Harmony Biosciences Holdings, Inc. (HRMY) Q2 2025 Earnings Report, Transcript and Summary

Good morning. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Biosciences Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference may be recorded. [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 Second Quarter 2025 financial results and provide a business update. Before we start, I encourage everyone to 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 on today's call are Dr. Jeffrey Dayno, President and CEO; Adam Zaeske, Medical and Scientific Officer; and Sandip Kapadia, Chief Financial Officer and Chief Administrative 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 thank you for joining our call today. I want to begin today's call by reaffirming something we believe is becoming incredibly story. We have built something rare in our industry, a profitable, self-funding biotech company with an innovative late-stage pipeline poised to deliver meaningful value for both patients and shareholders. Because of this unique profile, we continue to execute business anchored by WAKIX and narcolepsy has now delivered another quarter of double- digit revenue growth. We reported $200.5 million in second quarter net revenue, representing a 16% increase year-over-year. This performance extends our 4-year streak of profitability and reinforces WAKIX' strong momentum addition of 400 average patients during the second quarter. WAKIX remains the first and only non-scheduled treatment for narcolepsy, leading to prescribers. As demonstrated by the sustained momentum, we believe WAKIX will achieve $1 billion plus blockbuster status in narcolepsy alone, well ahead of loss of exclusivity in 2030. But our story doesn't end with the success of WAKIX because we are just getting started. What excites us most is what lies franchise company with 3 core areas of focus: sleep/wake, neurobehavioral and rare epilepsies. Each of these franchises and peak sales potential across multiple indications. Let me walk you through what lies ahead in our pipeline, starting with our next major clinical catalyst coming from our neurobehavioral franchise and its innovative investigational product, ZYN002. This is a 100% synthetic pharmaceutically manufactured cannabidiol devoid of THC, delivered through a unique proprietary patent-protected permeation-enhanced transdermal gel formulation. Our Phase III registrational trial in patients with Fragile X syndrome completed enrollment in Q2, later this quarter. This study, the RECONNECT study was designed to confirm the positive findings of the primary outcome from the Phase II/III CONNECT study in the prespecified group of patients with complete underlying genetic defect in patients with Fragile X syndrome. In fact, Fragile X is the most common known inherited cause of intellectual impairment and autism spectrum disorders. Stepping back a moment, in order to understand the potential significance of our Phase III RECONNECT study, there are roughly 80,000 people living with Fragile X in the U.S. similar in size to the diagnosed narcolepsy market. However, unlike that market, there are currently no FDA-approved treatments for Fragile X syndrome. A positive readout from the potential for the first and only approved therapy for Fragile X syndrome and a transformational moment for people living with Fragile X syndrome and their families who have waited far too long for a therapy designed to address their needs. Kumar will be sharing more detail with you on the reasons for our strong conviction in the upcoming top franchise, as I mentioned, WAKIX continues to grow and our pitolisant life cycle management programs are designed to both expand and extend this franchise well into the mid-2040s. We have major catalysts ahead for the 2 next-generation formulations of pitolisant, high-dose pitolisant or pitolisant HD and a gastro- resistant formulation of pitolisant or pitolisant GR. And we are on track to initiate Phase III registrational trials in both narcolepsy and idiopathic hypersomnia with pitolisant HD in the fourth quarter of this year. A potentially best-in-class profile and remain on track to enter the clinic and initiate first-in-human studies later this year with clinical data anticipated in 2026. Our third franchise in rare epilepsy is also making steady progress, is one of the most advanced 5-HT2 agonist compounds with a well-characterized mechanism of action and a strong safety record. It is now in Phase III registrational trials for both Dravet syndrome and Lennox-Gastaut syndrome with pivotal data expected in 2026. Our commitment to patients with serious rare neurological disorders does not end here. To that end, we recently entered into a research collaboration with Circ Biosciences, a regenerative medicine company discovering novel therapies based on cellular reprogramming and focused on developing novel regenerative cellular therapies to replace disorders. Our collaboration with Circ is strategically aligned with our current pipeline and focused on treatments for refractory epilepsy and treatment-resistant narcolepsy. This research could potentially result in the next -- for these advanced chronic neurological disorders. Sandip will be commenting further on the terms of this deal. When you look at Harmony today, it should be evident that what we are building is one of the most robust pipelines in the industry for patients with rare neurological disorders. We now have 8 innovative assets across 13 development programs, including up to 6 Phase III trials by the end of this year. This pipeline is poised to deliver one or more new product, or indication launches every year for the next several years. And with more than 6 sheet and a disciplined approach to capital deployment, we have the flexibility to continue to strategically expand our pipeline through targeted business development efforts in this favorable environment. So, what does all this mean? It means Harmony has built something different and something unique, a commercially durable business with a robust late-stage pipeline and a clear path to delivering long-term value for patients, providers and shareholders alike. And that's what makes Harmony one of the most compelling growth stories in biotech today. With that, I'll turn the call over to Adam Zaeske, our Chief Commercial Officer, for an update on our commercial performance. Adam?

