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

Welcome, everyone, to the 40th Annual JPMorgan Healthcare Conference. My name is Tessa Romero. I'm one of the senior biotechnology analysts here at JPMorgan. I'm joined by [ Taylor Hamley ] from the team. Our next presenting company is Harmony Biosciences, and presenting on behalf of the company, we have CEO, John Jacobs. [Operator Instructions] With that, I will hand it over to John.

Thank you, Tessa, good morning, and good morning, everyone. I'd like to open the presentation by saying thank you very much for joining us and investing your time to learn more about our company, Harmony Biosciences, and happy new year to everyone. I'm also joined today by Sandip Kapadia, Harmony's CFO; Dr. Jeffrey Dayno, our Chief Medical Officer; and Jeffrey Dierks, our Chief Commercial Officer, who will be joining me for Q&A at the end of the formal presentation. Next slide, please. Put up our legal disclaimer and forward-looking statement. Before we get into the details of the presentation, I'd like to encourage all of you afterwards to visit our website and peruse our SEC filings for more details and disclosures on the company. Next slide, please. For those of you who may not be familiar with Harmony, let me just take a moment to share a few corporate highlights. Harmony, NASDAQ symbol HRMY, was founded in 2017 by Paragon Biosciences and our Chairman, Mr. Jeffrey Aronin. We're a commercial stage biotech company focused on treatments for patients living with rare neurological diseases who have unmet medical needs. Our first approved product, WAKIX or pitolisant, was approved in August of 2019, launched in the United States in November of 2019, and since then, despite launching into the headwinds of a global pandemic, we've experienced quarter-on-quarter growth since the launch. And we have a remarkable opportunity to help expand the existing $2 billion narcolepsy market with WAKIX, with our first-in-class molecule that has a novel MOA approved for EDS or cataplexy in adult patients with narcolepsy. Importantly, WAKIX is the only FDA-approved, non-scheduled treatment option for this disease. And we see WAKIX as a portfolio and a product opportunity due to its unique MOA. And this allows us to expand the utility of WAKIX beyond narcolepsy, and we'll talk about that a little bit later in the presentation as we discuss our clinical programs that are upcoming for the product. Next slide, please. As I said, we founded the company in 2017, and we've achieved a lot of significant milestones in our short journey so far as a new organization. Starting with the approval and the launch of WAKIX in 2019, as I said before, culminating in $160 million in net sales in our first year of launch, which was 2020. And as I said earlier, continuous growth quarter-on-quarter since the launch despite the headwinds of the global pandemic. Moving beyond performance to the clinical side, we're proud to say that we were able to start 2 Phase II proof-of-concept trials. One in Prader-Willi in 2020 and the other in myotonic dystrophy in 2021. And in '21, we had our IND accepted for idiopathic hypersomnia, which we expect to start a Phase III registrational trial for this year. 2021 was our best year yet, including a strategic financing deal that we closed with Blackstone for $330 million. We saw WAKIX added to the AASM treatment guidelines and Harmony added to the S&P 600 small cap and NASDAQ biotech indices. But at Harmony, we don't look backwards, we look forward. So, how do we intend to grow the company from here forward? Next slide, please. With Harmony's strategy for growth, our simple and focused 3-pillar growth strategy. Pillar 1 is optimizing WAKIX performance. Pillar 2, expanding the clinical utility of WAKIX beyond narcolepsy to help patients living with different neurological disorders. And number three, equally important, acquire new assets to expand our portfolio beyond WAKIX. Next slide, please. Let's take a moment to look at some key catalysts coming up in 2022. As I said, 2021 was our best year yet to date, but we anticipate 2022 to be our best year to come. Starting with pillar #1, optimizing WAKIX performance, we fully expect continued growth and performance with WAKIX due to the strong underlying demand that we're seeing, positive feedback from both health care providers and patient communities that we'll share with you today and the large and growing market opportunity in narcolepsy. On pillar #2, expanding the clinical utility of WAKIX, we have 4 clinical programs underway right now. As I said earlier, 2 Phase II proof-of-concept trials in Prader-Willi and myotonic dystrophy, we're expecting top line data as anticipated first half and second half of this year, respectively. Our partner, Bioprojet is running a Phase III registrational trial as we speak in pediatric narcolepsy and we intend to start our Phase III registrational trial for idiopathic hypersomnia first half of this year. Finally, though, there's not a lot I can disclose about acquiring new assets in our business development activities currently. What I can say is, we have a dedicated business development team focused on acquiring new assets in rare orphan neurologic diseases and/or CNS or neuro diseases where we can leverage our internal expertise and infrastructure that we built at the company, exemplified by our first acquisition beyond WAKIX in HBS-102. First new product beyond WAKIX, this unique asset should help us explore additional rare orphan neurological conditions, more to be shared with HBS-102 in the future. Next slide, please. So, why don't we take a moment to just take a deeper