scheduled stated interest payments, if any, due on such 2024 Notes on each interest payment date occurring after the conversion date for such conversion and on or before June 1, 2023. In addition, ~~the Company~~we will have the right to cause all 2024 Notes then outstanding to be converted automatically if the volume-weighted average price per share of ~~the Company’s~~our common stock equals or exceeds 130% of the adjusted conversion price for a specified period of time and certain other conditions are satisfied.

Holders of the 2024 Notes will have the right, at their option, to require ~~the Company~~us to purchase their 2024 Notes if a fundamental change (as defined in the 2024 Indenture) occurs, such as a delisting of our common stock from the Nasdaq Global Select Market, in each case, at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. If a make-whole fundamental change occurs, as described in the 2024 Indenture, and a holder elects to convert its 2024 Notes in connection

with such make-whole fundamental change, such holder may be entitled to an increase in the adjusted conversion rate as described in the 2024 Indenture.

Subject to a number of exceptions and qualifications, the 2024 Indenture restricts our ability and the ability of ~~the Company and~~ certain of ~~its~~our subsidiaries to, among other things, (i) pay dividends or make other payments or distributions on their capital stock, or purchase, redeem, defease or otherwise acquire or retire for value any capital stock, (ii) make certain investments, (iii) incur indebtedness or issue preferred stock, other than certain forms of permitted debt, which includes, among other items, indebtedness incurred to refinance the 2021 Notes, (iv) create liens on their assets, (v) sell their assets, (vi) enter into certain transactions with affiliates or (vii) merge, consolidate or sell of all or substantially all of their assets. The 2024 Indenture also requires ~~the Company~~us to make an offer to repurchase the 2024 Notes upon the occurrence of certain asset sales.

The 2024 Indenture provides that a number of events will constitute an event of default, including, among other things, (i) a failure to pay interest for 30 days, (ii) failure to pay the 2024 Notes when due at maturity, upon any required repurchase, upon declaration of acceleration or otherwise, (iii) failure to convert the 2024 Notes in accordance with the 2024 Indenture and the failure continues for five business days, (iv) not issuing certain notices required by the 2024 Indenture within a timely manner, (v) failure to comply with the other covenants or agreements in the 2024 Indenture for 60 days following the receipt of a notice of non-compliance, (vi) a default or other failure by ~~the Company~~us to make required payments under ~~other indebtedness of the Company~~our or certain ~~subsidiaries~~of our subsidiaries; other indebtedness having an outstanding principal amount of $30.0 million or more, (vii) failure by ~~the Company~~us or certain of our subsidiaries to pay final judgments aggregating in excess of $30.0 million, (viii) certain events of bankruptcy or insolvency and (ix) the commercial launch in the United States of a product determined by the U.S. FDA to be bioequivalent to Inbrija. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, all outstanding 2024 Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 2024 Notes may declare all the notes to be due and payable immediately.

~~The~~ ~~2021 Notes~~ ~~received by the Company in the Exchange were cancelled in accordance with their terms. Accordingly, upon completion of the Exchange, $69.0 million of the~~ ~~2021 Notes~~ ~~remained outstanding.~~

~~The Company~~We assessed all terms and features of the 2024 Notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, ~~the Company~~we assessed the economic characteristics and risks of the 2024 Notes, including the conversion, put and call features. ~~The Company~~We concluded the conversion features required bifurcation as a derivative. The fair value of the conversion ~~feature~~features derivative was determined based on the difference between the fair value of the 2024 Notes with the conversion options and the fair value of the 2024 Notes without the conversion options using a binomial model. ~~The Company~~We determined that the fair value of the derivative upon issuance of the 2024 Notes was $59.4 million and recorded this amount as a derivative liability with an offsetting amount as a debt discount as a reduction to the carrying value of the 2024 Notes on the closing date, or December 24, 2019. There are several embedded features within the 2024 Notes which, upon issuance, did not meet the conditions for equity classification. As a

result, these features were aggregated together and recorded as the derivative liability conversion option. The conversion feature is measured at fair value on a quarterly basis and the changes in the fair value of the conversion feature for the period will be recognized in the consolidated statements of operations.