Thanks, Jeff. Harmony's Q2 2025 results demonstrate the enduring strength of our commercial business. WAKIX delivered $200.5 million in net sales for the quarter, representing 16% year-over-year growth in its sixth year on the market, representing an increase of approximately 400 average patients for the quarter. This represents among the strongest quarterly results we've seen since launch and continues the steady reliable growth we've seen for the past several years. This is sustained scheduled treatment option with its broad clinical utility for the more than 80,000 patients with narcolepsy as well as the strong focus and execution of our commercial teams with the support of the entire Harmony organization. We have a great deal of confidence in the continued growth potential and performance of WAKIX. In addition to its unique position as the only non-scheduled treatment option, WAKIX has among the highest brand awareness in the market, is perceived as efficacious and well-tolerated and is supported by broad payer coverage that has remained consistent for years. We see continued increases in prescribing among the approximately 4,000 oxybate REMS enrolled prescribing clinicians with the approximately 5,000 non-oxybate REMS enrolled clinicians, where WAKIX is the only branded option. This dual expansion, deepening usage within our core base while broadening our prescriber footprint demonstrate WAKIX's resilient position and reinforces our -- as we look to the second half of 2025, these strong WAKIX fundamentals support our confidence in maintaining its growth momentum. We are confirming our full year revenue guidance of $820 million to $860 million, and we remain on track to achieve $1 billion plus in annual revenue in narcolepsy alone. Looking to the future, the pitolisant GR and HD formulations each target significant unmet patient needs while extending our growth potential with utility patents filed through 2044. Particularly encouraging, and we'll be able to fully leverage our commercial infrastructure to drive the next phase of growth through our pitolisant franchise formulation. We're also excited for the opportunity to expand beyond the sleep/wake franchise and are eagerly anticipating the top-line data readout for ZYN. Kumar will provide a progress update on these programs in a moment. In summary, the fundamentals of our business remain robust. Our strong second quarter performance reflects the continued execution of our strategic priorities, and we are well-positioned to capitalize on the substantial opportunities before us. I'd like to now 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. Please refer to Slide #5 for our pipeline chart and the clinical development highlights are on Slide 6 through Slide 11. In R&D, we are on track for our next major catalyst, the top-line data for ZYN002, a high degree of confidence and conviction in the success of the Phase III registrational trial, the RECONNECT study as it builds upon the data and insights from the last Phase II/III CONNECT study. The efficacy data from the CONNECT study, especially in patients with complete methylation, one of the strongest efficacy data sets generated in patients with Fragile X syndrome. We saw over 50% of patients demonstrating clinically meaningful improvements in social avoidance, the primary endpoint and irritability disruptive behaviors, other core symptoms in patients with Fragile X. The RECONNECT study essentially seeks to replicate the statistically significant efficacy signals with several enhancements to further bolster the probability of success. We have completed enrollment, and we are on track to the top line data later this quarter. If positive, the RECONNECT study is expected to support regulatory approvals in both the U.S. and EU and Harmony holds global rights to be the first and only approved treatment for any symptom domains in patients living with Fragile X. Moving on to the scientific rationale for ZYN002 in this condition, Fragile X syndrome is a rare genetic disorder caused by the mutation of FMR1 gene on the X chromosome, and it is the most common known inherited cause of intellectual impairment and autism spectrum disorders. Fragile X syndrome is characterized by FMR protein deficiency resulting in endocannabinoid dysfunction. ZYN002 interacts with the CT1 receptors, modulates the system, improving the neurobehavioral symptoms. With ZYN002, we also remain on schedule to initiate a Phase III registrational trial in 22q deletion syndrome later this year and disorder with significant neurobehavioral symptoms similar to Fragile X has no approved therapies and also affects approximately 80,000 individuals each in the U.S. and Europe. Moving on to our sleep/wake franchise. We have made significant progress across our next generation pitolisant programs. The pitolisant HD program, a higher dose pitolisant formulation with an optimized PK profile targeting enhanced efficacy for excessive daytime sleepiness