dive into each of these pillars to show you why we're so confident about our growth strategy for the future of Harmony. Starting with pillar 1, WAKIX' performance. And as you know, WAKIX was indicated in narcolepsy, a chronic debilitating neurologic disorder. Narcolepsy is thought to affect up to 165,000 Americans. All patients with narcolepsy have the cardinal symptom of excessive daytime sleepiness. And about half of the patients in the U.S. by diagnosis code, also have cataplexy. And importantly, narcolepsy is broken down into 2 types: type 1 is narcolepsy with cataplexy; type 2 is narcolepsy without differentiated by cataplexy as an additional symptom beyond EDS. Now, it's not just these 2 symptoms. Imagine having to live with this disease. You can see the images in the middle of the slide. These patients can also suffer from sleep paralysis, disturbed or fragmented nighttime sleep and hypnagogic or hypnopompic hallucinations. These hallucinations can be very vivid and terrifying to the patient. There's actually some artwork that a patient created depicting one of those hallucinations that she was experiencing during the day during her wakefulness moments. We can put up all the statistics, charts and images that we want to. And as investors and corporate executives, we often get lost in those numbers during our daily business. But I think, and I believe you agree as investors, it's important to never forget that what we do matters and that we're helping people who have to live with these chronic lifelong diseases like narcolepsy, which can be life changing. In fact, 86% of people living with narcolepsy surveyed reported that it's a life-changing disorder. So thank you for taking your precious capital and investing it in innovative companies that help to bring better hope and cures and assets like WAKIX to patients living with these diseases. It matters. Let's take a moment on the next slide to hear from some real patients. At Harmony, we believe that helping patients begins with listening deeply to their needs and understanding their journey. The 9 amazing people you see depicted on the left of the slide, we've met personally here at Harmony. These are actual narcolepsy patients who worked with us to help create our 9-time award-winning disease education campaign, Know Narcolepsy. Please visit the website knownarcolepsy.com and hear their stories live and see the type of educational effort that our investments are making in the marketplace to help people better understand this disease. As we work with these patients over a 24-month period, they taught us a couple of things about their journey with narcolepsy. The first one that resonates in my mind the most is that narcolepsy takes. It takes away from them things that are precious. It takes away from them time with their loved ones that they can never get back. They also shared with us that at times, they feel marginalized by society. Labeled as lazy, something's wrong with them, and it often takes years to finally get diagnosed and understand they're living with this disease. Let's just take a look at 1 or 2 of the quotes. Narcolepsy severely impacts not only me, but my family and friends. It's a daily battle fought over a lifetime. I lost my best friend, my spouse and my daughter for a number of years because I just couldn't function. I'll never get that time back. As I said, what we do matters. So what's out there to help these patients and how do they feel about the options that they have? And the last important thing they taught us was about that. New innovative therapies are needed in this marketplace, desperately needed, and they made that crystal clear to us even before we launched WAKIX. Next slide, please. And market research supports that great need. In a survey fielded prior to the launch of WAKIX with 200 people living with narcolepsy, 93% of those patients express frustration with current narcolepsy medications due to things like side effects, loss of efficacy over time, worries about dependency or abuse or lack of efficacy. 94% believe they needed new treatment options. And in a separate independent analysis by Rush University Medical Center of an electronic chart review of 97 treated narcolepsy patients, Rush determined that 3 out of 4 patients had residual symptoms that could negatively impact their life even while on medications. Next slide, please. And that's why we're so excited and so hopeful about the future growth potential of WAKIX which offers a truly differentiated product profile with a favorable risk/benefit profile. WAKIX is a first-in-class molecule with a novel mechanism of action. It's the only selective H3 receptor antagonist inverse agonist that's approved by the FDA. Importantly, it's the first and only FDA-approved, non-scheduled treatment for narcolepsy. It's not a stimulant. There is also no evidence of drug tolerance or withdrawal symptoms. Many of the things you're hearing here were on the previous slide as concerns that patients expressed with existing meds. It can be used as monotherapy or administered concomitantly with other narcolepsy treatments such as the standard of care modafinil or sodium oxybate. It's a once-daily oral tablet administered in the morning upon wakening. So WAKIX' profile nicely aligns with the unmet needs in the marketplace and brings new innovative hope and an option for patients in need. Next slide, please. So what are health care providers been telling us since the launch? The proof's in the pudding, as I like to say. So it's one thing to get some market research data, it's another to hear from your customers on how they're reacting to the product when they try it. We interviewed health care providers who both had experience with WAKIX and not, and here's the key finding from market research. Physicians tell us that WAKIX is being well-received by their patients. That they feel it's appropriate for the vast majority of their patients, especially since the approval of the cataplexy indication. That narcolepsy represents significant unmet need and that WAKIX truly offers a unique treatment option for their patients. 