~~The Company~~We received stockholder approval on August 28, 2020 to increase the number of authorized shares of ~~the Company’s~~our common stock from 13,333,333 shares to 61,666,666 shares. As a result of the share approval, ~~the Company~~we determined that multiple embedded conversion options met the conditions for equity classification. ~~The Company~~We performed a valuation of these conversion options as of September 17, 2020, which was the date ~~the Company~~we completed certain securities registration ~~obligations.~~obligations for the shares underlying the 2024 Notes. The resulting fair value of these conversion options was $18.3 million, which was reclassified to equity and presented in the statement of stockholder’s equity as of September 30, 2020, net of the $4.4 million tax impact. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. ~~The Company~~We performed a valuation of the derivative liability related to certain embedded conversion features that are precluded from equity classification. The fair value of these conversion features was calculated to be ~~$0.3 million, representing a change of $0.9 million that is recognized in the consolidated statement of operations for the nine-month period ended~~negligible as of September 30, ~~2021.~~

2022. The outstanding 2024 Note ~~balance~~balances as of September 30, ~~2021~~2022 consisted of the following:

(In thousands)	September 30, 2021			September 30, 2022
Liability component:
Principal	$	207,000		$	207,000
Less: debt discount and debt issuance costs, net		(59,553	)		(44,240	)
Net carrying amount	$	147,447		$	162,760
Equity component	$	18,257		$	18,257
Derivative liability-conversion Option	$	325		$	—

In June 2014, ~~the Company~~we issued $345 million aggregate principal amount of 1.75% Convertible Senior Notes due 2021 (the “2021 Notes”). On December 24, 2019, ~~the Company~~we completed the private exchange of $276.0 million aggregate principal amount of then-outstanding 2021 Notes for a combination of ~~newly-issued~~newly issued 6.00% Convertible Senior Secured Notes due 2024 and cash. Accordingly, upon completion of the exchange, $69.0 million of the 2021 Notes remained outstanding. On June 15, 2021, ~~the Company~~we repaid the outstanding balance of the 2021 Notes at their maturity date using cash on hand.

~~Non-convertible~~Our Biotie subsidiary received fourteen non-convertible capital loans ~~were~~ granted by Business Finland (formerly Tekes), for research and development of specific drug candidates, with an aggregate adjusted acquisition-date fair value of $20.5 million (€18.2 million) and aan aggregate carrying value of ~~$28.0~~$24.9 million as of September 30,~~, 2021.~~ 2022. The loans are ~~composed of fourteen non-convertible loans. The loans bear interest based on the greater of 3% or the base rate set by Finland’s Ministry of Finance minus one (1) percentage point.~~ ~~The maturity dates for these loans range from eight~~ to ~~ten years from the date of issuance, however, according to certain terms and conditions of the loans, the Company may repay the principal and accrued and unpaid interest of the loans~~be repaid only when the consolidated retained earnings of Biotie from the development of specific loan-funded product candidates is sufficient to fully repay the loans. In light of the status of the loan-funded product candidates, we filed an application with Business Finland for waiver of the loans and accrued interest. In July 2022, Business Finland granted these waivers, which will become effective upon Biotie’s compliance with specified conditions to be completed, including a residual payment of approximately $50,000 for certain of these loans. As of September 30, 2022, Biotie had approximately $14.5 million in cash.

In addition to the non-convertible capital loans described above, Research and Development Loans (“R&D ~~Loans”~~loans”) were granted to Biotie by Business Finland with an acquisition-date fair value of $2.9 million (€2.6 million) and a carrying value of ~~$0.0 million~~$0 as of September 30,~~, 2021. The R&D Loans bear interest based on the greater of 1% or the base rate set by Finland’s Ministry of Finance minus three (3) percentage points.~~ ~~The repayment of these~~ 2022. These loans ~~began in January 2017. The loan principal is paid~~were repaid in equal annual installments ~~over a 5 year period, which ended~~from January 2017 through January 2021.

