Harmony Biosciences Holdings, Inc. (HRMY) Earnings Call Transcript & Summary

Okay. Well, good afternoon, everyone. Welcome to the 3:50 p.m. session on day 3 of the 42nd Annual Goldman Sachs Global Healthcare Conference. My name is Graig Suvannavejh. I cover U.S. and European biopharma names for the firm, and it's my great pleasure to be hosting Harmony Biosciences in a fireside chat discussion today. And joining us from the company, CEO, John Jacobs; and CFO, Sandip Kapadia. Welcome, gentlemen. It's good to see you.

Thank you, Graig. Same here.

Okay. Great. I think a great place to start is just kind of maybe, John, you telling us a little bit more about the Harmony story. A relatively new company and a new publicly traded company, and certainly one that we're very positive on. But with that said, tell us a little bit of what you do and what you think your key areas of expertise are and why you think Harmony makes such a unique investment proposition.

Thank you, Graig, very much for the question and for welcoming us here today and to everyone in the audience for joining us today. Thank you so much. Well, look, we are a relatively new company, but we're certainly not a new team. We built this team from scratch, Graig, from the beginning to do one thing really well. And that's to develop and launch rare orphan neurological assets for patients who are living with rare diseases in the neuro space. And so we handpicked the team from scratch. Harmony is a company, everyone, that's focused on developing and commercializing treatments for patients who live with these disorders, especially where there's unmet medical need. And so many patients in rare diseases have nothing or limited therapy options. So that's our vision is to bring options forward for these patient populations. And starting with WAKIX, which is our core technology right now. WAKIX is a first-in-class molecule, Graig, differentiated with a novel MOA that works through histamine with unique attributes that we truly believe have the potential to succeed in expanding the existing multibillion-dollar narcolepsy market. But also to go beyond that, WAKIX is really a portfolio and a product opportunity as we see it. And Harmony itself together brings a strong balance sheet, this unique technology in WAKIX and a very deeply experienced management team in the space that we really believe has the potential to grow the company over the long term.

Maybe can you -- I do believe that the team that you've assembled is a key to the success that you've had thus far. Can you paint us a picture of the folks that you have brought on and what their experience has been that has helped the launch of WAKIX become successful as it is?

Thank you, Graig. Just a couple of examples. I mean, you look at our Chief Commercial Officer, Jeffrey Dierks, who led the Nuvigil, Provigil franchise for Teva Pharmaceuticals when it was branded. And he followed in my footsteps, and I led that franchise before from a marketing perspective in the United States. Dr. Jeffrey Dano, our Chief Medical Officer, who was involved in the original clinical development programs for Nuvigil back when. Our sales force, we have a 70-person sales team, 70 people strong. But that was over 2,000 resumes and applicants for those positions, Graig. And we took months to really handpick the sales reps, as an example, who have deep rare orphan neurology launch experience and proven success in that arena. And then executives like Sandip Kapadia who brings years of depth and experience in the capital markets in the biotechnology arena. Just a few examples of the type of employees that we were able to handpick. I was the fourth person or so hired in the company, Graig, and we've really built the company from scratch to do this well.

Before we go into perhaps a more detailed discussion around WAKIX, let's talk about the past year and certainly, for companies that are launching products amidst a COVID pandemic environment. And I've had a couple of such companies during our health care conference. But I'd love to get your perspective. If we were doing this a year ago and we're thinking about what WAKIX would look like, what end up happening, maybe give us your perspective of kind of the challenges that we're facing, Harmony and how you think the company did in meeting those challenges. Certainly, we were -- no one could have anticipated what this would have been like but would love to hear your perspective.