95% of the physicians surveyed said WAKIX is effective for the treatment of EDS and 90% [ thought so of cataplexy ]. And about 9 out of 10 physicians expect to prescribe at least what they've already started to prescribe or even increase their WAKIX prescribing in more patients in the future. So how about patients? Next slide, please. We interviewed patients who are actual WAKIX patients and have experience with our product. They're telling us they've had an overall good experience with WAKIX and even a better experience for some in learning about and accessing the medication than other narcolepsy treatments. In fact, 3 out of 4 patients suggested that interest across the patient community is strong and has increased since the cataplexy indication, certainly. 8 out of 10 are likely to tell other people living with narcolepsy about WAKIX and 9 out of 10 expect to continue using our product. That's some strong feedback from the HCP and patient communities. Next slide, please. So it shouldn't be a surprise that we've experienced at Harmony, quarter-on-quarter sequential growth in our net revenues and market penetration since launch despite launching into the teeth of a global pandemic. Our best quarter yet was our latest quarter reported, 3Q 2021, with over $80 million in net sales, and that represents a 77% increase over same quarter prior year. And as of September 30 last year, 3,500 average number of patients on WAKIX. But we've only just begun to scratch the surface in the opportunity in narcolepsy. Next slide, please. Slide 15 shows significant value opportunity in the narcolepsy market in the United States. It's hard to believe that as I said earlier, it's thought that up to 165,000 Americans are living with this devastating disease. In 2020, our first full year on the market, the market was valued at just over $2 billion and continues to grow. On the top right of the slide, you can see in the dark green and light green shaded split bar, the current WAKIX patient opportunity. Because we're new to the market, the 72,000 currently diagnosed patients in the United States with narcolepsy represent opportunity for WAKIX. It was over 10 years since they had a new product, as Sunosi and WAKIX were both launched in 2019. The last new product launched for narcolepsy was in 2007 with Nuvigil. They had a long wait for new innovation, but it's here in the marketplace. So that 72,000 represents significant opportunity for WAKIX even if the market didn't grow. But the market is growing. And take a look, up to 93,000 more Americans are thought to be living with the disease that are yet to be diagnosed. And we see this market growing for years to come. What are the factors driving that? First, growth in diagnosis rates we've seen; increased investment in education, things like knownarcolepsy.com that I shared with you earlier; the investments made by the pharmaceutical companies that have products to help patients in this marketplace; the introduction of new innovative treatments like WAKIX and others to come; and the low satisfaction with traditional treatment options are all drivers of future growth. So that wraps up our deeper dive into pillar 1 to show you why we're so confident and why we expect continued and robust growth for WAKIX in the future in this marketplace. So let's take a moment to take a deeper dive into pillar #2, expanding the clinical utility of WAKIX beyond narcolepsy. Next slide, please. As I said earlier, we see WAKIX or pitolisant as a portfolio and a product opportunity due to its unique MOA. And that gives WAKIX the potential to help patients in different neurological diseases, rare orphan neurological diseases, and allows us to take a mechanism-based approach to drug development in our LCM studies. And that's based on the role of histamine in normal physiologic functioning. The role of histamine in disorders of orexin deficiency and the location of H3 receptors throughout the CNS depicted in the image of the brain on the right. Next slide, please. Now as you can see from our pipeline chart, we've been busy on pillar #2. The shaded box in the middle shows the 4 clinical programs I discussed earlier. And you can also see our 2 approved indications above and our new asset, HBS-102, which we're currently exploring. It's in very early stage for different and other neurological diseases. We'll be glad to share some updates on that in the near future with you. Next slide, please. Now let's just take a moment on some of those key clinical trials and some exciting catalysts and milestones coming up in '22. As I said, we're excited that the FDA accepted our IND for idiopathic hypersomnia. We expect to start our Phase III registrational trial this year in the first half of 2022. Now idiopathic hypersomnia, or IH, is a rare chronic neurological disease. It's characterized by excessive daytime sleepiness despite patients getting sufficient and long sessions of sleep. Other key features include sleep inertia after waking and impaired cognition attention and alertness. It's estimated that there's about 30,000 to 40,000 diagnosed patients in the United States with this disease and there's currently only one approved treatment