Harmony Biosciences Holdings, Inc. (HRMY) Q1 2025 Earnings Report, Transcript and Summary

Good morning. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Biosciences First Quarter 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Brennan Doyle, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences first quarter 2025 financial results and provide a business update. Before we start, I encourage everyone to go to the Investors section of our website to find the materials that accompany our discussion today, including a reconciliation of our GAAP to non-GAAP financial measures. At this stage of our life cycle, we believe non-GAAP financial results better represent the underlying business performance. Our speakers today on the call are Dr. Jeffrey Dayno, President and CEO; Adam Zaeske, Chief Commercial Officer; Dr. Kumar Budur, Chief Medical and Scientific Officer; and Sandip Kapadia, Chief Financial Officer. As a reminder, we will be making forward-looking statements today which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties. Our actual results may differ materially and we undertake no obligation to update these statements even if circumstances change. We encourage you to consult the risk factors referenced in our SEC filings for additional details. I would now like to turn the call over to our CEO, Dr. Jeffrey Dayno. Jeff?

Thank you, Brennan. Good morning, everyone, and thanks for joining our call today. Before we get started, I am very excited to introduce and welcome Adam Zaeske, our new Chief Commercial Officer, to the Harmony team. Adam will be sharing a bit about his background in a moment, but let me tell you, in just 6 weeks at Harmony, he has already made a big impact. He has been fully embraced by the team, shown himself to be a quick study and strategic thinker and has brought fresh energy and focus as we continue to grow the pitolisant franchise from the strong foundation we built over the past 5 years. Building off of our 4 years of profitability, Q1 was another strong quarter for Harmony. We continue to leverage our commercial success to drive both top and bottom line growth and are well positioned for significant momentum throughout 2025 fueled by key catalysts from our robust late-stage pipeline. Our next major clinical milestone is on track for the third quarter. The top line data readout from the Phase 3 registrational trial of ZYN002 in patients with Fragile X Syndrome, the RECONNECT study. A positive outcome could position us to deliver the first ever Fragile X Syndrome, a significant milestone for patients and their families. I am very proud of the unique profile we have built at Harmony, a profitable self-funding biotech company with a robust pipeline that has the potential to help hundreds of thousands of patients living with rare neurological diseases while creating durable, long-term value for our shareholders. First, a few comments on our core commercial business. WAKIX in narcolepsy continues to deliver strong, consistent growth. Net product revenue for the quarter was $184.7 million, a 20% increase year-over-year, now in its sixth year on the market. This growth reflects the highly differentiated product profile of WAKIX. As the first and only FDA-approved nonscheduled treatment for patients living with narcolepsy, our unique commercial model and strong execution continue to deliver results and we remain confident that WAKIX is on track to reach $1 billion plus opportunity in narcolepsy alone, well ahead of its loss of exclusivity in 2030. Turning to our pipeline where Harmony story gets even more exciting. Over the last 2 years we have been strategic in leveraging our strong balance sheet to build one of the most robust late-stage pipelines in the industry for people living with rare neurological diseases. Today, we have 3 distinct franchises in sleep/wake, neurobehavioral disorders and rare pediatric epilepsies, each with late-stage programs, each with plans to pursue multiple indications and each one of these franchises with peak sales potential of $1 billion to $2 billion. Our pipeline now includes 8 assets across 13 development programs and we expect to have up to 6 programs in Phase 3 trials by the end of this year. Some highlights from our pipeline, first, ZYN002 in patients living with Fragile X Syndrome. The Phase 3 RECONNECT study is on track for top line data in the third quarter. This trial is designed to replicate the positive findings from the pre-specified analysis on the primary outcome from the Phase 2/3 CONNECT study in the subgroup of patients with complete methylation of the FMR1 gene. Next, pitolisant HD. We are on track to initiate Phase 3 registrational trials in narcolepsy and idiopathic hypersomnia in the fourth quarter. Pitolisant HD is our next generation high-dose pitolisant formulation with an enhanced PK profile designed to deliver greater efficacy with no change in the well-established safety tolerability profile of pitolisant. With utility patents filed out to 2044 and a target PDUFA date in 2028, pitolisant HD provides us with a unique opportunity to extend and expand the pitolisant franchise and pursue additional indications for which there are no approved treatments. Kumar will provide more color on our pipeline later in the call. On the business development front, with over $600 million in cash and cash equivalents on the balance sheet, we are actively looking to further strengthen the pipeline. Our experienced business development team has a track record of disciplined smart execution and we are focused on opportunities that can expand our leadership in sleep/wake, build out our neurobehavioral and epilepsy franchises and/or bring in adjacent rare CNS assets. Our financial strength gives us flexibility and we are well positioned to deploy our resources to further grow our pipeline and generate significant value for both patients and our shareholders. Against the current market backdrop, Harmony’s profile is not only unique because of its profitability and strong cash generation, but Harmony is also well positioned to navigate the shifting geopolitical landscape, including the potential impact from proposed new tariffs. On the supply chain side, while our current manufacturing site for WAKIX is in France, we have been working on a secondary manufacturing site for WAKIX in the U.S. and have made good progress toward bringing this site online. Looking ahead, pitolisant HD is the future of the pitolisant franchise with utility patents for HD extending out to 2044. The manufacturing of pitolisant HD has been based in the U.S. from the start of the program. Importantly, our exclusive licensing rights for WAKIX and the intellectual property associated with WAKIX, along with all the IP related to our pipeline products are domiciled here in the United States. I want to emphasize how unique Harmony structure is compared to many others in the biotech industry because of its U.S.-based operational foundation. While the outcome of many of these policy proposals is uncertain, we have taken proactive steps to ensure operational independence and minimize exposure to these potential risks. In closing, I want to leave you with this. Harmony is a profitable self-funding biotech company with a strong and growing commercial business. Next generation formulations are pitolisant on track for PDUFA dates in 2026 and 2028 with utility patents filed out to 2044 and a catalyst-rich late-stage pipeline that is poised to deliver one or more new product or indication launches each year over the next several years, with peak sales potential over $3 billion. If you look across our industry today, Harmony’s profile stands out and offers a unique and compelling investment opportunity. Thank you again for joining us today. I’ll now turn the call over to Adam Zaeske, our Chief Commercial Officer, to share more about his background and provide an update on our commercial business. Welcome, Adam. We are thrilled to have you on the team.