Yes, Graig. Thank you. And first, let me just acknowledge that WAKIX -- that we were able to perform with WAKIX successfully through the pandemic, but first acknowledge that, that was tough on everyone, just for families, for everyone in the United States, for companies, we all had to face in our own way, shape or form challenges from the COVID pandemic. And certainly, sitting back when we first had approval of the therapy the year prior and the product became available in November of 2019, we never expected to be right in the prime of our launch in the first few months into the teeth of a global pandemic. But I couldn't be more proud of our company and what we've been able to achieve to help patients. I mean, Graig, as you know, despite the headwinds from that pandemic, we closed the year at approximately $160 million in net sales. And Q4 represented over 20% growth in revenues. And despite a resurgence, even if we think back to Q4 with the weather events and wildfires and other things going on, a lot of offices were closing down, difficult access for salespeople, difficult for patients to see their physicians even, we were able to continue to drive strong organic demand for WAKIX. And that carried into Q1 2021, Graig. As COVID continued, Q1 represented our first profitable quarter in the history of Harmony and our fifth consecutive quarter of continued growth. And I don't know, Sandip, if you wanted to comment on Q1 headwinds and how we were able to continue to grow through that as well, coming out of the end of '20.

Yes. No. We had, obviously, great momentum coming out of 2020 where we had $160 million. And we still, despite some of the headwinds that you -- as you typically see in the first quarter, for many specialty products where you have higher gross-to-net deductions related to co-pay assistance and a lot of the things that an insurance resets and so forth. And even really, despite that, we're able to collect almost $60 million in sales in the first quarter, which is still a growth of about 6% versus the prior year -- versus the prior quarter in quarter 4. So that continued momentum continues into this year. And as John said, we have a fifth quarter of consecutive growth, and we expect quarter-over-quarter growth for the balance of this year as well.

And Graig, why were we able to achieve that, in our opinion, I mean, I think we were able to, in about 15 business days to pivot to full digital platform for our field-based teams, MSLs and sales reps. Our team did a remarkably good job of converting our assets to digital assets and using a platform that was quite flexible with health care providers and the patient community. We can communicate with folks over their cell phones, iPads, laptops and had hired the people, as we said before, that have deep experience in this arena. And that experience, Graig, includes relationships, sales reps that have known physicians for years. So when they do call, that phone gets answered, where it may not for someone who is brand new in that arena, right? So we were able to maintain very strong and robust connectivity with the medical community. And then also, and importantly, this market is rife with unmet need. Up to 3/4 of patients even who are on therapy for narcolepsy have residual symptoms that negatively impact their life. And they need and they desire new therapies. And physicians are looking for new therapies to help them. So maintaining that connectivity was essential, but also, the unmet need is aligning so well with the profile of WAKIX, in fact, bringing the first nonscheduled, nonaddictive therapy into the U.S. market for patients living with narcolepsy. And with the profile of WAKIX aligning so well to the unmet needs, maintaining that connectivity is what it took to continue driving the results we've seen.

I'd love to ask you this question, which I have been asking some other of my commercial-stage companies. Those particularly who have just been experiencing launching their first product in a pandemic environment. And it's been a mixed experience depending, obviously, on the company, depending on the drug in the therapeutic area. I have heard some companies say, look, our digital efforts were fantastic. We feel really good about how we're able to engage in a virtual world. Our reps couldn't get out there. But ultimately, we weren't in front of the physicians in person, and there is still -- there's an element of education that you don't get if you're not in front of the physician. And so I'd like to ask that question from the Harmony experience, if that is one that's shared or perhaps because of the products or because of the disease that you're treating, if there's just a very different dynamic here. And I guess, what I'm trying to ask is that pull-through that you're able to get because, obviously, being able to touch people digitally is different than actually having either patients get a prescription and be able to fill that prescription.