for patients with this condition. Prader-Willi syndrome, a rare genetic multisystem disease characterized by hypothalamic dysfunction, decreased hypocretin or orexin levels in some patients as well. There's thought to be 15,000 to 20,000 patients in the U.S. with this disorder, and more than 50% of them have excessive daytime sleepiness, a disturbing symptom that they are seeking relief from. And that's where we're focusing our trial, our Phase II proof-of-concept study. There are currently no approved treatments for EDS in patients with Prader-Willi syndrome, a significant unmet medical need. Our Phase II trial initiated in the second half of 2020, and we're expecting top line data first half of this year. Then finally, myotonic dystrophy, a rare genetic multisystem disease, myotonia and progressive muscle weakness are hallmark symptoms of course, but excessive daytime sleepiness, believe it or not, is the most common nonmuscular symptom and debilitating for patients. Up to 90% of patients have that symptom. And they also experienced decreased hypocretin or orexin levels, which gives us scientific reason to believe that histamine [ upregulation ] could be helpful here. There's thought to be 160,000 or so people in the U.S. with the genetic defect for myotonic dystrophy. About half of those are symptomatic and roughly half of those are diagnosed, putting the diagnosed population at about 40,000 Americans living with this disease with no approved treatment options and significant unmet medical need. We're proud that we started our Phase II clinical trial in the first half of 2021 and top line results are anticipated in the second half of this year. Next slide, please. And that takes us to our final pillar, equally important in our 3-pillar strategy, acquiring new assets through business development to expand our portfolio beyond WAKIX. Next slide, please. Let's take a moment on our business development strategy. What's our objective? We intend to evolve Harmony into a leading rare orphan neurology company with significant potential for long-term growth. To achieve this, we want to build upon our success with WAKIX. We intend to acquire a portfolio of rare orphan neurology assets and/or assets in specialty neurology indications where we can leverage our existing capabilities and infrastructure that we've already built at Harmony and enough potential synergies with WAKIX in our current commercial footprint. What about timing? We're beginning this journey early in our company history, so we can take the time to be thoughtful and prudent in what we acquire. And frankly, flexible in the types of deals we're able to consider. And we have the capabilities to do so. We may be a newer organization, but we have a deeply experienced team. We actually have a dedicated business development team who focuses on this initiative every day. Core members of that team were the core members of the team who originally discovered WAKIX and licensed it and helped us to form Harmony Biosciences. We also have the internal capabilities to develop assets from very early stage, all the way through to commercialization and neurology because of our experience in clinical development, regulatory affairs, commercial launch and execution. Next slide, please. Importantly, and to facilitate business development, we're very glad that we're in a strong financial position as a company. As I mentioned to you earlier, we had net product revenues of over $80 million in Q3 '21, our best quarter yet. And our best is yet to come, as I said earlier. We are profitable, and we continue to grow revenue on a quarter-on-quarter basis. As of September 30 last year, we already had approximately $190 million in cash and cash equivalents on our balance sheet, and we also, importantly, closed a strategic financing deal with Blackstone in Q2 '21. That helped us improve our cost of debt capital by almost $11 million a year and provides an additional $100 million of non-dilutive debt capital for business development support. So we're in a good position. We have optionality and flexibility from a capital standpoint to make the appropriate acquisitions to build our pipeline. Why don't we move to our final slide, please, Sandip. So in summary, who are we at Harmony Biosciences? Well, we're a commercial stage biotech focused on treatments for patients living with rare neurological diseases who have unmet medical needs. We were founded in 2017 by Paragon Biosciences and our Chairman, Jeffrey Aronin. Our NASDAQ symbol is HRMY. Our first approved product, WAKIX or pitolisant, was approved in August of 2019 for narcolepsy in adults with EDS and has experienced consecutive quarter-on-quarter growth since launch. But we're not looking backwards, we're looking forward, anticipating our best year yet to come in '22 as we execute on our 3-pillar growth strategy, with pillar 1 being optimizing -- continue to optimize, I should say, our performance with WAKIX. Pillar 2, expanding the utility of WAKIX beyond narcolepsy to help bring this unique product to additional patients living with other rare neurological diseases. And pillar 3, acquire new assets beyond WAKIX to expand our portfolio. In '22, as I said, we expect it to be our best year yet. We do anticipate continued growth of WAKIX. We look forward to moving the ball forward on our clinical programs in IH, Prader-Willi and myotonic dystrophy, and our dedicated BD team has their nose to the grindstone, to speak proverbially, to get additional assets to help expand our portfolio beyond WAKIX. Thank you so much for your time and attention this morning. We'll now move to the question-and-answer session.