Thanks, Jeff. I really appreciate the warm welcome from the entire Harmony Biosciences team. And I’m thrilled to be joining Harmony at such an exciting time. I’ve been very impressed with the clear focus on patients and what the team has achieved over the past several years with WAKIX. I’m excited to continue that success for many years to come and to expand on that with the next generation pitolisant formulations as well as the late-stage products in the pipeline. I hope to leverage my experience having led marketing, sales and market access teams for 10 years in the U.S. as well as leading large and small country organizations in Europe for 10 years. My most recent role was leading a region of 25 countries, nearly 900 employees and over $2 billion in revenue, with double digit growth for the past 3 consecutive years as the largest contributor to revenue and growth for Europe. Prior to that, I led the franchise teams for Europe across rare disease, neuroscience, immunology, hematology, oncology, gastroenterology and plasma-derived therapy. I’ve been a part of building several multi-billion-dollar brands and I’ve worked on 10 rare disease launches in the past 10 years. Turning to Harmony’s performance. Q1 2025 demonstrated the ongoing strength of our core business and our ability to deliver durable growth. Notably, we achieved $184.7 million in net sales and the fundamentals of the business remain strong and stable. In the first quarter, we saw the familiar seasonal rhythm to our performance consistent with prior years. This includes the traditional Q1 challenges faced across the industry related to payer dynamics, followed by positive momentum and increased prescription demand coming out of Q1. The continued strong 20% year-over-year first quarter growth in WAKIX net revenue now in its sixth year post launch underscores the sustained high demand for WAKIX within the narcolepsy market, driven by the broad clinical utility of WAKIX and the fact that it’s the first and only nonscheduled treatment for patients with narcolepsy. This differentiated profile allows us to tap into the full potential of the approximately 80,000 diagnosed narcolepsy patients. Even with the introduction of new and generic oxybate alternatives, we continue to see consistent utilization of WAKIX among the approximately 4,000 HCPs enrolled in oxybate REMS. Despite our high penetration within this group, WAKIX prescriptions for additional narcolepsy patients within this segment continues to grow each quarter. We’re pleased with the robust growth in WAKIX prescribers, beyond those enrolled in oxybate REMS demonstrating WAKIX’s ongoing success in capturing a broader segment of branded prescribers. Additionally, we have now reached over 50% penetration within this approximately 5,000 HCP segments as of the end of Q1. As we look ahead to full year 2025, we’re confident in the strength of the underlying business fundamental and optimistic that they will fuel continued growth of WAKIX. Based on this, we confirm our net revenue guidance in the range of $820 million to $860 million and we remain on track to achieve $1 billion plus in narcolepsy alone. Leveraging our robust, scalable commercial infrastructure, we are well positioned to unlock significant longer term growth and value with our next generation pitolisant programs. Our development of both pitolisant gastro-resistant, the GR and high dose, HD formulations, is centered on unmet patient needs, aiming to deliver meaningful improvements in care and extend the growth and revenue of the pitolisant franchise into the mid-2040s. Kumar will elaborate on the specifics of the HD and GR development programs. Initial market research among HCPs and payers regarding the HD target product profile has demonstrated strong interest from both physicians and payers and clear unmet need for patients. In summary, we saw continued strong growth of WAKIX in Q1. Our patient-centric drug development approach to the pitolisant life cycle management program, combined with our unique commercial model will ensure durable growth through the mid-2040s. And in closing, my experiences in both rare disease and neurology were tremendously rewarding parts of my career. I’m excited to return to these therapeutic areas and contribute to Harmony’s potential to help many more patients living with unmet medical needs. I would now like to turn the call over to our Chief Medical and Scientific Officer, Kumar Budur, to discuss the advancements in our clinical development programs. Kumar?