and pursuing a differentiated label with an indication for fatigue in narcolepsy is on track for -- similarly, the Phase III study pitolisant in patients with idiopathic hypersomnia is also pursuing a differentiated label with an indication for sleep inertia and is also on track for initiation in Q4 2025, 2028. Over to the pitolisant GR formulation. It is designed to address the potential for treatment-related GI side effects, especially since almost 90% of patients with narcolepsy experience GI symptoms. In addition, it also provides an ability to start at the therapeutic dose range, eliminating titration. This is a fast-to-market strategy we are demonstrating bioequivalence to formulation. The top line data from the pivotal BE study is expected in Q4 with a potential PDUFA in 2026. Utility patents have been filed for both 2044, securing long-term franchise value. Beyond pitolisant, our sleep/wake portfolio continues to advance with BP1.15205, a highly potent orexin 2 receptor agonist demonstrating best -- at the recent sleep meeting, we presented a comprehensive preclinical safety and efficacy data that demonstrated efficacy at very low doses across all parameters of interest in a standard transgenic mouse model. The program remains on schedule for IMPD submission and first-in-human studies later this year, and we anticipate sharing clinical data in 2026. In our epilepsy franchise, we continue to actively enroll patients in 2 global Phase III registrational trials with EPX100, the ARGUS study in Dravet syndrome. In conclusion, our late-stage rare neurology portfolio is advancing with exceptional momentum, positioning us to potentially introduce multiple new products for indications every year over the next several years. Beyond the clinical and regulatory milestones, what truly drives us is the opportunity to transform careers, many of whom currently have either no treatment options or therapies with suboptimal efficacy and significant safety tolerability limitations. 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 the clinical investigators and site personnel for all 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 second quarter 2025 earnings release and filed our 10-Q operating results. We had a great first half of the year. We delivered another quarter of solid financial performance with continued double-digit top line growth, sustained profitability and robust cash generation. Our financial performance and profile for the remainder of the year and beyond. For the second quarter of 2025, we reported net revenues of $200.5 million compared to $172.8 million in the prior year quarter, representing a growth of 16%. Performance in the quarter reflects the strong underlying demand for WAKIX, offset by a reduction in trade inventories of a few days as we head into the summer months. We recorded total operating expenses for the second quarter of $114.2 million compared to $119.3 million for the same quarter in 2024. The expenses during the second quarter and the commercialization of WAKIX in narcolepsy. We also recognized a $15 million IP R&D charge related to the Circ research collaboration, which Jeff mentioned. We have an option to customary milestones and royalties based on continued development and potential commercialization. We continue to show solid net income and margin. Non-GAAP adjusted net income for the second quarter of 2025 was $53.8 million or $0.92 per diluted share compared to $24.5 million or $0.43 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. Cash, cash equivalents and investments on the balance sheet. The balance reflects strong cash generation from operations of approximately $79 million during the second quarter. Our cash position provides us the financial flexibility to execute on business development. Looking ahead to the balance of 2025. Our strong first half results gives us increasing confidence in our full year outlook. We are reiterating our revenue guidance of $820 million to $860 million, highlighting our progress towards a $1 billion-plus opportunity with WAKIX in narcolepsy alone. We expect continued quarter-over-quarter net revenue growth for the balance of the year. With respect to expenses, we expect continued investment in R&D as we advance our late-stage pipeline with multiple programs in Phase III registrational trial. As previously noted, we expect to potentially incur $29 million in milestones for the completion of the Phase III trial for ZYN002 in Fragile X syndrome, $15 million on track for Q3, along with a potential milestone of $10 million for positive top- line data from this trial. In addition, we expect a milestone of approximately $4 million in our orexin-2 program. In summary, we're having a very successful first half of the year and have confidence in the continued growth of WAKIX along with the advancement of our late-stage pipeline in the second half. And with that, I'd like to turn the call back over to Jeff for his closing remarks. Jeff?