Great. Thanks so much, John, for the presentation. I thought we might start the discussion with commercial WAKIX. We have a number of portal questions that have come in around this. So I thought I would just start there. So our first question is, how should we think about cadence of net patient adds quarter-over-quarter? Is 300 to 400 patients a reasonable assumption? Do you have more context on the treatment discontinuation rates, and what are the key reasons? And how do you plan to move WAKIX up the treatment paradigm ahead of oxybates in type 2 narcolepsy. So a lot of questions there, but over to you, guys.

Okay. Thank you, Tessa. Well, why don't I just take a few seconds on the first question, the question about cadence and 300 to 400 patients per quarter that someone asked if that was a reasonable cadence. Look, when we had the product approved in August and commercially available in November of '19, none of us knew, right, that we were about to face a global pandemic that at least, in our lifetimes, for most of us, was unprecedented. So we hardly know a time without launching our product under the COVID umbrella, if you will. And if you look backwards through those 7 quarters of consistent growth, you do see that 300 to 400 average number of patients added every single quarter despite those headwinds. So looking backwards, that's the trend. It's hard to say what might happen looking forward. And we're not providing forward-looking guidance at the moment because of that continued uncertainty with COVID. It's hard to say what we might be able to achieve should that fully lift should foot traffic go back to pre-COVID levels, where patients see their doctors more often; should our reps get more face-to-face interactions with these accounts as they did pre-COVID. I do think as a conservative planning assumption, that's reasonable, but we might even be able to do better. I'll turn it over to Jeff Dierks. Jeff, if you'd like to add additional color or context there.