At September 30, ~~2021,~~2022, cash and cash equivalents were approximately ~~$36.2~~ $20.7million, as compared to ~~$71.4~~$45.6 million at December 31, ~~2020.~~2021. Our cash and cash equivalents consist of highly liquid investments with original maturities of three months or less at date of purchase and consist of investments in a Treasury money market fund. Also, we maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. Our September 30, ~~2021~~2022 cash and cash equivalents balance does not include $12.4million of restricted cash that is currently held in escrow under the terms of our convertible senior secured notes due 2024, further described above under Financing Arrangements, which may potentially be released from escrow if we pay interest on those notes using shares of our common ~~stock.~~stock (the amount released would correspond to the amount of interest paid using shares).

Net cash used in operations was ~~$44.6~~$30.1 million for the nine-month period ending September 30, ~~2021.~~2022. Cash used by operations for the nine-month period ended September 30, ~~2021~~2022 was primarily due to net loss of $83.4 million, a change in acquired contingent consideration obligation of $4.2 million, non-cash royalty revenue of $8.9 million, deferred tax benefit of $6.8 million, a decrease in other non-current liabilities of $1.0 million, and a change in the derivative liability of $0.9 million. This was partially offset by share based compensation expense of $2.5 million, amortization of debt discount and debt issuance costs of $12.7 million, depreciation and amortization of $25.5 million, an increase in accounts payable, accrued expenses and other current liabilities of $4.9 million, a decrease in accounts receivable of $6.6 million, a decrease in inventory of $5.8 million, and a decrease in prepaid expenses and other assets of $2.6to:

Net cash used in investing activities for the nine-month period ended September 30, ~~2021 was $0.2 million, which~~2022 was due primarily to purchases of property and equipment and intangible assets of ~~$0.2~~$0.3 million.

Net cash provided by financing activities for the nine-month period ended September 30, ~~2021~~2022 was $4.3 million, which was primarily due to net proceeds from the sale of the Chelsea facility of $74.0 million, partially offset by the repayment of Convertible Senior Notes due in June 2021 of $69.0 million, and the repayment of loans payable of $0.7 million.$0.

A summary of our minimum contractual obligations related to our material outstanding contractual commitments is included in Note 13 of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business.

Under certain agreements, we are required to pay royalties or license fees and milestones for the use of technologies and products in our research and development activities and in the commercialization of products. The amount and timing of any of the foregoing payments are not known due to the uncertainty surrounding the successful research, development and commercialization of the products. As of September 30, ~~2021, we have inventory-related~~2022, the minimum remaining purchase ~~commitments of approximately $0.7~~commitment to Catalent was $4.5 million ~~as compared~~through December 31, 2022, less any payments to ~~$2.5~~Catalent for actual product delivered and $18 million ~~as of September 31, 2020.~~annually each year thereafter. Under our agreement with Catalent, we are obligated to make minimum inventory purchase commitments for Inbrija through the expiration of the agreement on December 31, 2030. As of September 30, ~~2021, the minimum remaining~~2022, we have additional inventory-related purchase ~~commitment~~commitments of approximately $2.5million, as compared to ~~Catalent was $4~~$0.7 million ~~through December 31, 2021, and $18 million annually each year thereafter.~~as of September 30, 2021.

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Effective January 1, 2021, ~~the Company~~we adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740). Effective January 1, 2022, we adopted ASU 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.” Other than the adoption of ~~the~~these new accounting guidance, our significant accounting policies have not changed materially from December 31, ~~2020~~2021.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act) we carried out an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the third quarter of ~~2021,~~2022, the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial ~~Officer.~~Officer and Treasurer. Based on that evaluation, these officers have concluded that, as of September 30, ~~2021,~~2022, our disclosure controls and procedures were effective to achieve their stated purpose.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations, and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding disclosure.

In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, including our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, concluded that there were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

From time to time, we may be involved in litigation or other legal proceedings relating to claims arising out of operations in the normal course of our business, including the ~~DRI matter~~matters described below. The outcome of litigation and other legal proceedings is unpredictable, and regardless of outcome, they can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