Thank you, Sandip. My thanks to everyone for joining our call today and for your interest in Harmony Biosciences. At this juncture of our company's journey, I have never been more proud of the Harmony team. We're more excited about what lies ahead, quite a few. WAKIX is on its way to a $1 billion-plus opportunity in narcolepsy alone. Our robust indication launches every year over the next several years with peak sales potential of $3 billion to $6 billion in total. And we have a high degree of conviction and are very excited about our next major clinical catalysts coming later this quarter. The top-line data readout from our Phase III trial of ZYN002 in fact represent a transformational moment for both the Fragile X community and for Harmony Biosciences. We have built something in our industry, a late-stage pipeline poised to deliver meaningful value for both patients and shareholders alike. Because of this unique profile, we continue to execute from a position of strength. And that is what makes Harmony one of the most compelling growth stories in biotech today. Thanks, everyone, and I will now turn the call back over to the operator for Q&A. Operator?

[Operator Instructions] We will take our first question from Jay Olson with Oppenheimer.

Congrats on all the progress. I wanted to focus on the RECONNECT top-line data readout, which I think you mentioned is still on track for this quarter. Can you please provide any additional color on the timing of when to expect that readout? It sounds like maybe it could be after Labor Day. Just describe what would be clinically meaningful and what is your target for a successful outcome in this registrational of Fragile X study? And finally, if you could just remind us the evidences of your target profile.

Thank you for your questions, and thanks for your coverage to Harmony. Welcome. I appreciate your initiation of coverage. I will -- Kumar can address your questions about the RECONNECT study and the opportunity in Fragile X syndrome.

Thank you, Jeff. Thanks for the question. Yes, we are on track for top-line data in Q3, and we are very excited about this opportunity, not just with Fragile X syndrome and their caregivers in general. Regarding the level of confidence, we have studied because we are essentially trying to replicate the statistically significant findings that we saw in the last Phase II/III CONNECT study on the primary endpoint of social avoidance in patients with complete methylation. Useful outcome will be defined by demonstrating a statistically significant outcome in the primary -- the study is more than adequately powered to detect that. If positive, we have an opportunity here to bring the first and only approved treatment for any symptom domains in patients with Fragile X syndrome, and that's what we're really excited about.

And our next question comes from David Hoang with Deutsche Bank.

I also wanted to ask on Fragile X in terms of, I guess, the top line readout, could you just outline for us the data that -- the types of data you expect to disclose in the top line? And at that time, would we have visibility on the results in the fully methylated versus partially methylated patients? And when might we know, I guess, how you plan to approach your filing strategy with the FDA, if you would be pursuing fully methylated or in the back half of the year. I was wondering if you could just talk a little bit about the pushes and pulls that get you to the upper versus the lower end of the guidance range.

Yes, obviously, the strategy for Fragile X and the ZYN readout, and Adam can address the question about WAKIX. Kumar?

Yes. David, thanks for the question. So, in terms of what we disclosed at the top line data for Fragile X syndrome, it will be a standard top line data readout, which is the demographic data, safety and tolerability data, the efficacy of how we will proceed next. Look, if the study show statistical significant outcome on the primary endpoint, we will move rapidly to have a pre-NDA meeting where there are no approved treatment, I think it's fair to expect a priority review. And if everything goes according to plan, hopefully, we will have an approved product by the end of next year.

Thanks, Kumar. Adam?

Yes. Thanks for the question on WAKIX. We're really pleased with the performance that we're seeing on WAKIX at this stage, million in net revenue for the second quarter. That's a 16% year-over-year increase in year 6, which is fantastic. We also achieved 7,600 average patients in the quarter. That's an increase of 400 average patients in Q2. And that launch. So, the performance steady drumbeat continues. In terms of puts and takes, I would say that WAKIX is a highly differentiated product, first and only non- scheduled treatment option for patients. We're supported by broad payer coverage with 80% of lives covered, and that's been the case for years. We don't expect any changes in payer coverage. We have a very experienced team. Many of our team members actually started at the launch of WAKIX, has really high level of service to HCPs, office staff as well as patients. And I would highlight increased preference share in the 4,000 oxybate REMS enrolled clinicians, and we see increased preference share and the addition of new prescribers in the 5,000 non-oxybate REMS enrolled HCP group as well. So those are probably the key drivers of that continued performance. Sandip, I don't know if you want to add anything.