Thank you, Adam. Good morning, everyone, and thank you for joining us today. In R&D, we continue to make progress in advancing our pipeline of prospecting development programs, 8 different assets and 3 distinct franchises focused on rare neurological diseases with high unmet medical needs. We have 4 Phase 3 registrational trials ongoing in 4 distinct indications and we will have up to 6 Phase 3 registrational trials by the end of this year. This makes our portfolio one of the most robust late-stage pipelines in the industry, with the potential to deliver one or more new products or indication launches every year in the coming years. Our full clinical development pipeline is shown on Slide #5 and the clinical development highlights are on Slide 6 through Slide 11. Let’s begin with our sleep/wake franchise. Our next-gen pitolisant programs which are patient-centric development programs are aimed to build upon the product profile of pitolisant. We are on track to initiate a Phase 3 registrational trial of pitolisant HD in narcolepsy in Q4 2025 with a target PDUFA date in 2028. This optimized higher dose formulation holds the promise of greater efficacy in addressing excessive daytime sleepiness, the most important unmet need in patients with narcolepsy and also target fatigue, a symptom experienced by about 60% to 70% of patients with narcolepsy for which there are no currently approved treatments. We are also on track to initiate our Phase 3 registrational trial in idiopathic hypersomnia in Q4 2025. Pitolisant HD is expected to deliver efficacy in excessive daytime sleepiness and also address critical symptoms such as sleep inertia, another core symptom in patients with idiopathic hypersomnia for which there are no approved treatments. This double-blind, randomized, placebo-controlled parallel arm study is designed with FDA input and we anticipate a PDUFA date in 2028. Moving on to our pitolisant GR program, this formulation is designed to address the GI comorbidity current in almost 80% of patients with narcolepsy and also designed to give patients an ability to start at the therapeutic dose range with no titration. We initiated the pivotal B study in Q1 2025 and the top line data are anticipated in Q3 2025, with the projected PDUFA date in 2026. Utility patents have been submitted for both pitolisant GR and pitolisant HD, with the potential for patent protection until 2044. Next in our sleep/wake franchise is our orexin receptor agonist program, BP1.15205, a potential best-in-class candidate currently in preclinical development. In vitro pharmacology data demonstrate greater potency compared to all other publicly disclosed orexin-2 agonist. The combination of high potency, excellent selectivity, potential for once-daily dosing, and robust preclinical safety data underscores its best-in-class potential. We will be presenting a comprehensive preclinical safety and efficacy data at the upcoming annual sleep meeting in June and the data will demonstrate efficacy in sleepiness consistent with its high potency. We remain on track to file an IMPD by mid-2025 with first-in-human studies in the second half of this year and anticipate to share clinical data in 2026. Moving on, I’m very excited about our neurobehavioral franchise, which is the next major catalyst in our portfolio. The top line data from the ZYN002 Phase 3 registrational trial, the RECONNECT study in Fragile X Syndrome is in the third quarter of this year. Fragile X Syndrome, a rare genetic disorder caused by mutation of the FMR1 gene on the X chromosome results in decreased or no FMR protein production, especially in patients with complete methylation that results in silencing of the gene. Lack of FMR protein causes endocannabinoid dysregulation, leading to significant neurobehavioral symptoms, intellectual impairment, developmental delays and other symptoms. In fact, Fragile X Syndrome is the most common known inherited cause of intellectual impairment and autism spectrum disorders with an estimated prevalence of approximately 80,000 patients each in the U.S. and the EU. ZYN002 represents a novel therapeutic approach. It’s a 100% synthetic cannabidiol devoid of THC in a patent-protected permeation-enhanced transdermal gel delivering the drug directly into the systemic circulation. ZYN002 is designed to modulate the endocannabinoid system by interacting with CD1 receptor, aiming to restore endocannabinoid homeostasis and thereby alleviating the neurobehavioral symptoms. Notably, transdermal administration of ZYN002 offers a significant advantage in tolerability and safety compared to oral cannabidiol, which is associated with substantial gastrointestinal disturbances such as nausea, vomiting, abdominal cramps and diarrhea. By avoiding the first pass hepatic metabolism, ZYN002 is not associated with liver function abnormalities that are often observed with oral cannabidiol. The ongoing Phase 3 registrational trial, the RECONNECT study builds upon the data and insights from the large Phase 2/3 CONNECT study. The RECONNECT study essentially seeks to replicate the clinically meaningful and statistically significant efficacy signals observed in patients with complete methylation in the CONNECT study. We have completed recruitment and closed new patient screenings. We are on track for top line data in Q3 2025. If positive, the RECONNECT study is expected to support regulatory approvals in both U.S. and EU and Harmony holds global rights for ZYN002. Based on the etiology and pathophysiology of Fragile X Syndrome, ZYN002’s mechanism of action, the robust clinical data in patients with complete methylation from the CONNECT study as well as the enhancements in the design of the RECONNECT study based on the learnings from the CONNECT study, we have a strong conviction in the program’s success. If approved, ZYN002 will be the first and only treatment approved for any symptoms in patients with Fragile X Syndrome. Furthermore, we remain on schedule to initiate a Phase 3 registrational trial in 22q deletion syndrome in 2025. This rare disorder with significant neurobehavioral symptoms and no approved therapies affects approximately 80,000 individuals each in the U.S. and Europe. Finally, a few words on our epilepsy franchise, where we have the most advanced 5HT2 serotonin development programs in developmental and epileptic encephalopathies. EPX-100, clemizole hydrochloride program is actively enrolling participants in the global Phase 3 registrational trials, the ARGUS study in Dravet syndrome and the LIGHTHOUSE study in Lennox-Gastaut syndrome. Our other investigational product in developmental and epileptic encephalopathies, EPX-200, a liquid formulation of lorcaserin, is in the pre-IND phase. In conclusion, we are making strong progress across our late-stage rare neuro portfolio with the potential to launch one or more new products or indications each year in the coming years. More importantly, this progress holds the promise of providing meaningful new treatment options to hundreds of thousands of individuals affected by rare neurological disorders. For many of these patients there are currently no approved treatments or the existing therapies offer limited efficacy and considerable safety and tolerability issues. As always, on behalf of Harmony, I would like to thank all the patients and their families who are participating in our clinical trials as well as our clinical investigators and site personnel for their efforts and commitment in helping us to advance our development programs. I’ll now turn the call over to our CFO, Sandip Kapadia, for an update on our financial performance. Sandip?