I think you've summarized it very well, John. I think what we've demonstrated in the past 5 to 7 quarters is probably a very good conservative estimate looking forward. Again, we're not providing forward-looking guidance, but I think we've demonstrated our ability to continue to grow during a pandemic, given the unique profile of WAKIX and the unmet medical needs that exist and how we're making a difference in the narcolepsy community.

Thank you, Jeff. And Tessa, I believe the second question, I tried to capture it as quickly as I could with my handy pen here, was on discontinuation rates. So I think Jeff Dierks can handle that specifically. What I will say is, that's the reason we report average number of patients per quarter as a leading indicator and growth factor for WAKIX each quarter. Because that average number of patients takes into account discontinuation, persistence, compliance, abandonment and payer coverage. All 5 of those key factors are taken into account which helps -- should help people with modeling and thinking about how to forecast forward-looking numbers for the product. Jeff, did you want to add any color or context regarding, specifically, the discontinuation rate?

Sure. So I mean, 2 years into our launch, we're extremely pleased with what we've seen with respect to the uptake in adoption of WAKIX. As John shared in his prepared remarks, we've seen approximately 3,500 average number of patients on WAKIX in the third quarter of 2021. And you take a step back and look at the larger narcolepsy market, the data suggests that the persistency or discontinuation rates of all the approved treatment range between 30% and 50% at the end of 12 months. And what we've heard from healthcare professionals is they believe that COVID is likely having an additional impact on patient medication behavior over the past year plus. Patients skipping doses, temporarily stopping their medicine on their own or even hoarding medication. And what we've seen to date with WAKIX with respect to patient medication behavior is consistent with that seen with other oral narcolepsy treatments, and it falls right within the range as we expected. Talking with health care professionals about their experience, they're telling us that WAKIX is being well-received by the health care professionals as well as their patients. Physicians have a perception that WAKIX has a lower discontinuation rate than other narcolepsy treatments. And what we've heard from patients is about 9 out of 10 of them expect to continue on treatment. And we're obviously extremely encouraged by our continued performance, and we're more optimistic even about our future growth outlook.

Thank you, Jeff. And Tessa, I believe the third question was about, if I heard you correctly, changing the paradigm and the line of therapy for WAKIX as a new therapy in the marketplace. Did I hear you correctly?

Yes. Exactly, exactly. That's what the person was asking.

Excellent. Well, great question, and thank you for that question, whoever submitted that. Since we received the cataplexy indication, many plans, managed care plans, have made the decision to allow first-line coverage of WAKIX for patients with type 1 narcolepsy. And as I said earlier, that's narcolepsy that includes cataplexy as a symptom beyond EDS. But Jeff Dierks, did you want to speak about line of therapy and the market dynamics we're seeing with WAKIX uptake?