No. I agree, Graig. And look, it's -- in my personal opinion and in our experience in the past, we have an experienced team, there's nothing like a face-to-face interaction, especially when you're in a product launch and you're changing human behavior. You're educating a health care provider about a new therapy option, and health care providers have a big responsibility to make sure they understand how products work and how to safely use them and appropriately apply those products to their patients when they're in need. And so face-to-face is absolutely correlative with a more rapid or efficient market penetration, especially in a launch. But again, I think the modern technology as we've been using here today, Graig, right, versus being in an auditorium together, has its applicability and was -- and enabled us to maintain the right level of connectivity to maintain a good performance. But I have to say it's our belief that we would have performed even more strongly in 2020 had it not been for that global pandemic. And I think it's a true testament not only to the quality of our team and our experience but also to the tremendous unmet need, the amazing and courageous patient community and the health care providers who serve them, and the way that WAKIX profile aligns with their unmet needs. And it was that combination of effort that allowed us to perform. But again, sans COVID, I think we would have done a lot better. But that brings us to '21 now, Graig. And as I'm fully vaccinated. I'm very comfortable sharing that with everyone, and my entire family is as well. And we're in the office today, not wearing masks if we're not vaccinated. And we're seeing the countries start to open up. And I think, Sandip, we couldn't be more optimistic about the year ahead and our ability to help even more patients with WAKIX. And we're seeing continued strong organic demand, Graig. And so we're expecting quite a robust year in '21.

Maybe let's just double-click on that just for a moment. And so I do believe, also depending on the drug or depending on the therapeutic area, but America is reopening in different parts of the country in different ways. And with that said, as you think about where your sales force is, where your efforts are, where do you think we are today? In other words, are you seeing regional differences where perhaps doctors' offices are still closed for whatever reason, whereas perhaps all the assumption that we're all in the Northeast right now, it seems as if, by and large, we are reopening. So as we think about the evolution of WAKIX's sales and now that we're in June, so the second quarter is going to reflect April, May, June, and then we've got, obviously, third and fourth quarter, how should we be thinking about the evolution in terms of what you think you're seeing right now?

What I will say, I'll comment first and I'll pass it over to Sandip to talk about, we're not providing, as you know, specific projections, Graig, on a quarter-to-quarter basis, especially at this stage in the life of our company so far. But I will say what we have seen geographical pockets, some open up a lot more than others. And that's to be expected based on the rate of infection and the rate of vaccination, et cetera. And I know our leaders are trying their best to be careful and to open up appropriately in each of these pockets. But what hasn't changed, though, and we're seeing that as variable, but overall, it's opening up. It's more quick in some areas than others. But what hasn't changed is the patients living with narcolepsy were living with narcolepsy prior to COVID and living with it during COVID, and they'll be living with it for the rest of their lives, unfortunately after COVID. And so the unmet need and the opportunity in this marketplace is tremendous. That has never changed. And what COVID did was slow down our ability to get face-to-face with physicians, slow down the ability of patients connecting with their physicians and health care providers for med checks and diagnosis. But it didn't change anything about the unmet need and the opportunity in this market. And we're so optimistic that as it continues to lift, we expect to see continued strong momentum through the rest of the year. Sandip, did you want to comment on anything in Q2 that you feel comfortable sharing here?

Yes. Like you said, we're not obviously providing guidance within the quarter itself. But what I could say is Q1, obviously, we had some headwinds that we discussed a few minutes earlier. Obviously, you go through those headwinds. And certainly, that helps in quarter 2. And I think -- and also, one thing that I also want to highlight. We had almost 2,800 patients on therapy in Q1 with strong growth towards the end of the quarter. So -- which obviously will carry forward and support the company in future quarters as well. We have almost 1/3 of our prescribed targets who had at least written 1 prescription of WAKIX, again, a really strong indicator. So we're expanding our growth in terms of prescribers. We're expanding the number of patients on therapy and quite optimistic about the balance of the year. And particularly, obviously, as we return back to normal and our field force goes out and starts face-to-face engagement in the back half of this year, so we continue to expect that quarter-over-quarter growth.