Thank you, Kumar, and good morning, everyone. This morning, we issued our first quarter 2025 earnings release and filed our 10-Q, where you’ll find the details of our financial and operating results. Our financial performance is also shown on Slides 12 through 14. We’re off to a great start to the year in 2025. We reported another quarter with strong growth in revenues of 20% and net income growth of 19%, along with closing the quarter with over $600 million of cash, cash equivalents and investments on the balance sheet. We continue to have a very unique profile in biotech with growing top line profitability and generating positive cash flow. As a result, we are well positioned to advance our growth strategy and look for opportunities to drive incremental value for shareholders. For the first quarter of 2025, we reported net revenues of $184.7 million compared to $154.6 million in the prior year quarter, representing a growth of 20%. Performance in the quarter reflects the strong underlying demand for WAKIX, coupled with the typical seasonal dynamics in Q1 that the industry as a whole experiences, including higher gross to net deductions while not seeing a significant change in trade inventories. We reported total operating expenses for the first quarter of $96.6 million compared to $75.1 million for the same quarter in 2024. Growth in our expenses were driven by our expanding late-stage pipeline, along with investments for the commercialization of WAKIX in narcolepsy. We also reported solid net income and margin. Non-GAAP adjusted net income for the first quarter of 2025 was $60.4 million or $1.03 per diluted share compared to $50.7 million or $0.88 per diluted share in the prior year quarter. We believe non-GAAP adjusted net income better reflects the underlying business performance. Please see our press release for a reconciliation of GAAP to non-GAAP results. We also ended the first quarter with $610.2 million in cash, cash equivalents and investments on the balance sheet. And looking ahead to the balance of 2025, we are reiterating our net revenue guidance for 2025 of $820 million to $860 million, highlighting our progress towards a $1 billion-plus opportunity in narcolepsy alone. We expect continued strong quarter-over-quarter growth, while noting the potentials of trade inventory drawdown of a few days in Q2 as we head into the summer months. With respect to expenses, we expect increased R&D investments as we advance our late-stage pipeline with multiple programs in Phase 3 registrational trials. As previously noted, we expect to potentially incur $29 million in R&D-related milestone payments in 2025, including milestones for the completion of the Phase 3 trial for ZYN002 in Fragile X Syndrome, along with a milestone for positive top line data from this trial. In addition, there is a milestone related to the initiation of the Phase 1 trial in our orexin-2 agonist program, which we anticipate in the second half of this year. In summary, I’m pleased with the great start we’re off to in 2025. We once again delivered a quarter with double digit top line growth and healthy operating margins. This, along with our U.S. operational footprint, positions us well as we move through the year with the potential for significant value creation through our catalyst-rich pipeline. And with that, I’d like to turn the call back over to Jeff for his closing remarks. Jeff?

Thank you, Sandip. To wrap up, Harmony Biosciences offers a very compelling profile, a strong commercial foundational business generating significant cash and profitability, a robust late-stage pipeline with meaningful near-term catalysts poised to deliver one or more new product or indication launches each year over the next several years and peak sales potential over $3 billion. Over $600 million on the balance sheet, funding the entire enterprise, giving us the capacity to build out our pipeline further and create even greater value potential. I am proud of the entire team and what we have accomplished together, transforming Harmony into a high-growth biotech company, delivering on our promise to patients and creating durable long-term value for our shareholders. So thank you and I will now turn the call back over to the operator. Operator?

Thank you. [Operator Instructions] We’ll take our first question from Graig Suvannavejh with Mizuho Securities.

Hey, thank you very much for taking my question. Congrats on the quarter. Two questions, please. First, just on the pipeline and for ZYN002, could you please remind us what the powering assumptions are for the study? And also what perhaps are risk mitigation strategies and what strategies for optimizing clinical trial success you’ve put in place? That’s my first question. Then my second question is just for Adam. Congrats on the new role as Chief Commercial Officer. But could you please share with us maybe what you’ve seen thus far with the commercial team and strategies that are in place supporting WAKIX? And are there any changes or tweaks that you think given your experience can be put in place?

Thank you for your questions on – first to Kumar on ZYN002. Very excited for that opportunity and Kumar can sort of share with you the powering and how that program is designed and our conviction in the top line data that’s on track for Q3. Kumar?

Sure. Thanks for the question. Regarding the powering of the study, the study is powered more than 90% for the primary endpoint, which is change in the social avoidance severity from baseline to the end of the study as measured by Aberrant Behavior Checklist-Community edition specific for Fragile X Syndrome. And the study powering and the sample size calculation and all the statistical analysis was planned based on the learnings from the CONNECT study, where as we have disclosed in the past, we not just saw a clinically meaningful, but also a nominally statistically significant difference in patients with complete methylation on the same primary endpoint. Regarding the question on the checks and balances within the clinical trial, Graig, as you know, many of us have done so many neuropsychiatric clinical trials. And these clinical trials are very unique. It’s very important to make sure that the right patients get into the study. And we have ensured it. In a way, with Fragile X Syndrome, it makes it somewhat easier because all of these patients need to have full methylation – sorry, full mutation that is confirmed by looking at the CGG repeat and also full complete methylation via PCR test. And after that, we have put a pretty rigorous criteria and checks and balances in place to make sure that the baseline severity meets the criteria that we have set. And also, the caregivers are trained extensively via an independent third-party vendor whenever they complete the assessment. So, overall, lots of checks and balances in place. Again, as we mentioned in the past, this study is designed based on the learnings from the CONNECT study. Not only that, we made several enhancements in the RECONNECT study to increase the probability of success, overall, very excited, high level of conviction and confidence in potentially bringing the first treatment for any symptoms in patients with Fragile X Syndrome.

Thank you, Kumar. And over to Adam for his initial impressions and let me reiterate our welcome to Adam to the Harmony team. Adam?

