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

Hi, everyone, and welcome again to the 44th JPM Healthcare Conference. I am Sherry Yang, an Associate from the Healthcare Investment Banking Group, and it's a pleasure to be introducing Harmony Biosciences. Today, we have Jeff Dayno, President and CEO on stage with me for the presentation and Sandip Kapadia, CFO. Kumar Budur, Chief Medical and Scientific Officer; and Adam Zaeske, Executive VP and Chief Commercial Officer in the audience. Please join me in welcoming Jeff to the podium. Thank you.

Thank you, Sherry. Good afternoon, everyone. And on behalf of the Harmony team, I want to thank JPMorgan for the invitation to present again at this year's conference. I'm really excited to be here with all of you to share Harmony's outlook, a very great outlook for 2026. Our forward-looking statement, please refer to our website for our latest SEC filings. The theme is momentum. Harmony enters 2026 with significant momentum and propelled by 3 key drivers. First WAKIX performance with 5 years of consecutive growth and profitability, our 2026 guidance points to over $1 billion in net revenue, which means that WAKIX is on track to achieve blockbuster status this year. Driver #2, a robust late-stage pipeline. With 5 Phase III programs in the clinic advancing towards 5 distinct CNS indications, which will set us up for multiple catalysts over the next few years. And the third driver, our strong financial profile. Harmony is a profitable self-funding biotech company with a strong balance sheet, the ability to bring in new assets, additional assets to build out our pipeline further as well as expand and diversify our commercial portfolio. We have the expertise. We have the proven commercial engine, and we have the conviction to deliver on our growth strategy. So let me share with you how our momentum is going to propel us throughout this year to deliver on this growth strategy. First, I want to start with some highlights of the overall Pitolisant franchise. Grow, extend and expand our leadership position in sleep/wake by addressing unmet patient needs. So let me break this down for you. Starting with WAKIX, the foundation of the Pitolisant franchise. The first and still the only product approved for narcolepsy that's not scheduled as a controlled substance, which sort of translates into a very differentiated product profile, a strong overall benefit risk proposition. And that has led to broad clinical utility in this large market. And going into year 7 on the market, WAKIX is on track to achieve $1 billion plus in narcolepsy alone and blockbuster status. Then turning to PITOLISANT GR or gastro-resistant formulation to extend the Pitolisant franchise. So the gastro-resistant coding and formulation is designed because about 90% of patients with narcolepsy have GI symptoms, GI disturbance, not related to the meds they take, but related to the underlying disorder, the underlying condition. So the GR formulation is meant to minimize the impact on those GI symptoms and minimize the worsening. We've also demonstrated with the dose optimization study the ability to start at a therapeutic dose and no need for titration. So with PITOLISANT GR we are on track to extend the Pitolisant franchise with a focus on new patients, and patients that may have been on WAKIX before may have discontinued, for which through our single patient hub and those patients opting in, we can reach out and recontact them with a new treatment option. And lastly, the main value driver. PITOLISANT HD or a high-dose formulation of Pitolisant with a novel formulation and optimized PK profile that is designed to drive greater efficacy in an area, where about 75% of patients still have residual symptoms in this chronic neurologic disorder with refractory symptoms. So with PITOLISANT HD can generate greater efficacy. In addition to expand the franchise, we're looking at unique indications in these Phase III development programs. In narcolepsy, in addition to EDS and cataplexy, looking at a fatigue indication and the programs are designed to demonstrate benefit on fatigue, which occurs in about 60% of patients with narcolepsy. In our program in idiopathic hypersomnia, or IH, in addition to the symptoms of excessive sleepiness we're pursuing an indication, an unique indication in sleep inertia, 1 of the core symptoms in IH. So the plan is drive a differentiated label, a differentiated product in the market and expand the Pitolisant franchise with new patients, previous patients and then patients that are on WAKIX with a greater value proposition. In some market research that we've done with both HCPs and payers, they see this product profile as clinically superior and would switch their patients with this greater value proposition greater efficacy and a unique indication in fatigue. With utility patents filed out to 2044 we have the ability to extend and expand the Pitolisant franchise to the mid-2040s. The LOE for Wakix is Q1 2030 plus we are on track to obtain pediatric exclusivity, an additional 6 months of regulatory exclusivity that would take the LOE to Q3, 2030. PITOLISANT GR is on track. We're working on the NDA to submit the NDA second quarter this year with an anticipated PDUFA date in Q1 of next year 2027. We're making good progress in PITOLISANT HD, the high-dose program. We initiated the 2 pivotal Phase III trials, 1 in narcolepsy, 1 in idiopathic hypersomnia, last quarter, fourth quarter last year and are on track with the anticipated PDUFA date in 2028. So what that gives us is 2 meaningfully differentiated product profiles building off of the success of WAKIX with the anticipated PDUFA dates prior to