Harmony Biosciences Holdings, Inc. Q3 FY2025 earnings call

Key Points from Management

• CEO Jeff Dayno highlighted a strong Q3 with $239.5 million net revenue, 29% YOY growth, and raised full-year revenue guidance to $845 million to $865 million. Cash generation was $106 million, and balance sheet stood at $778 million as of September 30.
• CCO Adam Zaeske discussed WAKIX's strong performance, noting a record increase of approximately 500 average patients in Q3, following a 400 average patient increase in Q2. He highlighted refined sales execution, payer coverage wins, and improved patient conversion rates. He also mentioned the company is rapidly approaching $1 billion-plus annual revenue from narcolepsy alone.
• CMO Kumar Budur provided pipeline updates: IND for pitolisant HD submitted to FDA, pitolisant GR dosing study completed with positive results, BP1.15205 preclinical data shared, ZYN002 Phase III RECONNECT study in Fragile X syndrome didn't meet primary endpoint, and EPX-100 Phase III trials ongoing.
• CFO Sandip Kapadia talked about financial results: $239.5 million net revenue, $114.3 million operating expenses, non-GAAP adjusted net income $63.5 million, and cash position of $778 million.

The main product segment is WAKIX. For the third quarter, WAKIX delivered $239.5 million in net sales, representing nearly 30% year-on-year growth. This contributed significantly to the overall net revenue of $239.5 million for the quarter, which was a 29% year-on-year growth. WAKIX accounted for a major portion of the revenue contribution.

• Raised full-year net revenue guidance from $820 million to $845 million to $865 million.
• Expect continued growth in average number of patients for WAKIX in Q4.
• Pitolisant HD program has a target PDUFA in 2028, pitolisant GR has a target PDUFA in Q1 2027.

• Placebo response issues in clinical trials, e.g., ZYN002 Phase III RECONNECT study in Fragile X syndrome didn't meet primary endpoint due to higher-than-expected placebo response.
• Uncertainties in clinical trial outcomes and potential market competition affecting product adoption.

Q: On guidance and WAKIX trajectory, how is the growth evolving and sustainable?

A: Adam Zaeske discussed strong patient add momentum with 500 avg patients in Q3, building on Q2's 400 avg patients, and Sandip Kapadia mentioned the raised guidance and strong top-line demand. Jeffrey Dayno added underlying fundamentals remain strong.

Q: On GR formulation AEs, what were the observations?

A: Kumar Budur stated no new safety or tolerability issues were observed with pitolisant GR, with all 46 patients initiating at therapeutic dose and 98% tolerating higher dose.

Q: On business development and M&A, current thoughts?

A: Jeffrey Dayno mentioned continued focus on strategic business development to pursue innovative assets to build pipeline and product portfolio.

Q: On EPX-100 data at AES in December, what to expect?

A: Kumar Budur said efficacy and safety/tolerability data from ARGUS open-label extension study will be presented.

Q: On WAKIX patient breakdown, proportion of NT1 vs NT2?

A: Adam Zaeske said about 45% NT1, 55% NT2.

Q: On pitolisant HD effect size, what's the clinical meaningful difference?

A: Kumar Budur discussed pitolisant HD's optimized PK profile and targeting of new indications like fatigue in narcolepsy and sleep inertia in idiopathic hypersomnia without compromising safety.

Q: On pipeline diversification and confidence post setbacks?

A: Jeffrey Dayno reiterated strong conviction in pipeline programs despite setbacks, with Kumar Budur supporting the R&D team's expertise.

Q: On WAKIX growth drivers, new writers vs existing?

A: Adam Zaeske said both new writers and increased penetration of existing writers contribute to growth, with over 9,000 physicians targeted.

Q: On EPX-100 placebo response in trials?

A: Kumar Budur talked about learnings from placebo response in neuropsych trials and checks and balances in EPX-100 trials.

Q: On pitolisant HD switch patients, what defines a good switch?

A: Adam Zaeske said health care providers will determine switch patients, targeting those with residual symptoms.