Thank you, Jeff. And thank you, Graig, for the question. Look, it’s fantastic to be part of the team here at Harmony now. I’m super excited. I’ve been thrilled with what I’ve seen so far. I was originally attracted to Harmony Biosciences for a couple of reasons. I saw an organization that had a very clear purpose and a shared purpose around really trying to benefit patients and meet unmet needs of those patients in neurology. I saw an extremely strong team, a lot of talented individuals. And I think as you’ve seen here today, the outstanding performance and it just continues quarter-over-quarter, year-over-year, in addition to having a really exciting pipeline, pipeline that is developed with a very clear patient orientation and is, I think, smartly designed to really meet the remaining unmet needs of patients in each of these areas. So I’m just about one month in. I’ve had a wonderful opportunity to connect with the team. And really, I’m focused on learning and listening at this stage. My platform is pretty simple. I’m focused on how do we continue the strong performance that the organization has delivered for the past 5-plus years consistently and how do we prepare for the future? I think the team has a lot of great ideas and I’m really enjoying the discussion and we’re going to be evaluating tweaks as you say, tweaks and opportunities moving forward and prioritize those. And I’m confident we will continue the strong performance with WAKIX and we will be prepared for the future with the exciting time that exists here. So thank you for your question.

Yes, that’s useful.

We’ll go next to David Amsellem with Piper Sandler.

Thanks. So wanted to ask a high-level question on the orexin, so you have 3 orexin agonists in mid to late-stage development and it’s a space that’s admittedly getting crowded. So I guess the question is, where do you see your orexin-2 receptor agonist fitting in within this emerging armamentarium in sleep/wake? Are you looking at the asset in settings beyond sleep/wake as other companies are starting to do? So that’s number one. And then number two, can you just talk at a high level about the payer landscape for WAKIX? And what I guess I’m particularly interested in is as we get more and more generic competition for the year, how should we think about the payer landscape and the gross to net for WAKIX?

Thanks for your question. So orexin-2 agonist, obviously, a lot of attention, a lot of focus, a lot of interest and the next novel target for narcolepsy, other central disorders of hypersomnolence. The programs are emerging, still early, still a lot to learn. I think I’ll turn it over to Kumar in terms of our thoughts on where they could fit in. We still see narcolepsy in terms of a polypharmacy market, chronic neurologic disorder, multiple mechanisms always can be helpful. Kumar, further thoughts on the other programs and where we fit in?

Sure. Thank you, Jeff. Thanks for the question. Look, I mean, we see all of these programs as still early and the data are emerging. We just need to see how the data will pan out from an efficacy and safety perspective and also from a tolerability perspective. With the possible exception of Takeda 861, which is being pursued only in NT1 and is in Phase 3, the other two assets are in Phase 1b/2a studies and we are monitoring these programs very carefully. What we are excited about is really BP1.15205 as we have disclosed in the past continues to be the highest potent compound compared to any other orexin receptor agonist for which the data has been disclosed publicly. And you’ll see this high potency translated into robust efficacy in sleepiness in very low doses in the preclinical models and this data will be presented at the upcoming annual sleep meeting in the month of June and we will be providing additional color and context around the preclinical safety and efficacy. In terms of your question, David, beyond central disorders of hypersomnolence, and that is something we are also carefully monitoring and also doing some of our own experiments as well. There is a potential that orexin receptor agonist could be helpful in certain other symptoms domain. For example, like cognition and potentially mood disorders. These are some of the things that we are working on and also following the field very closely, but it’s too early to comment on that.

Thanks Kumar. In terms of the payer landscape, let me turn it over to Adam. But I think, David, in terms of – mentioned the generic oxybate, I think to-date, we have not seen any impact with regards to – on the payer environment for WAKIX with generic oxybate thus far and also the once-nightly. In terms of the oxybate vertical, where we feel that we are pretty well-insulated given that it’s the first and only non-scheduled product with a differentiated profile, payers not wanting to step WAKIX through an oxybate therapy. But further thoughts on plan landscape going forward, Adam?

Thank you, Jeff, and thank you, David, for the question. One of the things I have been really impressed with is the strength and stability of the fundamentals underpinning the business for WAKIX. And I would include payer coverage in that. I think we experienced very broad coverage for WAKIX with over 80% of lives covered, U.S. lives covered for WAKIX. And that has really remained consistent, I think for the past several years despite entries of additional brand and generic oxybates. As Jeff mentioned, plans typically don’t step through an oxybate to secure access for WAKIX. And that is, I think largely because it is a highly differentiated product as the first and only non-scheduled treatment option for these patients. And that performance and coverage has really been stable and consistent, I would say, for the past several years. We saw no changes in – no significant changes in payer coverage in 1Q. And that is also a reason why I think we remain confident in confirming our full year guidance for net revenue of between $820 million and $860 million for the year. Thank you.

Thanks.

Thanks David.

We will go next to Ami Fadia with Needham.

Hi. Good morning. Thanks for taking my question and Adam, welcome to the team. And perhaps my first question is just sort of around market dynamics. And how do you see that evolve with the orexins entering the market? I understand that some of the assets are still in Phase 2. However, in the data that they have generated so far, particularly Takeda as well as Alkermes, seems to indicate that patients can achieve something in close to 30 minutes in the MWT. And with that, is there still likely to be polypharmacy in this market? And maybe if you could sort of comment on that and comment on whether you think the dynamics could be different across NT1, NT2 and NIH? And then just separately, regarding EPX-100, what are your thoughts around potentially exploring it in a broader DEE population as opposed to SGS? Thank you.