~~On November 9,~~In July 2020, ~~Drug Royalty III, L.P., and LSRC III S.ar.l. (collectively, “DRI”)~~we filed an arbitration ~~claim against us~~demand with the American Arbitration Association ~~under a September 26, 2003 License Agreement that we originally entered into with Rush-Presbyterian St. Luke’s Medical Center (“Rush”). DRI previously purchased license royalty rights under~~against Alkermes, PLC after the ~~license agreement from Rush. DRI alleges~~parties were unable to resolve a dispute over license and supply royalties following the ~~last-to-expire~~2018 expiration of an Alkermes patent ~~covering sales~~relating to AMPYRA. On October 16, 2022, we announced that a three-judge arbitration panel issued a final decision in this dispute and awarded to us $15 million plus prejudgment interest of $1.5 million. In addition, as a result of the ~~drug Ampyra~~panel’s ruling, we will no longer have to pay Alkermes any royalties on net sales for license and supply of AMPYRA, and we are now free to use alternative sources for supply of AMPYRA, which we have already secured. On October 21, 2022, we made a submission to the arbitration panel to correct the award to include an additional $1.6 million that was inadvertently omitted from the initial award calculation, which amount Alkermes does not dispute. We are awaiting the arbitration tribunal’s decision on this corrected award amount and the amount of pre-judgment interest to be applied to this corrected award amount.

On August 20, 2020, ratiopharm Gmbh (an affiliate of Teva Pharmaceutical Industries Ltd.) filed nullity actions against us in the German Federal Patent Court seeking to invalidate both of our German patents that derived from our European patents, EP 1732548 (the ‘548 patent) and EP 2377536 (the ‘536 patent), with claims directed to the use of a sustained dalmfapridine composition (known under the ~~license agreement,~~trade name Fampyra in the European Union) to increase walking speed in a patient with multiple sclerosis. In November 2021, the German Federal Patent Court issued preliminary opinions indicating that the claimed subject matter of the ‘548 patent lacked inventive step and ~~is claiming damages based~~the claimed subject matter of the ‘536 patent lacked novelty and inventive step. At an oral hearing in February 2022, the German court dismissed ratiopharm’s action against the ‘536 patent as inadmissible because of ongoing formality proceedings relating to the ‘536 patent in the European Patent Office. At an oral hearing in April 2022, the German court dismissed ratiopharm’s action against the ‘548 patent as inadmissible because of ongoing formality proceedings relating to the ‘548 patent in the European Patent Office.Ratiopharm has appealed the decision on ~~unpaid license royalties~~the ‘536 patent but not the decision on the ‘548 patent, and could refile the nullity actions. Ratiopharm has commenced a generic launch in Germany, notwithstanding the dismissals of ~~$6 million plus interest.~~the nullity actions. On January 11, 2022, STADA Arzneimittel also filed a nullity action against the ‘536 patent, and on July 27, 2022, Teva GmbH also filed a nullity action against the ‘548 patent, both in the same court as the ratiopharm nullity actions. We ~~believe we have valid defenses against this claim~~are working with Biogen to vigorously defend these actions and ~~intend to defend ourselves vigorously.~~enforce our patent rights.

Item 1 of Part II of our Quarterly Reports on Form 10-Q for the quarters ended March 31, ~~2021~~2022 and June 30, ~~2021~~2022, include prior updates to the legal proceeding in Germany described above.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as updated in our Quarterly Reports subsequently filed during the current fiscal year, including this report, all of which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Following is the restated text of certain risk ~~factor~~factors, as well as additional risk factors, to report changes since our publication of risk factors in our ~~2020~~2021 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q for the quarters ended March 31, ~~2021~~2022, and June 30, ~~2021.~~2022.

Our ~~restructurings and associated organizational changes may not adequately reduce our expenses, may lead~~ability to ~~additional workforce attrition, and may cause operational disruptions.~~

~~In January and September 2021, we implemented corporate restructurings to reduce costs,~~ ~~more closely align operating expenses with expected revenue,~~ ~~and focus our resources~~continue as a going concern is dependent on ~~Inbrija (levodopa inhalation powder). As part~~a significant amount of ~~these restructurings, we substantially reduced employee headcount~~. ~~Further restructuring activities may be~~cash required ~~in the future, depending in particular on the rate of decline in our sales of Ampyra due to generic competition and whether we are able to sufficiently increase sales of Inbrija. Our~~ ~~restructurings~~ may have other unintended consequences as well, including, for example, making it more difficult for us to attract and retain highly skilled personnel in a competitive environment (particularly given that we have implemented four corporate restructurings since 2017). We have recently experienced workforce attrition in various functions across our business, which may be attributable to our corporate restructurings, our current business circumstances, a combination of both, or other factors. Our efforts to adjust our operations with the reduced workforce may not be successful in preventing disruption to our business, and with the reduced workforce we lack redundancy in important functions across our business. We are increasingly relying on the services of a contract commercial organization to provide sales representatives in response to substantial sales force attribution. Further loss of one or more of our key employees, additional loss of multiple employees in particular functions, and/or our inability to attract replacement or additional qualified personnel could substantially impair our ability to operate our business and ~~implement~~service our ~~business plan, particularly our efforts to successfully commercialize Inbrija.~~