No, I think increased confidence certainly in our guidance range. Look, we're very comfortable with where things are at right now. It was -- it's really -- at the end of the day, it's the underlying demand that really drives overall net sales. And as -- in terms of the pushes and pulls, net patient adds certainly have an impact any potential gross to net impact as well as trade inventory impact as well. As you know, we have a fairly -- we have a concentrated customer base overall. So just order patterns overall. However, look, we're very confident in the guidance range. Consensus currently falls right within the range, and we're --

And our next question comes from --

So I just wanted to ask on Fragile X. I want to understand the implications of full methylation. So, does using full methylation versus partial means a haircut of the patient population? Just if you can give us a sense of like what is the full methylation Fragile X patients in the U.S. versus the 80,000 that you mentioned? And then secondly, can you talk about -- so has FDA accepted applications for these type of rare pediatric conditions with the data showing efficacy only in a fully turned off.

Thank you for the question. So, in terms of the split between complete methylation versus partial methylation, approximately 60% to 70% of patients with Fragile X syndrome have complete methylation and the rest have partial methylation. So in terms of us choosing the complete based on the findings that we saw in the CONNECT study, and this fits into the etiology, the pathophysiology of Fragile X syndrome that we know about is they have more than 200 nucleotide repeats of CGG, which results in almost complete silencing of the gene, which means that they are hardly able to produce any FMR protein, which causes significant dysfunction of the endocannabinoid system -- endocannabinoid system. So, these patients have a higher burden of in terms of the mechanism of action fits nicely well in treating the symptoms in these patients. In terms of the FDA, and we have full alignment with the FDA on the study design, the target patient population, the primary endpoint. In fact, the study is designed not just to meet the requirements of FDA, but EMA as well. So should the study be positive, we will be pursuing an indication both in the U.S. and in Europe.

Yes. Ash, I would just add as well as the data and the Phase III RECONNECT trial is designed to replicate the positive findings in the Phase II/III CONNECT study. And then in addition, obviously, with no approved therapies with regard to where the bar would be set with a high unmet need in this patient population.

And our [indiscernible]

And I was curious about you -- can you walk us through the thoughts, especially from a BD and corporate strategy perspective, the cell therapy approach is interesting for sure, but I don't think it's been a proven area. And so just wanted to get your thoughts just on the collaboration, but also maybe future BD direction.

Thanks for your question. Yes, I think in terms of the collaboration, we see it as an exciting opportunity. Obviously, a very early sort of discovery commitment to patients with serious rare neurologic disorders in an advanced stage. It's strategically aligned with our pipeline and potential cellular therapies for refractory epilepsy in one of the discovery programs and the other treatment-resistant narcolepsy based on sort of reprogramming the cellular platform. This is potentially resulting in kind of the next generation of innovative disease disorders. With that, Kumar, can you comment a little further on the platform and what we saw in the opportunity.

Sure. Graig, thanks for the question. Look, with, what really attracted and really fascinated was the utilizers that offer significant competitive and manufacturing advantages compared to embryonic or induced the consistency and the reliability of readily sourced GMP-grade cell lines because these are fibroblast derived cells that are induced to transform into cell of interest based on a small molecule epigenetic modifiers and growth factors, enable allogeneic cryopreserved ready-to-use therapies that require no manipulation at the point of care of tumorigenicity and manufacturing inefficacies that are seen with stem cells. So, we are very excited about the collaboration, both in epilepsy and in narcolepsy and look forward to data generation from far, and we'll provide more information as we make progress.

Yes. And Graig, I would add, I think that we see this as kind of an opportunistic play, if you will, again, very early discussions, other BD efforts as you asked. Obviously, our strategy is to continue to grow and build out. We see in terms of -- we're always looking for opportunities to deploy our cash and drive value for shareholders. We continue to actively evaluate different opportunities across the spectrum of development phase early to late potentially on-market opportunities. Obviously, we're as always, we take a disciplined approach, thoughtful, strategic to how we build out the pipeline. We feel that we're just getting started with regards to some of the opportunities ahead of us. Sandip, any further comments on the capacity?

Yes. Look, I mean, this quarter was a really strong quarter in terms of cash flow with over $670 million in cash. So, I think we're in a highly strong position to be able to transact. I mean, look, we continue to look for opportunities, as you mentioned, Jeff, across the spectrum overall. We'll continue to be disciplined in terms of how we deploy our capital. But our filters continue to be the same. So, I think we're -- it's hard to predict timing in a strong position. We have a very unique profile as a company, highly profitable, generating positive cash flow and the ability to deploy it in a market that is an attractive market at this point.