LOE in 2030 advancing differentiated product profiles to strengthen our leadership position in sleep/wake. The Pitolisant franchise and WAKIX continues to grow. Again, you're going into year 7 in the market. The net revenue -- full year net revenue for 2025, $868 million, coming in over our guidance range of $845 million to $865 million. And then for this year, setting WAKIX up and our guidance of $1 billion to $1.04 billion, WAKIX on track to reach blockbuster status this year. We have been talking about that for a couple of years with the significant growth and momentum, but we look to this year to achieve that goal. And after WAKIX being 1 of the most successful orphan rare drug launches, we see continued momentum, continued strong underlying demand. The new net patient ads in fourth quarter last year of 400 patients. And what you see here, we have shown 3 consecutive quarters of 400-plus new patient adds in the WAKIX brand in year 6 on the market, the first time we've ever seen this with WAKIX and with that, a significant large market opportunity remains. With 80,000 patients diagnosed, we ended last year at an average of 8,500 patients. With 80,000 patients diagnosed with narcolepsy in the U.S., significant market opportunity remains and another 90,000 not yet diagnosed. In a market of polypharmacy, we see significant opportunity ahead for WAKIX and the next-gen formulations. This is being driven by our strong commercial engine. And I think what I'm most excited about, I'm proud of the commercial team, proud of the performance. But what I'm most excited about are some of the improvements and enhancements we made in the second half of last year and especially what's to come this year. So last year, in year 6 in the market, we had some new payer wins -- on top of strong formulary access, about 80% of lives covered, we had additional and new formulary wins. We strengthened our operations at -- we have a single patient hub. We added some staff, some new initiatives to help the patient experience from prescription to dispense, be more efficient, and that has shown benefit with regards to the commercial performance. And then this year, so we after really fine-tuning in the execution last year. This year, the theme is about investing and expanding in the commercial operation, expanding on our field teams, and we're also going to be launching an online portal for e-prescribing, which will also drive efficiency in the process for HCPs, which will also benefit patients. With Pitolisant GR, we are on track to extend the Pitolisant franchise. And as I mentioned, anticipate PDUFA date in the first quarter of 2027. This is a fast-to-market strategy based on the demonstration of bioequivalence to the WAKIX formulation, which we have demonstrated and reported out. As I also mentioned, we've shown that patients can start with on PITOLISANT GR at a therapeutic dose without the need for a titration dose. So possibly reaching clinical benefit quicker and the overall patient experience enhanced in that regard. NDA submission, second quarter this year and utility patents filed out to the mid-2040s to extend the Pitolisant franchise. And with PITOLISANT HD we have the opportunity not only to extend, but to expand this franchise. PITOLISANT HD is different. It's an enhanced formulation, a new and unique formulation of Pitolisant with an optimized PK profile and a higher dose. About 2x the label dose. So it's designed to drive greater efficacy, again, in a market where residual symptoms, refractory symptoms not uncommon, even on polypharmacy. The program is also designed to deliver differentiated label, a differentiated product profile, fatigue indication in narcolepsy and sleep inertia and idiopathic hypersomnia. We're making very good progress. We initiated 2 Phase III registrational trials in the fourth quarter last year ONSTRIDE 1 for adult patients with narcolepsy ONSTRIDE 2 adult patients with IH. And we anticipate top line data readouts from both of those studies in 2027 also utility patents on the HD out to the mid-2040s. Okay. So not seeing pictures of patients. So -- this is why we do what we do. Those shadows are pictures of patients with narcolepsy that are not here. But -- and Harmony, this is why we do what we do to help patients living with narcolepsy as well as other rare neurological disorders based on what we're working on in our pipeline. So let me turn to our robust pipeline. And this is an innovative late-stage pipeline. We have programs of Phase III program in Prader-Willi Syndrome. I just shared highlights with you of our Pitolisant, our next-gen Pitolisant programs with GR and HD. Our Orexin 2 receptor agonist program, early phase but in the clinic and advancing. And then our rare epilepsy development programs led off with EPX 100 in Dravet syndrome and Lennox-Gastaut syndrome or LGS. In the developmental epileptic encephalopathies. We're driving momentum across the pipeline, setting us up for multiple catalysts over the next few years. So BP1.15205, our Orexin 2 agonist. And the excitement here is Phase I clinical PK data anticipated in the middle of this year. And last year, at the Sleep meetings and the World Sleep Congress, we also presented some of the preclinical data to share the profile from the preclinical safety and efficacy data in a transgenic mouse model of narcolepsy. And what we showed was single oral dose administration a significant and dose-dependent increase in total wakefulness at the lowest doses reported in that model, 0.03 milligrams per kilogram, which proves out and consistent with this being the most potent of the Orexin 2 agonist compounds that are being -- currently being worked on. So