Yes, Graig, we're supremely confident in our ability to keep growing the business and believe we've only really just begun to scratch the surface on potential to help patients with this unique medication. And thank you for that commentary, Sandip as well. And I'd say, Graig, that's -- as you know, we have 3-pillar strategy for growth at Harmony. And Pillar 1 is continued performance in the launch. And we're very confident about the organic demand, Sandip, that we're seeing and our strong financial position to be able to support that strategy. We finished Q1 with over $140 million in cash and cash equivalents and in a very good, strong financial position, generating cash and good revenues from WAKIX. That puts us in the position to execute on the other elements of our strategy as well, Graig. And as you know, Pillar 2 is expanding the utility of WAKIX beyond narcolepsy. Because WAKIX is not a sleep medication. WAKIX is a histamine modulator, inverse agonist/antagonist of the H3 receptor in the hypothalamus in the CNS. And what it does is up-regulate histamine in the CNS, which has applicability outside of narcolepsy and other rare orphan diseases. And as you know, we're already in the clinic with Prader-Willi syndrome patients. And through that program, we're seeking an indication for excessive daytime sleepiness. And we said that we would start our myotonic dystrophy program by the end of June, and we're on track for that. As you know, Graig, also seeking through that program an indication for excessive daytime sleepiness in that disease. And there's a common threat across these diseases that may not be apparent on the surface. So if you wouldn't mind, if I could take a moment to share that with investors.

Sure.

Right. These diseases are a function of hypothalamic dysfunction. And interestingly, across those 3 patient communities: narcolepsy, Prader-Willi and myotonic dystrophy, we see orexin depletion in the CNS. So orexin neuron depletion, which is at the root cause of excessive daytime sleepiness in narcolepsy. There's clinical evidence to show that there are subsets of patients, significant subsets, in PWS and DM, or myotonic dystrophy, with that same orexin depletion. In fact, in myotonic dystrophy, the #1 nonmuscular symptom that patients suffer from is excessive daytime sleepiness. 80% to 90% of patients suffer from that. And it's in the top 3 or so of symptoms they indicate are the most debilitating for them and what they want to see a therapy help with. Now sadly for that patient population to date, Graig, there's no approved therapy from FDA to help them in myotonic dystrophy. Should we be successful, we could be the first. And that community is absolutely thrilled that Harmony is on track to start that clinical trial by the end of this month. So we're very proud of that. We'll be able to move WAKIX, hopefully, as we anticipate success. Of course, that's our intention, that we can bring WAKIX forward hopefully to help patients with both Prader-Willi and myotonic dystrophy. And there's 40,000 diagnosed myotonic dystrophy patients in the U.S. and thought to be 140,000 living with DM type 1. And now there's a genetic test offered at birth to help increase the rate of diagnosis there. So we're quite optimistic that if you look at those 2 patient populations, from a therapeutic area perspective, it almost doubles our opportunity to help patients with WAKIX beyond narcolepsy. And then Pillar 3, if I might, Graig, is we won't remain a one-product company forever. And we built Harmony for that purpose of developing and launching rare orphan neurological assets to help patients with unmet medical needs that live with these diseases. And we're starting with WAKIX. And look, you could build a great company just around WAKIX with the attributes, right, Sandip? But what we want to do is add additional assets beyond that, Graig. And to do so with a focus on what we built the company to do well: rare orphan neurology and CNS. That's our focus. We're starting now early in our company life cycle with a dedicated team to look at that, so we can take our time drug to be thoughtful, about which assets we select and how we build that business out. So let me stop there.

You stole some of my thunder from my talk later, but with that...

Sorry.

If we can just come back and focus kind of on what you're seeing currently with WAKIX. And what I'm trying to get a better picture of and provide that for our audience is, where exactly is WAKIX being used? In which patients? And certainly, we know it's from mild to moderate patients. But is there a picture that you can paint for us in terms of like is it used broadly in mild to moderate patients? Is it being used, perhaps even in a frontline setting? Is it after -- just help us understand kind of where the product is being used and where you think it's resonating the most.