And our next question comes from David Amsellem with Piper Sandler.

I had some questions on the AR data that you're anticipating next year, is that in healthy sleep-deprived volunteers? Or is that going to be an actual narcolepsy for next year? And to the extent you're not yet testing narcolepsy in IH patients, when do you expect to do so? That's number one. And then number two, in terms of differentiation, I know you've talked about it as potentially being best-in- class. But we've got a number of more advanced orexin improvements well north of 20 minutes, and we've seen real validation here. So, what do you need to see in orexin is indeed best-in-class?

David, thanks for your question. Kumar, our position on the orexin programs.

Yes. Thank you, Jeff. Thank you for the question. Regarding our orexin program, David about how we are going to approach and the first-in-human studies. We are on track. The way we are approaching this is start with the single-ascending dose study in healthy volunteers and in parallel, also conduct a healthy volunteer sleep-deprivation study because as you know, BP1.5205 on the data that is disclosed in the public domain. And we do want to get a better idea in terms of the dose range before we progress this into patients. What you can expect next in the healthy volunteers sleep-deprivation study as well. How we are going to proceed after that is something that we are still thinking through depending on what our -- what we are learning from others as well in this field. In terms of how do we differentiate, David, I think it's too early to comment based on the pre that potency is important and potency translated to efficacy at very low doses model, we showed statistically significant difference in the lowest dose that is ever studied in this particular model. We anticipate the high potency and therefore, low dose gives us the flexibility, the dosing flexibility to target all 3 central disorders of hypersomnolence, not just NT1, but also the safety or tolerability concerns. So, this is our strategy right now.

And our next question comes from Danielle Brill with Truist.

As a follow-up to the prior question, I wanted to ask in general, what -- how we should think about the potential impact of Takeda's orexin-2 entering the market and how confident you are that the WAKIX franchise can continue -- wanted to clarify, it looks like the quarter-over-quarter growth was lower than what you typically observed in the past despite the high number of new patient adds in the speak to the dynamics that were at play here such as gross to net compliance and any other factors?

Danielle, thanks for your questions. In terms of the impact of orexin, how we see as we follow these programs closely, I'll ask Adam in regards to -- we still continue to see this market as a polypharmacy market with multiple mechanisms and how you're seeing that from a commercial perspective.

Orexin as a potential new treatment option for patients. And as Kumar mentioned, we're very confident in the molecule that we have in our pipeline. There's still some questions to be addressed as a class, I think dosing label, this is the only non-scheduled treatment option. It's been on the market for now more than 6 years, really steady performance quarter-over-quarter over that period. And that's despite new brand and generic entrants coming in. I think that's because physicians see WAKIX is highly differentiated. They perceive it to be well tolerated and has broad clinical utility, and we expect that to continue. At the time of orexin's launch, HCPs will have more than 8 years of clinical experience. It's a very familiar pharmacy approach to treatment. We expect WAKIX will continue to be added to therapy for patients broadly. Not to mention that there's evidence to suggest in the continued growth and performance of WAKIX.

Yes. Thanks, Adam. With regards to the quarter's performance, Sandip, a few comments on that?

Sure. Happy to comment on that. I think, as I mentioned, generally, look, our results so far gives us increased confidence in the revenue guide of $820 million to $860 million, 15% versus prior year. And in fact, I mean, in Q2, getting to your point, it's really underlying performance, is probably even stronger than, I would say, the net revenues would indicate. And as I mentioned in trade inventory drawdown approximately a few days as we head into the summer month. Typically, what happens with trade inventory, as you know, Q4, Q1 tends to be a little bit higher, Q2, Q3 tends to be a bit lower generally. But it's -- I think the more important point is really looking at the fundamentals of our business and the forward demand of one of the strongest quarters we've had in terms of net patient adds and generally, again, gives us really strong confidence in the next 2 quarters to finish out the year.

Yes. So, I think just to reiterate, I think underlying business fundamentals remain strong quarter-to-quarter, as Sandip alluded to. Obviously, as the base of patients increases and then also with only 3 specialty pharmacies in terms of the ordering pattern. So, I think a couple of days of inventory with regards to that fluctuation. We're comfortable with the street's kind of estimates of where we are. This business continues to grow and excited as our pipeline advances and the opportunities ahead.

And our next question comes from Corinne Johnson with Goldman Sachs.