~~Our inability to attract and retain key management and other personnel, or maintain access to expert advisors, may hinder~~debt, as well as our ability to ~~execute~~obtain additional funding in the future; we may not have sufficient cash flow from our business ~~plan.~~to continue to sufficiently fund our operations and pay our substantial debt.

We ~~are highly dependent on the services of Dr. Ron Cohen, our President and Chief Executive Officer, as well as the other principal members~~will need to expend substantial resources forcommercialization of our ~~management and scientific, regulatory, and commercial personnel. Our success depends in large part upon~~marketed products, including costs associated with the commercialization of Inbrija. In addition, our ability to ~~attract and retain highly qualified personnel with~~make scheduled payments of the ~~knowledge and experience needed for these~~

principal of, to pay interest on, or to refinance our indebtedness of $207.1 million of convertible senior secured notes that mature in December 2024, depends on our future performance, which is subject to economic, financial, competitive and other ~~areas of~~factors beyond our ~~business. We do~~control. Our business may not ~~maintain "key man" life insurance policies on~~continue to generate cash flow from operations in the ~~lives of~~future sufficient to support our ~~officers, directors or employees.~~

~~We face intense competition in~~operations and service our ~~hiring efforts with other pharmaceutical~~debt and biotechnology companies, as well as universities and nonprofit research organizations. We may be unable to attract or retain qualified personnel because their competitive salaries and other compensation may increase to levels that we are unwilling or unable to provide. In addition, material adverse developments with our business, including the 2017 adverse patent decision relating to our Orange Book-listed Ampyra patents, the termination or suspension ofmake necessary capital expenditures. Also, research and development programs ~~four reductions~~will not generate any revenues for the foreseeable future, if ever, because they have been either suspended or are in ~~force since 2017,~~early stages and ~~the current progress~~are subject to numerous risks including those described elsewhere in these risk factors.

Our ability to meet our future operating requirements, repay our liabilities, meet our other obligations, and continue as a going concern are dependent upon a number of ~~our Inbrija commercial launch, may impede~~factors, including our ability to ~~attract and retain highly qualified personnel. We have recently experienced workforce attrition in various functions across our business, which may be attributable to one or more of~~generate cash from product sales, reduce planned expenditures, maintain the factors described above or other factors. Our efforts to adjust our operations with the reduced workforce may not be successful in preventing disruption to our business, and with the reduced workforce we lack redundancy in important functions across our business. We are increasingly relying on the services of a contract commercial organization to provide sales representatives in response to substantial sales force attribution. Further loss of one or more of our key employees, additional loss of multiple employees in particular functions, and/or our inability to attract replacement or additional qualified personnel could substantially impair our ability to operate our business and implement our business plan, particularly our efforts to successfully commercialize Inbrija. Also, due to the recent attrition, four reductions in force since 2017, and our 2021 sale of our Chelsea manufacturing operations, we believe we lack personnel needed for, and would need to hire replacements before continuing with, research and development and clinical programs. Our inability to attract qualified replacements needed for research and development and clinical programs could substantially impair our ability to advance those programs, if we determine to make further investments in those programs.

We also have scientific, medical, clinical, marketing and other advisors who assist us in our research and development, clinical, and commercial strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. Similarly, they may have arrangements with other companies to assist in the development and commercialization of products that may compete with ours.