Good morning Ami. Thank you for your questions. Yes, with regards to the orexin-2 agonist and sort of the evolving landscape there, obviously, we are following that closely, anticipating what those product profiles may deliver. And as you mentioned, strong efficacy on improving EDS in terms of the data that we have seen, obviously as we move forward with our next-gen pitolisant programs and HD looking for kind of greater efficacy going forward in the pitolisant franchise as well, I think it really comes down to what the overall product profiles will deliver, efficacy in cataplexy. It’s sort of the totality of the evidence, if you will, what the ultimate product profile will look like. And I will turn it over to Kumar, any other thoughts with regards to that piece and then on EPX-100.

Sure. Thank you, Jeff. Hey, good morning Ami. Thanks for the question. Ami, you did mention about the 30 minutes on MWT. That’s true. That’s the kind of efficacy that we have seen based on the preliminary data from a couple of orexin receptor agonists, which is good. But still, there are many unanswered questions in terms of the response rate, the durability of response and the overall safety and tolerability profile. And these things need to be figured out. The way we see it is as we progress our own orexin receptor agonist, which we believe has the properties to be potentially the best-in-class orexin receptor agonist. As we make progress, we continue to believe that narcolepsy will be a polypharmacy market. Patients with narcolepsy will require more than one medication. As you know, it’s not just excessive daytime sleepiness. They also have disrupted nighttime sleepiness. They have cataplexy. They have hypnagogic hallucinations, fatigue and a host of other symptoms. That’s exactly one of the reasons why we are targeting our pitolisant HD formulation towards fatigue, which is a symptom that is experienced by about 60% to 70% of patients with narcolepsy for which there are no approved treatment and histaministic mechanism of action specifically is suited to treat fatigue symptoms and we demonstrated that in our DM1 study. So, that’s where we are with our orexin receptor agonist and how we are thinking about the landscape. To your question about EPX-100, yes, it’s definitely the option of going or pursuing a broader DEE indication is available. Right now we are focused on our two Phase 3 studies, ARGUS study in Dravet syndrome and LIGHTHOUSE study in Lennox-Gastaut syndrome. Both of these studies are up and running, actively recruiting patients and we are evaluating potentially adding other DEE indications, but we just need to look at the benefit-risk balance by making some of these studies more heterogeneous by adding other patients. So, that’s an option that is definitely available and we are evaluating.

Thank you.

Thanks Ami.

We will go next to Patrick Trucchio with H.C. Wainwright.

Thanks. Good morning. Just a couple of questions from me, the first is I am wondering if you can discuss the drivers of your revenue guidance? And specifically, what we should be looking for to suggest the year’s revenue should trend to the higher end of the range rather than the lower end? And then secondly, I am wondering if you can preview any of the design elements from the upcoming Phase 3 trials for pitolisant HD and narcolepsy and IH, including other fatigue and sleep inertia endpoints may be formally powered in the HD trial for differentiated labeling?

Good morning Patrick. Thanks for your questions. So, Adam, in terms of drivers of the business and Sandip, if you want to comment on that as well.

Sure, I can jump in. Thank you, Jeff, and thank you for the question. The primary driver of growth for the remainder of the year is going to be continued sequential additions of patients on therapy. And this is something we have seen historically very consistently. Again, back to the fundamentals of the business here, a very strong and stable continued progression of average patients on therapy. This quarter, in Q1, we achieved 7,200 patients on WAKIX. We exited the quarter actually at 7,300, so we continue to see that strong momentum moving into the rest of the year. And we would expect to see that growth and performance continue. As we think about that patient growth, we typically have been discussing how do you grow the top line referrals? How do you make sure that we are converting patients to ensure that referrals are actually dispensed, and what is the adherence and compliance with that therapy over time. And I think in each of those buckets, you see very strong, stable fundamentals, and we would continue to expect that through the remainder of this year.

Yes. And I would just add, Patrick, I think it speaks for the – I think the underlying opportunity in the narcolepsy market. So, again, large market, 80,000 diagnosed patients, year six in the market, continue to grow, continued sort of momentum and then the differentiated product profile. Again, we tapped into the 9,000 HCPs, prescribing 5,000 of whom are not – don’t participate in an oxybate REMS, continue to penetrate across that segment, about 50% or so penetrated as well as the depth of the 4,000 HCPs with the larger clinics, more patients. So, it is the rhythm of the business, if you will, as we said now going into year six in the market, large market opportunity, differentiated profile, strong underlying business fundamentals that are consistent. And we are confident. We are confident in WAKIX being on its way to $1 billion-plus opportunity in narcolepsy alone.

Thank you, Jeff. Hey. Good morning Patrick. Thank you for your questions on pitolisant HD Phase 3 programs. We have already disclosed the study designed for idiopathic hypersomnia, which is aligned with the regulatory agency. It’s going to be a double-blind, randomized, placebo-controlled parallel arm study. Phase 3 narcolepsy study, we haven’t disclosed the design yet and we will provide that information as we get ready to initiate the study. And your other question was around fatigue. We have done some leading-edge work in fatigue already. We have been working on this for more than 2 years now. We completed a qualitative research study to look at the instruments to measure specifically fatigue, specifically in patients with narcolepsy. And we are about to complete a really large longitudinal study looking at the prevalence and impact and the stability of symptoms of fatigue in patients with narcolepsy. The goal is certainly to get fatigue as an indication in narcolepsy sooner or later and we will be providing more information on that as we get closer to initiating the narcolepsy study. Thank you.

Thanks so much.

Thanks Patrick.

We will go next to David Hoang with Deutsche Bank.

Hi. Thanks so much for taking my questions. Adam, welcome to the team. I wanted to ask a little bit about ZYN002 in Fragile X. If you do get positive data in hand, how quickly do you think you could file the NDA for that molecule? And can you just give us a sense of what commercialization of 002 in the Fragile X market might look like? How do you think about the value proposition of this product? And are there other analogs in rare neurological diseases that we could look at?