along with the preclinical efficacy and safety profile, the other feature is the unique structure, the unique chemical scaffold, different than the other compounds. So with all this, and as we go into the clinic, we're excited about the potential for a best-in-class Orexin-2 agonist and further opportunity in the sleep/wake space in the central disorders of hypersomnolence. Turning to our epilepsy programs, EPX 100. So first half 2027, anticipating top line data from an ongoing global Phase III trial, the ARGUS study in patients with Dravet syndrome. But importantly, last month at the American Epilepsy Society Meeting, we shared some of the clinical data from the open-label extension phase of the ARGUS study in patients that had been on EPX-100 for at least 6 months. And what we demonstrated was clinically meaningful reduction in seizures in the condition of patient population with refractory seizures on top of multiple other medications 3, 4, 5 other anti-seizure medications with a median reduction on top of that of about 50% in countable motor seizures, the primary end point. And there's also an overall 50% response rate, both of these clinically meaningful with regards to efficacy. But what the EPX 100 offers is a product profile and the potential to offer an unique risk-benefit proposition with the current therapies in the market, it's not just about efficacy, but especially in polypharmacy, safety and tolerability. And the profile that is emerging with EPX 100, so a very safe, well-tolerated profile. No need for additional laboratory monitoring, example is Epidiolex, a treatment for Dravet where you have to monitor LFTs. No need for special safety monitoring, another approved product for Dravet [indiscernible] that requires in the REMS program and echocardiogram at baseline in every 6 months to assess for cardiac valor disease. So none of these aspects on the safety and tolerability profile for EPX-100 as the Phase III trial advances. In addition, the chance to offer convenient dosing regimen, BID, as opposed to some of the other products out there for both patients and caregivers as well. EPX-100 is 1 of the most advanced of the 5-HT serotonin agonist programs in the Developmental and Epileptic Encephalopathies Space or the DEES. It has an established and validated mechanism of action through a highly predictive preclinical model known as the Zebrafish model, actually developed out here in San Francisco, Scott Baraban at UCSF. And we are also in Phase III global registrational trials with EPX-100 in patients with Lennox-Gastaut syndrome and we anticipate top line data readout from this global study in the first half of 2027 as well. So let me line up for you the catalysts at Harmony that we see coming and our path to long-term value creation. This year, top line Phase III top line data readout from the Pitolisant program in Prader-Willi syndrome. The importance of this is not just on track for an indication, but this will represent the second and final of 2 data sets that we need to obtain pediatric exclusivity, the additional 6 months of regulatory exclusivity on the back end of the longest patent. And we are on track, and we'll have the top line data readout this year. And then the Orexin 2 receptor agonist program, we're excited to share the Phase I clinical PK data around mid-2026 this year, but then looking to next year when it gets really exciting. The PDUFA date, first quarter of next year for PITOLISANT GR. And then Phase III top line data readouts for 4 orphan rare CNS indications for PITOLISANT HD Phase III top line data readout in both narcolepsy and IH, in our epilepsy program with EPX-100, top line data readouts for both Dravet syndrome and LGS -- that positions us going into 2028, just a couple of years away for 4 anticipated PDUFA dates and if successful, HD PDUFA date in narcolepsy and IH, EPX-100 in both Dravet and Lennox-Gastaut. And in addition, the Prader-Willi program with Pitolisant that anticipated PDUFA date there. So what you see here is our pipeline is poised to deliver significant value through both the extension and expansion of the Pitolisant franchise and our innovative EPX-100 epilepsy asset. And finally, with strong cash generation, prudent investments and responsible expense management, we've established a very strong financial profile at Harmony. And this driving value for our shareholders, consistent revenue growth and profitability. And as I shared with you, guiding this year to $1 billion to $1.04 billion, WAKIX is on track this year to achieve blockbuster status. And importantly, everything I shared with you, the pipeline programs, the commercial -- strong commercial engine, the expansion of the field force is being fully funded off of our balance sheet. And it also leaves us significant capital for business development, to continue to build the pipeline, grow the enterprise. So we're poised for value creation. So in closing, I shared with you the momentum coming into 2026 in these 3 main drivers: commercial performance with WAKIX on track to achieve blockbuster status. Our pipeline advancing with 5 Phase III registrational programs advancing towards 5 distinct CNS indications, setting us up for multiple catalysts over the next few years and a strong financial profile, a strong balance sheet as we look to deploy the capital to bring in new assets, build out the pipeline, expand the commercial portfolio. And with this momentum at Harmony, we're poised to deliver on our promise to patients, while creating meaningful value for our shareholders. Thank you for your attention. Thank you for your interest in Harmony. I'll invite members of my team up for the Q&A. Thank you.