Well, Graig, I think WAKIX offers broad clinical utility due to its very nice tolerability profile, safety profile and the fact that it's a nonscheduled medication, the first and only approved in the U.S. for narcolepsy. And what we're hearing back from the health care provider community is they see broad clinical utility for the majority of their narcolepsy patients. And that's from a recent survey. We just disclosed those results in our latest earnings call. You may be familiar with them. Those slides are available on our website for people who want to look at that data. And that's with physicians who had experience hands on now in the United States with WAKIX as well as those who are familiar with our clinical trial data. And so we see WAKIX now sourcing from across the full narcolepsy spectrum, Graig, whether it's patients who had given up on therapy before. And as you know, of the 70,000-plus patients diagnosed with narcolepsy in the United States, roughly 1/3 had foregone therapy or given up on therapy and were just living with the disease. And roughly 2/3 are being treated usually in a polypharmacy setting. And WAKIX is being -- is sourcing from across both of those pools of patients and can safely be added on to standard of care therapies like Nuvigil or Provigil generics. And that PK drug-drug interaction data is right in our package label. Our sales team has that, and physicians can feel comfortable adding WAKIX right on top of gold standard therapies. It's not a stimulant. So WAKIX is often used in combination with both Nuvigil, Provigil and a stimulant and also in combination with Xyrem and other therapies, and it can be safely done so. Now a key piece of data there is the market grew 16%, as you know, in value in 2020, which was our first full year of launch. And you had 2 new therapies in Sunosi and WAKIX, which launched in '19. Xyrem is a branded therapy in the market. And together, the market grew in value because there's so much unmet need here, and patients need these therapies. And we welcome more therapies and company voices into the space.

That does paint a very good picture. I want to also get to the idea that, particularly in the first quarter, if we actually look by the numbers in terms of quarter-to-quarter growth, it was 6%, which was sequentially down versus the prior period. And with that said, perhaps it might be of importance for investors to get a better sense of why that should be a sign of -- a troubling sign.

Great question. Go ahead, Sandip, why don't you take this one?

Yes. Sure. I mean, look, as I mentioned previously, I mean, the first quarter typically for many companies, there's always headwinds from insurance plans resets and higher gross-to-net deductions and some of those things that sort of impact our overall top line. But what I think -- as I mentioned, we had 2,800 patients on therapy during that quarter, and that was up significantly from the prior quarter of 2,500, I believe, in quarter 4. So we continue to see good underlying patient growth. And some of the sort of softness, if you want to call it, in the first quarter, was really just driven by what -- I think you would see it across the spectrum of many specialty products. But we expect continued quarter-over-quarter growth for the balance of the year and certainly, as we get back to sort of normalcy and -- especially in the back half of the year.

John, you have mentioned in the past, at least going back to last year in 2020, that perhaps some of your sales were being impacted by the impact of the pandemic as it related to jobs and employment. And I think you've done a very noble thing in instead of having WAKIX users just lose access to the drug altogether, you've taken them on in terms of your patient assistance program. Just based on where we are today, what can you say about that trend and how you think that might perhaps reverse itself looking forward?