This is Eric on for Corinne Johnson. So, I just wanted to ask a question elaborating on the last little bit. Specifically, how should we think about net price for WAKIX this quarter and specifically moving towards the back half of 2025 and beyond? And to what extent are you using price as a lever to improve volume or drive broader adoption?

Thanks for your question. As seen in past years, typically, the first quarter is the lowest just as we have higher gross to net deductions typically that happens with the insurance plans reset and typically improves in the balance of the year. So, we did see some improvement as we went into Q2. But obviously, as we go into the further quarter, a good portion of the price increase that we took earlier this year.

[Indiscernible]

Congrats on the quarter. I guess 2 questions. The primary endpoint for RECONNECT, the social avoidance, a domain for the ABC checklist for Fragile X. It's an observer scale, either parents or caregivers score -- can you just talk about this outcome, potential variability, the expected placebo response and what measures you've taken to mitigate the placebo response? And the second question is for Adam. You joined Harmony over 1.5 quarters ago. I'm curious to hear your views and build off what is already a successful franchise and also plans for life cycle management.

Yes, Pete, thanks for your question. Thanks for taking coverage on Harmony. Appreciate that. Kumar?

Yes. Pete, thanks for the question. Regarding the social avoidance subscale within the broader aberrant behavior as you know, ABC has been used extensively, very well validated. In terms of variability and placebo, great question. Look, in any neuros trial, these are something that we carefully watch for. In this particular study, we have multiple checks and balances to manage this, including rigorous inclusion and exclusion criteria. These are the patients that are biologically identified based on full mutation, complete methylation. We know the standard deviation for this particular instrument, not just in general, but in patients with blinded data that we have. And thus far, where we are, we feel good about it. In terms of differences between CONNECT and RECONNECT study, the primary endpoint is still the same with the social avoidance subscale within the broader ABC scale. The target population is patients with complete methylation only. And we made some other by 4 weeks. We increased the dose in patients who weigh more than 50 kilograms. This will enhance the probability of success. As I mentioned earlier, high level of confidence and conviction in this program and really the opportunity that's in front of us, if the study is positive, we have an opportunity to bring the first and only approved treatment for patients with CONNECT syndrome.

Yes. Thanks, Kumar. Adam, your thoughts on levers for growth.

Is a term that we talk about most frequently at Harmony. And it's a big focus. And I have to give credit to the team. The team here really does have a history of growth mindset looking for continued improvement opportunities. What we top line demand growth. So average referrals per day and then conversion of those referrals into dispensing events. So how can we make sure that our process is efficient and effective for patients to secure dispensing events and then retention over time. How can we provide the service that supports HCPs, the office staff and the patient to ensure that they maintain or remain on therapy over time. So, we -- that the work of the team is going to continue to help drive that performance.

From Wainwright.

Just a couple of follow-up questions from us on the pipeline. The first is on pitolisant HD. I'm just wondering with the expectation to initiate Phase III trials in the fourth quarter, can you talk to potential trial design or differentiation goals with this program? And then separately, regarding Fragile X, assuming a positive RECONNECT readout, how are you thinking about the commercial build for ZYN002, specifically payers? And what does this suggest about market receptivity and launch planning? And based on that engagement, would you anticipate a more gradual build? Or could you see a very rapid uptake if it's approved?

Pitolisant HD, we are on track to initiate 2 Phase III studies, one in narcolepsy and one in idiopathic hypersomnia in the fourth quarter of this year. At this stage, what I can say, Patrick, is that it's going to be a standard randomized double-blind, placebo-controlled parallel arm study. We are going to provide more information and all of the other things as we approach the study initiation.

Yes. So, I would say, standard trial design and then also in addition, to pursue a differentiated label in that regard. With regards to opportunities for ZYN002 go-to-market, a lot of work has started. Adam, a few thoughts on that.

Yes. And actually, thanks for the question, and I'll just go straight to the community, and I think you mentioned receptiveness to new therapies. I mean, this is a very close here because these are kids that are suffering from a range of symptoms across several domains, physical manifestations, cognitive impairment as well as behavioral symptoms. They're very well aware of any treatment that's being developed -- very high awareness and high receptivity when we come to market. In terms of go-to-market model, yes, as Jeff said, our plans are underway. We're continuing to have discussions across the community with different stakeholders and really ensure that we are prepared for a success.

Yes. And I would just add, I think this is what we do at Harmony, engaging with rare disease communities. We really have, I think, a team kind of working on our go-to-market strategy and that opportunity.