Yes. So thank you, Jeff. You shared a lot of very exciting developments for 2026. What are you most excited about?

All of it, everything -- so no, I think that really excited to see the continued growth of WAKIX in narcolepsy. And it's really across the 3 drivers: the advancement of the pipeline and the opportunities there, especially with the next-gen Pitolisant formulations. Proud of the commercial teams and continue to fine-tune what they're doing there and looking for further growth with those opportunities. And then -- and lastly, our strong financial profile, which gives us the ability to grow the enterprise even further. We're very active on the BD front scouring the landscape and looking for strategic, thoughtful opportunities to even generate further value creation.

And now moving on to WAKIX. You've built a very nice franchise with WAKIX already with a $1 billion potential. Can you help explain how the Pitolisant strategy is extending and expanding that franchise with GR and HD?

Sure. So I think that -- set up to the next gen is really starts with, I think, the market opportunity, as I alluded to. So we ended the year with about 8,500 average patients but there's still a large market opportunity with 80,000 patients diagnosed and another 90,000 not yet diagnosed. And then with that and the very unique differentiated product profile with WAKIX strong commercial execution. I think that's what gives us the opportunity. And I want to turn to Adam to sort of share his thoughts on what lies ahead with the commercial team.

Yes. So let's talk about '25 and then in '26. So the history of the brand WAKIX has had very steady performance over the last 6 years, generally adding between 1 and, let's say, 400 patients in a quarter. Prior to this 2025 we'd only seen a 400-patient quarterly add twice in the history of the brand. In 2025, we saw that 3x, 3 consecutive quarters of 400-plus patient adds. That is momentum, I think, was the word that you used. And it's a function of the market opportunity, highly differentiated product strong team with a lot of experience. Many of our team members have been with us since launch, but it's also about focus on the fundamentals. So really in 2025, sales force effectiveness, updating the call plan, reach and frequency, adjusting promo mix, these types of fundamentals. We enjoy broad formulary coverage. We added new coverage wins in 2025. We support patients well, but we improved that process as well. We added staff, we improved that process to make sure that patients get to a dispense faster and with a higher probability of success. That type of execution is going to continue in 2026 in addition to continued investment and expansion. So we are in the midst right now of expanding our field sales team, expanding our field reimbursement team, expanding our remote sales team. We'll be launching an online portal to support health care providers and patients and other significant changes to continue to improve that process to support patients and getting to a dispense event. So that momentum is going to continue in 2026, and that's why we feel confident in the guidance for 2026 that we will achieve $1 billion in net revenue this year.