Thank you, Graig. And first, Sandip, nicely handled on that question. I will say we did have 9% patient growth, Graig, in demand and 6% on revenue, as you pointed out. And that delta is often you'll see companies, things like gross-to-net impact from that insurance reset in Q1, which then tends to carry forward in a positive way into subsequent quarters. And most companies face a little bit of a slowdown in that January into first half of February due to new insurance plans for patients. Just to get prescriptions processed and tend to have a -- in general, this isn't Harmony-specific, but a stronger March. And then you don't get the full credit in a quarter from a revenue perspective there or from an average patient number count. And that tends to carry on and pay in a multiplicative way, as you get into out-quarters from there, from Q1. So typical dynamics. We're not concerned from that at all. And actually, we see that strong continued organic demand, and we're very optimistic about even potentially more enhanced levels of demand as COVID continues to lift and we leave Q1. Well, regarding patient assistance program, you had Harmony. I mean, you and I talked about this one when we first met before we even became a public company, that it's core to our heart to put patients first. And it says it right on the wall outside here in my office, they're at the heart of everything we do. So we stand by the patients who are counting on us and their families are counting on us to not walk away from them when they go through a hard time. So we're really proud, Sandip and I, our entire leadership team and all of our employees, frankly, of the robust support we provide. And we did see, as many pharma companies have seen, that reliance on that patient assistance program increased in the middle of the pandemic. And in general, these programs tend to track relatively close to the unemployment rate, et cetera. That's what you might see in a typical pharma company. So as that went up, you see more people needing assistance, right? As we disclosed in the Q1 earnings call, Graig, we saw a relatively consistent reliance on that program coming out of Q4 into Q1. So we haven't seen a significant shift in that yet. But obviously, there's a lag effect as the company continues to open. People get reemployed, thank goodness, and their families are more safe and secure. Then they get insurance again; they'll become paying patients again. And it's going to be gradual for not only Harmony but other companies as well who are doing similar things to help patients in our industry. So we do see it lifting, Graig. We see that changing and converting back majority of those patients to paying patients, but it's hard to predict exactly when. And it will be gradual, I think, Sandip, right, rather than an overnight, so.

You recently -- well, maybe not so recently, but you were able to have the cataplexy label. And would love to get the perspective of what impact, either directly or indirectly, you think having the cataplexy label will do in terms of the positioning of WAKIX. And I'm sure there'll be an angle as it relates to market access here. But with that said, let me turn it over to you in terms of what that means for WAKIX.

Well, certainly, we were really, really proud of being able to do that for the patient community, and everyone is relying on us and physicians who want to use the product to help patients who are living with cataplexy, a significant issue with narcolepsy, as you know. And so on October 13, we got that indication just qualitatively. I mean there was cheering in the hallway here in Harmony on behalf of patients and everyone who's counting on us and our investors. We were really thrilled. And we knew WAKIX has a very robust efficacy actually to help there and strong data that backs it up. So we're glad the FDA saw that and granted the approval. What we saw directly, Graig, with payers, let's start there, almost immediately, some payers began to make the decision to either mitigate, reduce or eliminate altogether the typical generic step edit that you would see for a type 1 narcolepsy patient. And as you know, type 1 narcolepsy includes the symptom of cataplexy. And so that's good to see. And we haven't disclosed exact percentages or whom or how many, but we see that continuing and friction being removed from the system. We already have very good market access with approximately 80% positive coverage on lives in the United States and those who haven't yet made a formulary decision or covering in a similar way to those who have. And we're not disadvantaged to any great degree against other products, and there's relatively good and strong access across the board to WAKIX. But that's improved since the cataplexy indication, right? That's been a big impact. And I think over the long run, when you think about our growth strategy for WAKIX and the company and as new therapies enter the market, hopefully, it's clear to our audience that this is a market with tremendous unmet need, that really needs additional therapies even beyond WAKIX. And it's a polypharmacy in nature. It's not a trade-off of one product versus another. But having that cataplexy indication further strengthens WAKIX profile as this market continues to mature and evolve.

With that said, you do reference the fact that there could be other products that come to market. There is an anticipation and our investors are very aware of a couple of programs that -- given where they are in the clinical developments, looks like they might be coming to the market in the next several years. As you think about new products coming into the marketplace, how are you looking to defend the WAKIX market? Does it need to be defended? How do you think about that potential competitor challenge? And what is the company doing right now in terms of -- maybe not war gaming that, but what do you think is going to happen?