~~This table provides information about our purchases of shares of Company stock during the three-month period ended September 30, 2021.~~

On November 12, 2021, Dr. Ron Cohen, our President and CEO, was granted options to purchase 100,000 shares of our common stock under our 2015 Omnibus Incentive Compensation Plan. The stock options have an exercise price equal to the closing pricelisting of our common stock on the ~~grant date, vest over four years~~Nasdaq Global Select Market and obtain additional financing. If we are unable to generate sufficient cash flow from the ~~grant~~sale of our products, we will be required to adopt one or more alternatives, subject to the restrictions contained in the indenture governing our 2024 Notes, such as further reducing expenses, selling assets, restructuring debt, or obtaining additional capital on terms that may be onerous and which are likely to be highly dilutive. Also, our ability to raise additional capital and repay or restructure our indebtedness will depend on the capital markets and our financial condition at such time, among other factors. In addition, financing may not be available when needed, at all, on terms acceptable to us or in compliance with the restrictions contained in our debt instruments. Furthermore, a determination that there is substantial doubt about a company’s ability to continue as a going concern is generally viewed unfavorably by current and prospective investors, as well as by analysts and creditors. As a result of these factors, we may not be able to engage in any of the alternative activities, or engage in such activities on desirable terms, which could harm our business, financial condition and results of operations, as well as result in a default on our debt obligations. If we are unable to take these actions, we may be forced to significantly alter our business strategy, substantially curtail our current operations, or cease operations altogether.

Our future operating requirements may change and will depend on numerous factors. These include the possibility that our common stock could be delisted from Nasdaq, which would have significant negative consequences under the indenture governing the 2024 Notes. If our common stock is delisted, holders of the 2024 Notes would have the right to require us to repurchase the 2024 Notes for 100% of their principal amount, plus any accrued and unpaid interest, and result in an increase in the conversion rates of such notes. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, we would be unable to pay, which would result in a default under the indenture governing the 2024 Notes. Such a default could, in turn, result in our bankruptcy or liquidation. On November 11, 2022, we held a special meeting of stockholders in order authorize our Board of Directors to approve the amendment and restatement of the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio of any whole number in the range of 1-for-2 to 1-for-20 within one year following the conclusion of the special meeting. At the special meeting, our stockholders voted to authorize the Board of Directors to effect a reverse stock split. We believe that this approval by stockholders of the reverse stock split proposal, will, if necessary as determined by the Board of Directors, enable us to maintain our listing on the Nasdaq Global Select Market, which forms the basis of our long-term strategic planning.

We believe that our existing cash and cash equivalents will be sufficient to cover our cash flow requirements for at least the next twelve months from the issuance date inof these financial statements. However, our future requirements may change and will depend on numerous factors, some of which may be beyond our control.

We may not have the ability to raise the funds necessary to settle conversions of our convertible notes or to repurchase notes upon a fundamental change.

Holders of our convertible senior secured notes due 2024 have the right to require us to repurchase their notes upon the occurrence of a fundamental change, including a delisting of our common stock from the Nasdaq Global Select Market, at a repurchase price equal ~~quarterly installments,~~to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any. This use of cash may have a material adverse effect on our liquidity. Furthermore, we may not have enough available cash or be able to obtain financing at the time we are required to make cash payments with respect to the 2024 Notes, whether upon maturity, conversion, or occurrence of a fundamental change. In addition, our ability to repurchase the notes or to pay cash upon conversion of the notes may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase notes at a time when the repurchase is required by the indenture pursuant to which the notes were issued or to make cash payments to settle conversions or make interest payments (including make-whole interest payments) as required by the notes indenture, would constitute a default under the indenture. If our common stock is delisted, this would constitute a fundamental change under the indenture governing the 2024 Notes and holders of the 2024 Notes

would have the right to require us to repurchase the 2024 Notes for 100% of their principal amount. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, we would be unable to pay, which would result in a default under the indenture governing the 2024 Notes. Such a default could, in turn, result in our bankruptcy or liquidation. While our stockholders voted on November 11, 2022 to authorize the Board of Directors to effect a reverse stock split, there can be no assurance that this or any other measures will be sufficient to avoid a delisting of our common stock and thereby trigger a fundamental change repurchase offer to holders of our 2024 Notes as described above.

We received a notice from Nasdaq that we are not in compliance with Nasdaq’s minimum bid price listing rule.