Thank you. Now moving on to R&D. Regarding your next potential launch of the Pitolisant GR, can you share any additional color on the current status of the NDA submission?

Sure. Kumar?

Yes. We are on track for NDA submission in Q2 of this year with the potential PDUFA date in Q1 of 2027. Pitolisant GR, it's a faster market strategy by demonstrating bioequivalence to WAKIX formulation, which we already did. And in addition, we conducted a small study a dosing optimization study, where we demonstrated that Pitolisant GR can be initiated at 17.8 milligram the therapeutic dose without going through the titration of 8.9 milligrams. So 2 distinct -- distinguishing features. We are on track for NDA submission, PDUFA in Q1 2027. And also, we have filed utility patents for Pitolisant GR with potential patent extension all the way into 2044, thereby extending the Pitolisant franchise all the way into mid-2040s.

You've guided to are starting the narcolepsy and the IH studies with PITOLISANT HD in Q4 of 2025. Can you share more color on the study rationale and the designs?

Sure. I will turn to Kumar. Yes, I think a lot of thought went into study designs with PITOLISANT HD to optimize those opportunities. And Kumar can share some highlights of the trial designs.

Right. I mean, PITOLISANT HD. This is an optimized formulation of pitolisant with doses up to 2x the highest labeled dose for WAKIX along with the gastro-resistant coating, 2 studies, 2 Phase III registrational studies, 1 each in narcolepsy and idiopathic hypersomnia. Both of these studies were initiated in fourth quarter of 2025. We anticipate top line data in 2027 with PDUFA 2028. In terms of study design, the first study, narcolepsy, we are running it ONSTRIDE 1. This is a prospective placebo-controlled, double-blind, randomized controlled trial comparing PITOLISANT HD with placebo. The primary objective here is to evaluate excessive data and sleepiness and the key secondary objectives are to evaluate cataplexy and fatigue. The second Phase III registrational study that is in idiopathic hypersomnia branded as ONSTRIDE 2 is also a prospective placebo controlled, double-blind, randomized controlled study comparing PITOLISANT HD with placebo. The primary objective here is to evaluate idiopathic hypersomnia symptoms we have idiopathic hypersomnia symptoms scale. And the secondary objective is to study sleep inertia, another core symptom of idiopathic hypersomnia, for which there are no approved treatments.

Thank you. You mentioned in your presentation the top line readout from the Prader-Willi study. Can you provide your thoughts on the unmet need and the opportunity for the pediatric extension and exclusivity?

Sure. Yes. So in terms of the Prader-Willi study, there's kind of 2 opportunities there. So Prader-Willi is a disorder. So fundamentally, it's a disorder of hypothalamic dysfunction. And in the hypothalamus, it is both [ hungeratety ] switch, and that's what drives sort of the main symptom of Prader-Willi. And I think most of you are familiar with the hyperphagia. But right next to that is the sleep/wake switch. So there's a lot of sleep to service in about 50% of patients with Prader-Willi syndrome. And that's the opportunity with regards to Pitolisant looking at Prader-Willi for improvement in excessive day from sleepiness. And then some of the downstream effects related to the behavioral symptoms, looking at irritability of some of the secondary endpoints. So that's the opportunity towards the indication. And then Kumar can sort of also expand on the pediatric exclusivity opportunity with that study.

Right. I mean we are in Phase III for Prader-Willi syndrome with Pitolisant. This was based off of a positive proof-of-concept study, the results of which were disclosed a couple of years ago. High unmet need, as Jeff mentioned, about half of the patients with Prader-Willi syndrome have significant excessive data and sleepiness and the histaminergic mechanism of action is uniquely situated, is uniquely placed to help with excessive data and sleepiness in this patient population, top line data in the second half of this year. And if it's positive, we will quickly move to NDA submission and potential PDUFA in 2027. In terms of the [ PEDS ] exclusivity, regardless whether the study is positive or not, this will fulfill the second and the last requirement for us to get [ PEDS ] exclusivity, which is 6 months of additional regulatory exclusivity for WAKIX formulation on top of the longest exclusivity for Pitolisant, which is currently at Q1, 2030. So at 6 months, it takes us to Q3 2030. And there's a significant opportunity, significant commercial opportunity for WAKIX.