Yes. Good morning David. Thanks for your question. Really excited about the ZYN002 Fragile X opportunity. Kumar, do you want to sort of talk about the development part and then we can talk about market opportunity?

Sure. Thank you, Jeff. Hey, good morning David. Yes, Fragile X syndrome, look, very excited for the top line data. As we disclosed this morning, we completed recruitment and closed for new screenings. We are on track for top line data in 3Q of this year. And if the results are positive, we have the ability, the opportunity to bring the very first approved treatment to patients with Fragile X syndrome. Once we get the top line data, David, the goal is to file NDA as soon as possible. And given the unmet need, significant unmet need in this patient population, I think it’s reasonable to expect a priority review in an indication like this. So, there will be an expedited timelines to submission of NDA and I am sure the FDA will also show the urgency to quickly review the data package and give their decision on PDUFA. And of course, the other thing is in the background, we are working expeditiously on 22q. We have aligned with the regulatory agencies on the primary endpoint and the Phase 3 study. As we speak, we are getting ready to initiate Phase 3 study in 22q as well. Another rare indication of approximately 80,000 patients each in U.S. and Europe and as we have mentioned in the past, we have global rights for ZYN002 and not have – go back on Fragile X syndrome, one thing is the study design meets the requirement of not just the FDA but also EMA for an indication for Fragile X syndrome.

Yes. So, David, suffice it to say, with positive data, we will move swiftly in terms of preparing an NDA and submitting that. And in terms of the market opportunity and go-to-market, so about 80,000 patients living with Fragile X as well as 22q in the U.S. and similar in the EU as well with global rights. We see this, I think about 60,000 by claims data, so significant opportunity for rare disease. We see this as a sort of a centers of excellence model, if you will, with regards to neurobehavioral syndromes and those types of disorders. We have a lot of institutional knowledge in the space that came over from our acquisition of Zynerba, know it well. And then our sort of world-class patient advocacy team is fully engaged with the Fragile X patient community, listening to them kind of understanding sort of the unmet needs. You will hear more from Adam going forward in terms of launch preparation as we plan for success with high conviction in the top line data.

We will go next to Ash Verma with UBS.

Thanks for taking my question. Congrats on the quarter. So, maybe just on Fragile X, I wanted to understand like there is this competitor Shionogi that has a program zatolmilast, which is reading out in the second quarter and they have shown prior Phase 2 data with cognitive assessment. Just what are your thoughts on PDE4D allosteric inhibitor approach? And then I saw like their endpoint is different versus what you are studying. Just wanted to make sure that these are both FDA-approvable or not. And then secondly, on WAKIX, so I wanted to understand like these new patients that you are getting in, can you provide us a split of how much of that is coming from oxybate experienced versus naïve patients? Thanks.

Thank you, Ashwani, for your question. In terms of the Shionogi program, just very briefly, obviously, following that closely, very different program, as you mentioned, the primary outcome around cognition and cognitive function only in male patients. So, if Kumar, you want to comment further, but our program is very different as well as the importance of any new treatments for patient populations with unmet medical need?

Jeff, I think you covered everything. Yes, Ash, it does utilize zatolmilast PDE4D inhibitor, specifically looking at symptoms of cognition in male patients only who have a relatively higher level of baseline cognitive function, whereas in RECONNECT, we are looking at neurobehavioral symptoms, which are extremely prevalent, in fact, prevalent in every patient with Fragile X syndrome and also the most bothersome symptom when it comes to patients and their caregivers.

Thanks Kumar. Adam, on WAKIX?

Sure. Thank you, Jeff. Thanks for the question. Yes. So, I guess in terms of sourcing of patients, I think Jeff mentioned before the polypharmacy nature of the therapeutic approach here. So, the reality is the majority of patients that we are seeing referred for WAKIX have been on one or multiple other therapies prior to that referral. That’s common. And that’s going to be true for any product for sleep/wake. And then even when patients are on WAKIX therapy, we continue to see that polypharmacy approach, and so the majority of patients on WAKIX therapy are also on one or additional other therapeutic options. And certainly, oxybates being a prominent option that HCPs have access to, that’s going to be a portion of those patients that would also have concomitant oxybate use.

Yes. And I think the experience with concomitant use, about 10% to 15% of patients on WAKIX also on an oxybate, it’s been fairly consistent since launch.

Thank you.

Thanks Ash.

We will go next to Jason Gerberry with Bank of America.

Hey guys. Thanks for taking my questions. Just on the orexin data at sleep, I am wondering if you can preview a little bit like what we will get. I think when I looked at some of the other players who are in the clinic when they were evaluating their drugs pre-clinically looking at the DTA mouse models and what endpoints will you give, and when I look at like Centessa’s versus Takeda’s data, some of the endpoint measures are a little bit different, making comparisons a little bit difficult. But will you give latency to sleep or latency to cataplexy, so we can benchmark and get a sense of the potency selectivity argument is starting to translate on the efficacy side? And then just asking the polypharmacy question a little bit differently, like what proportion of payers are amenable to proprietary brand medicines in the narcolepsy setting? Just trying to get a sense because as new proprietary presumably expensive medicines come onboard, just wondering how payers will be amenable to covering multiple brands? Thanks.

Good morning Jason. Thanks for the question. Kumar, on the upcoming data at sleep?