Yes. Good question, Graig. But first of all, I alluded to some of the elements of the market earlier that the dynamics in this market that are important for everyone to understand. It's such a significant unmet need. And if you add up to 1/3 of the diagnosed patients just walking away from therapy over a long period of time, I mean, there's a lot of need for new therapies. And I think we have a really good recent analog now to look at it. What happens when new entrants come into the narcolepsy market, right? You had Sunosi and WAKIX enter, and the market grew 16% in value. And at least to my understanding, all branded products grew over the course of 2020 in a positive way. So it wasn't a trade-off or a fight of one versus the other. It's additive and helpful as patients have cycled through different medications. So we see the dynamics of the market mitigate that type of trade-off competition that you might see in other types of markets. Now that being said, a key strategy for us, Graig, was ensuring that we got the cataplexy indication for WAKIX. Because new entrants like the orexin therapies that might be anticipated to enter are anticipated to have that type of indication. So we wanted to make sure that to moat the business, if we had to at all, we think it's not as necessary as it might be in other markets, certainly, due to these dynamics, but it's important to have that indication. And we were extremely pleased to get that without having to take the binary risk of another clinical trial, the time and expense of that, et cetera, and did it on the existing data with the product, which is very important to get early in our life cycle. And it's had near-term benefit with payers, near-term momentum with physicians who indicated that they're thrilled that we have the indication and were seeing an increase in type 1 narcolepsy prescriptions as well, right, in the last 6 months since that indication or so. So those are all good near-term benefits, but the longer-term benefit is it helps to moat our business in that mid-cycle when additional competition comes. And lastly, 3, 4 years from now, you've seen what we've been able to do already in the first year on the market, first full year in the middle of a global pandemic, converting our company from private to public, which is no small feat and the time-consuming for management, as you know. Though it's been enjoyable, and we really enjoy being in the space with you and the investment community, that's not an easy thing to do in the middle of a pandemic, in the middle of your first product launch, in the middle of the first year of launch. And so you look at what we've been able to do, about 20% or so of what some of the more robust competition in the space has done in the last 15 years on market penetration and value. Just in that year alone, where might we be 3, 4 years from now when new products come into the marketplace. And at that time, we expect to have leverage and scale, that if we had to work with payers in a different way, we have options to do so as well. But again, I think based on the dynamics in the market and what we've seen as an early analog when new products come in, it's welcomed. And the last point I'll make, Graig, there's thought to be over 160,000 people in the U.S. living with this disease. We have less than half diagnosed. I mean there needs to be more share of voice to help this patient community and to educate physicians nationwide on how to identify this and diagnose narcolepsy as a disease. Plenty of room for market growth, and we do see that diagnosis rate increasing and the market growing. And plenty of room for new therapies. So we feel very confident that we're well positioned, Graig.

You speak to the -- that number of patients that potentially could be living with narcolepsy at only 70,000-plus were diagnosed, and you do reference the fact that perhaps diagnosis rates are getting better. But clearly, there's a lot more work that needs to be done or could be done. And for those of us who may not be as close to kind of how diagnosis happens, what can actually be done? Is it the development of new tests? Is it making sure that physicians recognize the symptoms? Is it that patients need to recognize that they have symptoms? What can actually be done?