On June 22, 2022, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below $1.00 per share, which is the minimum closing price required to maintain continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Requirement”). The Notice has no immediate effect on the listing of our common stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days to regain compliance with the Minimum Bid Requirement. To regain compliance with the Minimum Bid Requirement, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 ~~year term.~~consecutive business days during this 180-day period, unless the Staff exercises its discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). Our compliance period will expire on December 19, 2022. We are currently evaluating our alternatives to resolve this listing deficiency, such as, subject to approval of our stockholders and Board ~~awarded these~~of Directors, implementing a reverse stock ~~options after considering~~split. However, there can be no assurance that a reverse stock split would result in a sustained higher stock price that would allow us to meet the ~~current~~Nasdaq stock price listing requirements, and the announcement and implementation of a reverse stock split could negatively affect the price of our common stock. In the event that we do not regain compliance within the Minimum Bid Requirement within the 180-day period and we receive notice from the Staff that our common stock is being delisted, Nasdaq rules permit us to appeal any such delisting determination by the Staff to a Hearings Panel (the “Panel”). We expect that our stock would remain listed pending the Panel’s decision. However, there can be no assurance that if we appeal the delisting determination to the Panel, such appeal would be successful, or that we will be able to regain compliance with the Minimum Bid Requirement or maintain compliance with the other Nasdaq listing requirements.

If our common stock is delisted from the Nasdaq Global Select Market, holders of the 2024 Notes would have the right to require us to repurchase the 2024 Notes for 100% of their principal amount, plus any accrued and unpaid interest, and result in an increase in the conversion rates of such notes. If holders representing a significant amount of the 2024 Notes were to exercise this repurchase right, we would be unable to pay, which would result in a default under the indenture governing the 2024 Notes. Such a default could, in turn, result in our bankruptcy or liquidation.

A delisting of our common stock from the Nasdaq Global Select Market would materially and adversely affect a stockholder’s ability to dispose of, or to obtain accurate quotations as to the market value of, ~~Dr. Cohen’s equity awards in light~~our common stock. Furthermore, our common stock could become subject to the SEC’s “penny stock” regulations. Under such regulations, broker-dealers are required to, among other things, comply with disclosure and special suitability determinations prior to the sale of shares of common stock. If our common stock becomes subject to these regulations, the ~~current~~ market price of our common stock and ~~also reductions~~the liquidity thereof would be materially and adversely affected.

Lastly, a delisting from the Nasdaq Global Select Market could greatly impair our ability to ~~Dr. Cohen’s compensation implemented in connection with~~raise additional necessary capital through equity or debt financing, or use shares of common stock for business development or other corporate purposes.

While our ~~recent corporate restructuring. Based~~stockholders voted on ~~these considerations,~~November 11, 2022 to authorize the Board ~~awarded Dr. Cohen these options as an incentive~~of Directors to ~~better align his long-term interests with those~~effect a reverse stock split, there can be no assurance that this or any other measures will be sufficient to avoid a delisting of our common stock and thereby trigger a fundamental change repurchase offer to holders of our 2024 Notes as described above.

We cannot predict the effect that our reverse stock split will have on the market price for shares of our common stock.

Even though our stockholders approved a reverse stock split at the Special Meeting on November 11, 2022, we cannot predict the long-term effect of the reverse stock split upon the market price for shares of our common stock, and the history of similar reverse stock splits for companies in like circumstances has varied. Although the reverse stock split will initially result in an increased market price per share of our common stock, the market price per share may subsequently substantially decline and may continue to decline due to, among other factors, the performance of our business, economic conditions and other factors, some of which may not be under our control. Even with an increased market price per share, the total market capitalization of our shares might be lower than the total market capitalization before the reverse stock split and it could

continue to decline thereafter. There can be no assurance that implementing the reverse stock split will enable us to maintain our compliance with the Nasdaq listing requirements.

Potential generic Fampyra competition could affect our prospects for receiving additional Fampyra royalties.