Sure. Hey. Good morning Jason. Thanks for the question. Yes, we will be presenting a comprehensive preclinical safety and efficacy data, Jason, at the upcoming sleep meeting in June in Seattle. And as I mentioned earlier during the call, I mean you will see high potency translated into robust efficacy in sleepiness at very low doses in the preclinical animal models. In terms of specifically the model and the parameters that we will be discussing, you can expect to see the standard parameters like sleep latency, wakefulness time in a mice model that is considered as a standard for preclinical studies. You are right, Jason, sometimes it’s hard to compare the data in preclinical models because of use of different animal models, different experimental conditions, different point in time. But we will be showing data that will show that the efficacy is consistent with the very high potency that we have been talking about and also the preclinical safety data in GLP studies that will look very good. Yes, great for the sleep making.

And Jason, I think your next question was about concomitant use of WAKIX and oxybates in the payer landscape. And I think that the experience has been at least quite difficult for given all the plans and each plan with not a lot of patients in the plans, but it’s almost more in terms of administratively with regards to managing both of those therapies. So, there is not been any pushback. I think with regards to – it’s not a big part of their budget. So, patients on both WAKIX and a branded oxybate has not been a challenge in the market for us because each of the plans don’t have a lot of patients given that it’s a rare disease.

Got it. Thank you.

Thanks Jason.

We will go next to Charles Duncan with Cantor Fitzgerald.

Hi. Good morning. Jeff, congrats on a nice quarter. Thanks for taking our question. I had a commercial question and then a pipeline question, may also have a strategy question at the end. But with regards to the commercial question, I guess, Adam mentioned exiting the quarter with about 7,300 patients on. I guess I am wondering five weeks into the quarter, how do you feel about the trends for WAKIX now? And would the guidance depend more on, call it, external factors such as demand or more on internal efforts such as tweaks to the marketing program that you plan for that you are contemplating for WAKIX?

Thanks for the question. So, what I can speak to is really the strong continued performance in Q1. And in Q1, we typically do see the traditional seasonality. We have seen that every year for the 5 years now, moving on to 6 years since launch. And that has to do with the traditional payer resets that happen at the beginning of the year. So, as patients move coverage, they have to reestablish prior authorizations and steps and that takes a little bit of time. So, that it does have an impact on Q1 patient numbers, but that’s something that’s seen actually not just for WAKIX, it’s seen across sleep/wake. It’s also seen actually across the industry. So, that’s the typical seasonality that we would expect to see and we weathered that successfully this quarter. As I mentioned, the momentum continues very strong as we are exiting the quarter and we continue to have confidence for that full year revenue guidance between $820 million and $860 million for the full year.

It sounds like it’s demand-driven, correct?

So, I mean, yes. So, certainly, the growth is, as Jeff said before, it’s going to be primarily driven by demand as a result of the highly differentiated profile of WAKIX. But I will mention as well, one of the things I have been really impressed with is the commercial model that has been put in place to support patients, to support HCPs as well as caregivers. I think it’s a key driver of performance. It’s not just the model itself, but also how it’s used with all referrals going into a single central hub, a very tight distribution through three specialty pharmacies and the broad set of data that we are able to capture on patients individually and longitudinally that allows us to deploy intelligent investment decisions, resource planning and make real-time decisions as we are seeing that data updated on a daily basis. So, I think that’s also an element.

Okay. That’s helpful. It sounds like no major changes in terms of sales strategy?

No, major changes, I think it’s really what I have said before. You are right, underlying demand remains strong. Market opportunity remains large, strong underlying fundamentals. And I think no major changes to the strategy. We will see opportunities, obviously, as the brand matures to make tweaks along the way. I think Adam is bringing sort of fresh perspective and thinking with regards to that. And we see continued opportunity ahead in our core franchise towards $1 billion-plus in narcolepsy as we prepare to initiate the Phase 3 trials for pitolisant HD in both narcolepsy and IH in the fourth quarter. So, we are poised with a target PDUFA in 2028 to transition the pitolisant franchise with utility patents to 2044, well into the future to extend that franchise and generate significant value.

That’s a great segue, Jeff, to my last question, which is pitolisant HD. In terms of the timing of that Phase 3 start, I am kind of wondering what the rate-limiting step is. I know that you run a lean and mean operation, so lots going on in the pipeline generally. But are there any experimental results you are waiting for to be able to operationalize that Phase 3 with pitolisant HD in narcolepsy as well as perhaps IH by the end of the year?

Yes, Charles, I think it’s mainly just finalizing the formulation work. I will turn it over to Kumar. But all of the preparation is in motion for those. And Kumar, do you want to provide more color?

Yes, sure. Thanks Jeff. Hey, good morning Charles. Now, maybe as we said, we will initiate the Phase 3 studies, both in narcolepsy and in IH in the fourth quarter of this year and we are on track to initiate both the studies in narcolepsy and in IH, large global Phase 3 studies. In terms of what happens, Charles, is these are large studies, registrational studies. So, a lot of work that needs to happen in terms of the protocol finalization, the regulatory alignment, IND submission and the formulation development, these are Phase 3 studies. So, we need commercial-ready formulation work that needs to be completed before you start Phase 3 study. So, we are just checking all the boxes and making steady progress to initiate both the studies in fourth quarter of this year. And we are committed to the potential target PDUFA date in 2028, as Jeff mentioned, well before the loss of patent on WAKIX, which is Q1 2030.

Thank you. I am showing no further questions. I would now like to turn the call back over for any closing remarks.

Thanks Angela. I want to thank everyone for joining our call today. Harmony is well-positioned to continue to grow our enterprise and generate durable value going forward. Thank you for your interest in Harmony and have a great day.

This does conclude today’s Harmony Biosciences first quarter 2025 financial results conference call. You may now disconnect your line and have a wonderful day.