I think it's a combination of the things that you just suggested, Graig, as typical approaches. I mean in Europe, I know that they do spinal tap, draw spinal fluid, and through that, an assay there you can assess orexin depletion, which is a key underlying sign of narcolepsy. But it's really a process of elimination by physicians because the symptoms of tiredness and fatigue, if it's not on the extreme end, if they have cataplexy and they're losing full muscle control and collapsing to the ground, you might diagnose them a little more quickly. But as you know, cataplexy is on a spectrum as a symptom of narcolepsy. So when someone comes in with extreme fatigue and excessive daytime sleepiness, physicians need to rule out thyroid issues. Could it be, heaven forbid, cancer or something else. So a lot of tests that it takes years sometimes for these patients to be diagnosed. So I think what needs to be done -- and look, I don't think spinal taps and drawing spinal fluid is a popular test in the United States. It probably won't gain a lot of traction beyond the university level, but I wouldn't -- certainly, I wouldn't want to have that done. But I would say that through education, through the voice of companies like Jazz who have invested millions of dollars in this space, companies like Harmony who are now joining their voice by trying to educate physicians and the patient community and others in the future, hopefully Takeda and others do come and join this market. Look, the drugs are needed, and the voices and investment is needed. And that's -- we believe, will exponentially start to grow the diagnosis rate through those efforts. And that's how one of the things the pharmaceutical community that manufacturers that bring these drugs forward can really help and pay it forward by investing in education and doing these kinds of things. So we're glad to be on the mission and looking forward, frankly, to help us joining. We really don't see it as a significant threat. We see it as a boost to the market as more voices get added. And that being said, Graig, even without a lot of growth in diagnosis, there was nothing new since, if I'm recalling right, about 2007, when Nuvigil had launched, until the launch of Sunosi and WAKIX in 2019 in this space. You went roughly 10 to 12 years with nothing new in this space. And the majority of the patients in this market carry over every year. It's a chronic disease. So you have a small -- much smaller slice of newly diagnosed entering each year. And this large bolus of folks like you and I, like Sandip, like our families, who are trying to get through the day every day but have the burden of this disease on their shoulders to carry. And so nothing new for so long. And then you see the unmet need, the pent-up demand and now you're adding additional products to help. And I think it's a good formula for success for everyone in the market.

With perhaps the couple of minutes that we have left, I'd love to turn to more corporate strategic matters and a question just around the financial health of your company. And clearly, you've just recorded a profitable quarter. I'm wondering, from your perspective, a couple of questions. One, that is there a commitment to that profitability? Is there a reason to believe that perhaps, we should not just naturally assume that profitability will be there and whether it's because of increased investment in X, Y and Z.? But what is the, I guess, corporate philosophy around profitability of the company?

I think -- yes, sure. Obviously, we haven't provided long-term guidance in terms of profitability. But the way sort of to think about it is like we're -- continue -- we're at a very early phase in the launch of WAKIX. We're going to continue to make investments to continue to commercialize the product as well as continue to build out the pipeline within WAKIX. So I think we'll certainly have some incremental investments as we go through this year, especially with reopening additional some commercial investments, as our reps get out and see physicians with more of the things that we talked about right now in terms of just education out there in the community setting. As well as, as we start our study in myotonic dystrophy. Toward -- by the end of this month, we'll have some clinical costs associated with that in the second half of the year. And then finally, the other piece is really around business development. There's certainly -- that's our third pillar of growth in the company. We don't anticipate being a single-asset company, and we're committed to expanding our -- expanding the pipeline and bring in assets and in license and obviously make investments to grow that. But despite that, we have good, strong cash position, $140 million, and continue to generate positive cash flow. I mean it's great to see the WAKIX franchise be a profitable franchise for the company. And will certainly be able to contribute towards further developing the company or developing the pipeline in the future.

And maybe, Graig, just quickly, speaking about that future, if we could project out 5 years, 6 years, 7 years out into the future, where we see Harmony. I mean, certainly, we see Harmony as a rare disease company, a leading rare disease company that's bringing new therapies forward beyond WAKIX with multiple products in a portfolio to help patients living with rare neurological disorders. And a WAKIX that's in a great position with multiple indications, helping patients in with Prader-Willi syndrome, with myotonic dystrophy and perhaps even with other indications that were -- we may be contemplating right now. And if we make the decision to invest further in WAKIX development, we'll announce that accordingly. But that's the vision we have. We're building a business for the long run here, a rare disease company that's here to help patients for the long run, starting with WAKIX but not ending there. That's our first chapter.

And while we're not ending there for Harmony, I think we will end it here with our [indiscernible]. It was a great way to finish. But John and Sandip, thank you very much for your time. I want to thank the audience as well for joining. We are close to the conclusion of the Global Healthcare Conference here for Goldman Sachs. But there's still 2 sessions left. So with that, I hope you join us in another session. But with that, thank you also, and have a good rest of your day.

Thank you, Graig. Much thanks, many thanks to our audience as well. I appreciate Goldman inviting us. Thank you.

You're welcome. Thank you.