Biogen’s commercialization of Fampyra depends on factors such as Biogen’s ability to obtain and maintain regulatory approvals, its ability to obtain and maintain adequate third party reimbursement as described further in these risk factors, as well as the extent to which Fampyra becomes subject to competition from generic versions marketed in European or other countries. Fampyra is no longer protected by regulatory marketing exclusivity in the EU, which expired in July 2021. Accordingly, generic drug manufacturers who have obtained or may obtain marketing approval for generic versions of Fampyra in European countries can potentially launch their products in those European countries, and we and Biogen would need to rely on enforcement of Fampyra patents to prevent competition from those generic versions. Fampyra is covered by claims of two European patents, which are set to expire in 2025, absent any additional exclusivity granted based on regulatory review timelines. However, it is uncertain whether we and Biogen would be successful in any Fampyra patent litigation with generic drug manufacturers, and we and Biogen may be unable to obtain injunctive or similar relief to prevent the commercial launch of a generic product while patent litigation is proceeding. Also, generic drug manufacturers have filed nullity actions in Germany against both of the German national patents derived from these two patents, and similar legal proceedings could be filed in other European countries challenging Fampyra patents. We and Biogen have been unable to obtain injunctive relief to prevent the commercial launch of generic products in Germany and such generic launch has commenced even though legal proceedings continue. The launch of generic products in Germany will erode Biogen’s market share and could embolden generic companies to launch in other countries. Biogen obtained commercial approval to distribute Fampyra in China in May 2021 and commenced product sales in June 2022. However, we do not know if Biogen will obtain approval to market and commercialize Fampyra in any new jurisdictions in the future, and there can be no assurance that Biogen will launch Fampyra in any new jurisdiction where they do obtain marketing approval. All of these factors could affect sales of Fampyra sales and accordingly our prospects for receiving additional Fampyra royalties in the future.

~~retention of his employment. These options will be taken into account by the Board in connection with any annual equity award program that is implemented in 2022.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~420 Saw Mill~~2 Blue Hill Plaza, 3^rd Floor, Pearl River, ~~Road, Ardsley,~~ New York		~~10502~~10965
(Address of principal executive offices)		(Zip Code)

	Title of each class		Trading Symbol		Name of each exchange on which registered
	Common Stock $0.001 par value per share		ACOR		Nasdaq Global Select Market

Class		Outstanding at November ~~5, 2021~~10, 2022
Common Stock, $0.001 par value per share		~~11,202,242~~24,337,814 shares

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of September 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	1
	Consolidated Statements of Operations (unaudited) for the ~~Three~~Three- and Nine-month Periods Ended September 30, ~~2021~~2022 and ~~2020~~2021	2
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the ~~Three~~Three- and Nine-month Periods Ended September 30, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the ~~Three~~Three- and Nine-month Periods Ended September 30, ~~2021~~2022 and ~~2020~~2021	4
	Consolidated Statements of Cash Flows (unaudited) for the Nine-month Periods Ended September 30, ~~2021~~2022 and ~~2020~~2021	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2526
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4042
Item 4.	Controls and Procedures	4142
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	4243
Item 1A.	Risk Factors	42
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	43
~~Item 5~~	~~Other Information~~	43
Item 6.	Exhibits	4547
Signatures		4648

(In thousands)
Restricted Stock and Performance Stock Units	Number of Shares
Nonvested at January 1, ~~2021~~2022		31116
Granted		~~261~~—
Vested		(97103	)
Forfeited		(537	)
Nonvested at September 30, ~~2021~~2022		~~142~~6

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

(In thousands)	Balance Sheet Classification	September 30, 2021		December 31, 2020
Right-of-use assets	Right of use assets	$	7,861	$	18,481
Current lease liabilities	Current portion of lease liabilities		9,316		7,944
Non-current lease liabilities	Non-current portion of lease liabilities		4,287		17,200


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
September 1-30, 2021	14,973	$4.38	-	-
August 1-31, 2021	-	-	-	-
July 1-31, 2021	-	-	-	-
Total	14,973	$4.38	-	-

Exhibit No.		Description
10.1*		Employment Agreement dated September 1, 2020, by and between the Company and Kerry Clem. Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on 8-K filed on September 9, 2021.31.1
~~31.1~~		Certification by the ~~Chief~~Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1		Certification by the ~~Chief~~Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101).

	Acorda Therapeutics, Inc.

	By:	/s/ Ron Cohen
Date: November ~~12, 2021~~14, 2022		Ron Cohen, M.D. President, Chief Executive Officer and Director (Principal Executive Officer)

	By:	/s/ Michael A. Gesser
Date: November ~~12, 2021~~14, 2022		Michael A. Gesser Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)