Sure, John. So what I would say is that WAKIX, right now, is being utilized as really a first-line branded option. Given that there are a number of generic alternatives, most managed care plans require a patient who try a wake-promoting agent and/or a stimulant prior to getting any branded option in a type 2 patient. And we are seeing ourselves utilized there. Importantly, with respect to treatment paradigm, there are no managed care plans that require a patient to try sodium oxybate prior to WAKIX. So WAKIX has the ability to be utilized first line, and we are seeing it being used as a first-line branded option in combination with a wake-promoting agent and/or a stimulant. There are also a cohort of patients that are on oxybate and WAKIX concomitantly, just due to the severity of their condition. But to John's point, we have seen with the cataplexy indication, managed care plans within type 1 patients either reduce or eliminate generic step edits for WAKIX, making it easier. So taking some of the friction out of the system, the paperwork, allowing patients to accelerate their ability to get on therapy, and even more recently, I can turn it over to Dr. Jeffrey Dayno, the American Academy of Sleep Medicine recently published their treatment guidelines, which really provides a very strong endorsement for WAKIX for both the treatment of EDS and cataplexy in narcolepsy.

Yes. Thanks, Jeff. I'll just expand on that. So last September, the American Academy of Sleep Medicine published their updated guidelines for central disorders of hypersomnolence. And the last time they were published was back in 2007. So in those updated treatment guidelines, WAKIX was added to that, with a strong recommendation for both the treatment of EDS as well as cataplexy. And in those guidelines, only 2 of the available treatments received a strong recommendation for both EDS and cataplexy, and those being WAKIX as well as sodium oxybate. So it provides sort of the evidence base in terms of the strong data for WAKIX' effective treatment for both EDS and cataplexy.

Okay. Great. Thanks so much for that, and thanks for the questions. We did have one more commercial question from a listener. He asks, IPD Analytics recently wrote a report suggesting loss of extension for WAKIX is in 2027. What is your expectation for generic entry?

Actually, we have patent coverage that carries out until 2029 for WAKIX and we're expecting at least 1 year of patent term extension beyond that. And importantly, at Harmony, we're also seeking a pediatric extension of an additional 6 months that can be added on to the end of your exclusivity period, which would carry us into 2031, should we succeed with those initiatives.

Okay. And expectation around generic entry?

Around WAKIX?

I think, yes. And I think that's what the person was asking.

Yes, absolutely. I think I've answered that question with our patent protection. We have market exclusivity for an orphan disease that gives you an extended period of exclusivity. We have layers of protection for WAKIX, so that includes being a unique NCE, market exclusivity because of its orphan designation as well as our patent suite, which carries us out into 2030 or so with patent term extension, and then we're seeking the 6-month pediatric extension, which should carry us into 2031, should we be successful there.

Okay. Great. Great. So I thought maybe we could turn the discussion now to a few pipeline questions. So you've talked about moving into the idiopathic hypersomnia space with WAKIX. How do you plan to design the Phase III or the registrational trial in this indication?

Thank you, Tessa. Dr. Jeff Dayno, would you like to take that one?

Sure. Yes. Thanks, Tessa, for the question. So first, let me say, we see this opportunity for WAKIX as a very exciting one in terms of a Phase III [ registrational file ] for IH. We are planning for a pivotal registrational study in terms of a randomized withdrawal design. So we will be enrolling patients open-label dose optimization, and then treatment responders will go into a randomized withdrawal design. So that -- and that is the plan. As we shared, we are planning to initiate the trial in the first half of this year.

Okay. And I think you also have some top line data in a couple of other indications coming up here, later this year. So I thought I would start with Prader-Willi syndrome, where you have a Phase II trial ongoing. Maybe it would be helpful if you could outline what could constitute a win for that update. I think it's coming the first half of this year.

Go ahead, Dr. Dayno.

Yes, sure. So in terms of starting with our Prader-Willi Phase II proof-of-concept trial. So we -- as I said, we see these as proof of concept, and we're looking to generate positive signals in these other patient populations as we investigate pitolisant. A win, if you will. So the primary outcome -- I guess, importantly to start, the primary outcome in the Phase II trial is around excessive daytime sleepiness. So it's an important sort of distinction, many of the other development programs in Prader-Willi have been focused on hyperphagia. But based on what we know about pitolisant demonstrated efficacy on EDS in patients with narcolepsy, that is the primary outcome. So a win, if you will, would be positive data, positive signals around EDS. And then we're also investigating key secondary outcomes that could be impacted by excessive sleepiness during the day, including the behavioral symptoms in patients with Prader-Willi syndrome as well as cognitive function. So the primary outcome key secondary is looking for positive signals to further inform a development program going forward.