Thank you. And now moving on to the Orexin assets. Why do you believe the Harmony's Orexin asset is best-in-class? And when do we expect clinical data?

So the Orexin space, I think, as you're all aware, a very interesting, exciting space, a lot of discussion around that. I think Kumar can share with you why we feel we have a potential best-in-class Orexin 2 agonist based on some of the features, what we've seen in the preclinical data and what's in store in the clinical program.

There is a lot of excitement about Orexins and we are excited as well with our own Orexin-2 receptor agonist. BP1.15205, we believe, based on the data that we could potentially be the best in class. #1, it continues to be the most potent Orexin receptor agonist that's out there. The potency is in terms of nanomolars n fact, it's 0.015 nanomolars to be precise, good selectivity, good safety data in the preclinical models and potential for once a day dosing. The efficacy in the preclinical model, Jeff was talking earlier, it was demonstrated, we're at a dose of 0.03 mg per kg in transgenic mice model of narcolepsy, we saw significant improvement in wakefulness, which is the lowest dose that is tested in this particular model of narcolepsy.

And in terms of the clinical data.

Well, in terms of clinical data, we started dosing in clinic in single ascending dose healthy volunteer study in fourth quarter of last year, mid-2026 we plan to present the clinical PK data, along with safety and tolerability. And in parallel, we also plan to conduct a sleep-deprived healthy volunteer study. And we'll disclose the data when they are available.

Thank you. And now moving on to financials. You provided guidance today. Can you tell us some of the puts and the takes of achieving your overall guidance?

Sure. Sandip?

Yes. Look, we're very excited about the guidance this year, as Jeff said, guidance on top line revenue of $1 billion to $1.4 billion for this year with Orexin narcolepsy. And the key drivers are a lot of the things that we I mean we have great momentum coming out of Q4 of this year -- I mean last year, we had $868 million in sales, 21% growth overall, really quite remarkable for a product at year 6 of commercialization to still be growing at 20-plus percent growth. So we have great momentum, not only from a top line perspective. But also, if you take a look at the net patient adds as Adam shared, we've seen great momentum of 400-plus add in the last 3 quarters, 1 of some of the strongest trends we've seen. And a lot of it is really driven by the unmet need in the space and in the total number of patients. I mean, we still have opportunity 80,000 patients that have been diagnosed with narcolepsy and we're about 8,500. So really significant opportunity to continue to grow the brand. And we look forward to executing on it this year and achieving that $1 billion plus that we've been talking about for several years.

Thanks, Sandip. Adam, any additional color?

I think Sandip explained it very well, absolutely. We believe we have that significant market opportunity remaining with a highly differentiated product very effective team that has a lot of experience, and that is essentially what is fueling the growth momentum this 2025 and into '26.

And then just last question for me. You have a very healthy balance sheet, as you mentioned in your presentation. You're very profitable with $770 million on the books at the end of Q3. How are you thinking about capital deployment and allocation?

Yes. So obviously, we've been very fortunate with regards to our profitability and the success of the WAKIX franchise. So I alluded to it. Business development is a top priority with regards to putting our cash to work off the balance sheet and investing in new opportunities. So we have a dedicated business development team. They're always scouring the landscape for good opportunities, we have a clear strategy in terms of our sweet spot in the orphan rare sort of neuro site space, also looking at some adjacencies, larger indications in neurology, if the opportunity is, right. We have been -- we spent a lot of time as a management team and with our business development team doing diligence. We've gone deep on several, and the plan is to deploy that capital drive greater value through building out the pipeline. We have a little more focus now on commercial assets on market to diversify the commercial portfolio. And I think that's sort of the initial thinking and where the focus is. Sandip, any?

No. I think we're well positioned. Like I said, we continue to generate positive cash flow every quarter because at the end of quarter 3 last year, we had over $770 million on the balance sheet and more highly profitable. So we're really looking at opportunities to continue to redeploy that capital to drive value for shareholders. But we're going to be disciplined and thoughtful about how we do it. So that makes sure there's a good synergy with everything that else that we're doing, and we're going to stay very focused to CNS.

Thank you. And that concludes our presentation. Please join me in thanking the management of Harmony.

Thanks, everyone.