And we will take our next question from Jason Gerberry with Bank of America.

This is Pavan Patel on for Jason Gerberry. A couple of questions from us, focused on Fragile for Fragile X syndrome. First, based on prior CONNECT data, how are you modeling patient adherence to therapy if the drug replicates the subgroup data with FMR1 gene methylation? And specifically, what percent of patients do you expect to stay on -- might be expected to discontinue due to lack of response? And then my second question is beyond achieving statistical significance on the social avoidance primary endpoint, what specific results or the caregiver global impression would give you the highest conviction in the data package for filing?

Yes. Thank you for those questions. There was several questions in there. Probably I'll start with the last one in terms of beyond social avoidance, what else we anticipate or what else we are monitoring. Obviously, social avoidance is the primary endpoint, but we are also looking at irritability behavior. the core symptom in patients with Fragile X syndrome. And we saw pretty good response on this domain data on irritability at the American Association of Neurology meeting in April this year, which was a podium presentation where patients exposed to 3 years for ZYN002 showed sustained and clinically meaningful response in irritability domain. In terms of the safety tolerance, ZYN002 product has very unique attributes, and we have discussed this in many forums in the past. The adherence rate is very high. And in fact, over 90% of the patients who completed the CONNECT study elected to participate in the long-term extension study. And in those patients, we have data lasting for more than 8 years, still continuing to use ZYN002, gaining efficacy, good benefit with acceptable safety and tolerability profile. Yes. I don't think I understood your very first question on the modeling between CONNECT.

Just asking about adherence rates and --

Sorry, I don't think I understood that question. Apologies.

What percent of patients might be expected to discontinue the drug versus remaining data?

Okay. Okay. Got it. Sorry, I don't have that data off the top of my head, but I can certainly provide you that data. Sorry about that.

Yes. And I just think overall, very well tolerated. Again, this is an innovative product, a little different than the oral cannabidiol that's in the market for other indications as a transdermal gel, and Kumar will get back with that information. Next question.

With Needham.

Maybe 2 follow-ups on prior comments. Firstly, with regards to the RECONNECT study, if Kumar, you could sort of remind us what was the placebo response in the CONNECT study and what assumptions you've made for the RECONNECT study. You're sort of watching for within which as long as the response stays, you feel good about it? If you could sort of elaborate what that range is. And then with regards to -- we've heard from physicians that with the orexins bringing patients to normalized levels, it might actually allow patients to move from polypharmacy to monotherapy in that context and maybe increasing their scrutiny on just some sort of a prospective study evaluating the complementary mechanisms between orexins and WAKIX.

Yes. Ami, thanks for your questions. The CONNECT study and the findings.

Yes. Ami, great questions. Thank you. So in terms of the placebo response for the CONNECT study, the data is published by [ Barry ] in the Journal of Neurodevelopmental Disorders. Happy to share that paper. What we saw, the placebo response in the overall patient placebo arm. And in patients with greater than 90% methylation, we saw a lower placebo response around 1 point in the magnitude of efficacy in patients with complete methylation. This again goes to the earlier point that I was making in patients with complete methylation, they have a higher burden of symptoms. The mechanism interaction with the endocannabinoid system and the greater magnitude of -- in terms of your question about the orexin synergistic effect between orexin and orexin receptor agonist and H3 agonist, we haven't shared that information. And just one final point I wanted to make is that the study is over 90% powered to detect a 1 point placebo-adjusted difference between the active and the placebo --

Ami, I think in terms of your question about the orexin landscape, yes, obviously, we're following looking at, ultimately, it's overall kind of risk benefit. And I think durability of response and understanding, obviously, orexin is working through kind of wakefulness and how the mechanism of action of WAKIX working through histamine. We have contemplated the opportunity of a synergistic mechanism and the opportunity to approach further down in our pipeline. And that is something that we have contemplated to possibly address the opportunity supported by pitolisant working through a synergistic mechanism. In the meantime, we focus on advancing the next-gen pitolisant products and continuing to grow the WAKIX base business.

And I'm showing no further questions. I would now like to turn the call back for any closing remarks.

Thank you, Madison. And thanks, everyone, for joining our call this morning and for your --

This does conclude today's Harmony Biosciences Second Quarter 2025 Financial Results Conference Call. You may now disconnect your line and have a wonderful day.