Okay. Okay. And maybe a similar question on the pitolisant DM1 study. Similarly, how would you think about what would make up a win scenario here in that update?

Sure. Happy to share it. So similar thinking, as John alluded to upfront, we see pitolisant as a portfolio and a product opportunity and our life cycle management strategy around this mechanism-based approach. So we go back to pitolisant working through histamine. Histamine is a major wake-promoting neurotransmitter in stabilizing states of sleep and wakefulness. So in type 1 myotonic dystrophy, as John mentioned, EDS is a very common symptom in up to 90% of the patients. So in that Phase II proof-of-concept study, EDS is the primary outcome. We would look for positive signals generated there in that patient population. And the key secondary outcomes, also mediated through CNS histaminergic circuits, include fatigue and cognitive function. And in that study, population of patients with DM1, age is 18 years and older. So we're very excited about our life cycle management programs, sort of the scientific rationale. And a win, if you will, would be positive signals that we could engage with the FDA and discuss a further development program going forward in pursuit of those indications.

Okay. And I guess, could either of those updates are you planning to kind of give kind of a PR type of strategy? Or could they come at relevant medical meetings in 2022?

So I think -- so based on the timing, I think we would share that the top line data as we disclosed. And then based on the timing, we would look for opportunities to present the data at relevant medical meetings and obviously, publish the results of those trials.

Okay. Great. And I guess, the last one for me, which is a little bit broader in nature. And I know John touched a little bit on this in his prepared remarks, but how active has Harmony been in pursuing additional assets? And what areas within rare orphan neurology and specialty neurology are you particularly interested in?

Thank you for that question, Tessa. That's very important, and that's our pillar #3 of our growth strategy, which is equally important to the first 2 pillars involving WAKIX performance in narcolepsy and expanding WAKIX utility beyond narcolepsy. As I said, we have a dedicated business development team. For competitive reasons and disclosure reasons, I can't share too much detail there. But certainly, that team is dedicated on a daily basis. We've been very active in searching for assets, and we're starting early in our company history, Tessa, so we can take the time to be thoughtful and prudent in how we build that portfolio. We're a newer company, but we're a deeply experienced team, and that business development team has built portfolios in the past, including the acquisition and licensing of WAKIX which helped us to form Harmony. So they're an experienced and accomplished business development team, and we're scanning the market widely across a wide variety of rare orphan neurological diseases. There are dozens and dozens and dozens of diseases with no therapies approved. Tens of thousands of patients living in the United States with these rare orphan diseases, Tessa, without any hope, without any therapies right now in development. And we hope to bring that forward with some new assets that we can acquire, in-license or partner on. And importantly, we have the capabilities at Harmony to take anything from very early stage pre-IND as we did with HBS-102, all the way through to on market, with our proven ability to launch and commercialize assets in this space. We have the infrastructure, we have the people, and we have the knowledge, the systems and the know-how to do that well. So we look forward to surprising everyone in the future as we continue to build out our portfolio. Thank you for the question.

Great. Well, I think we're coming up right on time here. I want to thank the whole Harmony team for joining us here at the JPMorgan 2022 Healthcare Conference. And thanks also for all the listener questions and for joining us this morning, and I hope everyone has a great rest of the day, great rest of the conference.

Tessa, thank you. Thank you to all of our listeners. I wish you all the best for a wonderful 2022. A happy, successful and healthy year. Thanks for investing your precious time to learn more about our organization. It means a lot to us. Thank you to JPM for hosting and giving us this fantastic presentation slide. Thanks, everyone. Have a great '22.