Harmony Biosciences Holdings, Inc. (HRMY) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The company shows promising financial and product development prospects, with strong pipeline expansion and strategic growth plans. The reiteration of revenue guidance and positive product outlook, especially for WAKIX, suggests continued growth. Despite some uncertainties, such as management's vague responses on certain trials, the overall sentiment leans positive due to robust strategic initiatives and potential market expansion.

Key Financial Performance

Net Revenue $239.5 million for Q3 2025, representing 29% growth year-over-year. The growth was driven by strong demand for WAKIX and an increase in trade inventories.

Cash Generation $106 million in Q3 2025, bringing the balance sheet to $778 million as of September 30. This reflects strong cash generation.

Operating Expenses $114.3 million for Q3 2025, compared to $81.6 million in Q3 2024. The increase was due to investments in the late-stage pipeline, a $15 million milestone for ZYN002 trial enrollment, and continued commercialization of WAKIX.

Non-GAAP Adjusted Net Income $63.5 million for Q3 2025, or $1.08 per diluted share, compared to $57.3 million or $0.99 per diluted share in Q3 2024. This reflects solid net income growth.

WAKIX Patient Growth An average of 500 new patients added in Q3 2025, resulting in approximately 8,100 average patients by the end of the quarter. This is the highest quarterly increase since launch.

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Operating Highlights

WAKIX: Achieved $239.5 million in net sales for Q3 2025, representing 29% year-over-year growth. Added an average of 500 new patients this quarter, reaching approximately 8,100 patients. Positioned as the only nonscheduled treatment option for narcolepsy, with high brand awareness and broad payer coverage.

Pitolisant HD: IND submitted to FDA. Phase III trials for narcolepsy and idiopathic hypersomnia to start in Q4 2025. Target PDUFA dates in 2028.

Pitolisant GR: Designed to minimize GI side effects and eliminate titration. Dosing optimization study completed with positive results. Pivotal BE study data expected in Q4 2025, with target PDUFA in Q1 2027.

Revenue Guidance: Raised full-year revenue guidance from $820-$860 million to $845-$865 million, driven by strong WAKIX performance.

Market Position: WAKIX is rapidly approaching $1 billion-plus blockbuster status in narcolepsy alone.

Cash Generation: Generated $106 million in cash during Q3 2025, bringing total cash and equivalents to $778 million.

Operational Investments: Invested in late-stage pipeline and commercialization of WAKIX, including a $15 million milestone for ZYN002 trial enrollment.

Pipeline Expansion: Actively pursuing value-enhancing strategic opportunities to expand the portfolio and drive shareholder value.

R&D Progress: Advancing 3 Phase III registrational studies, with plans for 5 by year-end. Focused on Sleep/Wake and Epilepsy franchises.

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Risk or Challenges

Regulatory Risks: The company is pursuing FDA approval for new formulations (pitolisant HD and GR) and indications, with target PDUFA dates in 2027 and 2028. Regulatory delays or rejections could impact the timeline and success of these programs.

Clinical Trial Risks: The ZYN002 Phase III RECONNECT study in Fragile X syndrome did not meet its primary endpoint due to higher-than-expected placebo response. This raises concerns about the success of ongoing and future trials, including paused programs like the 22q deletion syndrome study.

Pipeline Execution Risks: The company has multiple late-stage pipeline programs, including five Phase III trials by year-end. Managing these simultaneously could strain resources and increase the risk of delays or failures.

Market Competition: WAKIX faces competitive pressures despite its unique position as a nonscheduled treatment. The company must maintain its differentiation and payer coverage to sustain growth.

Economic and Financial Risks: While the company has a strong cash position ($778 million), increased R&D investments and milestone payments (e.g., $15 million for ZYN002 trial enrollment) could pressure financial resources if revenue growth slows.

Supply Chain and Operational Risks: The company reported an increase in trade inventories heading into Q4, which could indicate potential supply chain or inventory management challenges.

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Guidance & Outlook

Revenue Guidance: The company raised its full-year revenue guidance from $820 million to $860 million to a new range of $845 million to $865 million, driven by strong performance and momentum in WAKIX sales.

WAKIX Growth: WAKIX is rapidly approaching $1 billion-plus blockbuster status in narcolepsy alone, with continued growth in the average number of patients expected in Q4 2025.

Pipeline Development: The IND for pitolisant HD has been submitted to the FDA, with two Phase III trials (in narcolepsy and idiopathic hypersomnia) on track to initiate in Q4 2025. Target PDUFA dates for these programs are in 2028.

Pitolisant GR Formulation: The pivotal bioequivalence study for pitolisant GR is on track for Q4 2025, with a target PDUFA in Q1 2027. Utility patents have been filed for both pitolisant GR and HD, securing potential exclusivity to 2044.

Orexin-2 Agonist Program: The first subject dosing for the orexin-2 receptor agonist program is expected later this quarter, with clinical data anticipated in 2026.

Epilepsy Franchise: Two global Phase III registrational trials for EPX-100 in Dravet syndrome and Lennox-Gastaut syndrome are actively enrolling patients, with emerging safety data to be presented at the American Epilepsy Society Meeting in December.

Financial Position: The company has $778 million in cash and cash equivalents, providing a strong position to pursue value-enhancing strategic opportunities and expand its portfolio.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you elaborate on the trajectory of WAKIX patient adds and its sustainability into 2026?

A:The trajectory of WAKIX patient adds is strong, with a record quarterly increase of 500 patients in Q3, following a Q2 increase of 400 patients. The fundamentals remain strong, and the momentum is expected to carry forward into Q4 and beyond. The company raised its guidance to $845-$865 million, reflecting strong demand and optimism about top-line growth.

Q:What were the GI adverse events (AEs) observed with the GR formulation of pitolisant, and how do they compare to the in-market WAKIX?

A:No new safety or tolerability issues were observed with the pitolisant GR formulation. No serious AEs were reported, and the safety profile was consistent with the established profile of pitolisant GR. All 46 patients with narcolepsy tolerated the initial dose of 17.8 mg, and 98% tolerated the 35.6 mg dose after one week.

Q:What details can you share about the ARGUS open-label extension data to be presented at AES in December?

A:The ARGUS open-label extension study will present efficacy, safety, and tolerability data for EPX-100 in patients with developmental and epileptic encephalopathies, particularly Dravet syndrome. The data will highlight the unique benefit-risk profile of EPX-100.

Q:What are your latest thoughts on business development (BD) and M&A, especially after the failure of Zygel?

A:The strategy remains focused on being strategic and thoughtful in deploying capital to build the pipeline and product portfolio. The company is actively evaluating several opportunities in orphan rare CNS disorders and broader neuro indications. The failure of Zygel does not change the strategy.

Q:How are you thinking about the trajectory of WAKIX beyond 2026 with the potential introduction of orexin agonists?

A:The company remains confident in WAKIX's growth due to its highly differentiated profile, including being the only nonscheduled treatment option. The polypharmacy approach in narcolepsy treatment and WAKIX's established position with healthcare providers support its continued growth. New brand entrants tend to expand brand utilization, and WAKIX is expected to maintain its position.

Q:Can you provide more color on the Q4 sales guidance for WAKIX, which appears flat or down quarter-over-quarter?

A:The Q4 guidance reflects robust year-over-year growth, with some variability due to trade inventory changes and typical Q4 seasonality. The company feels confident in the guidance range and expects strong top-line demand growth.

Q:What are your current thoughts on deploying your growing cash balance?

A:The company prioritizes business development to pursue innovative, value-enhancing assets and build the pipeline. Other options like share buybacks are also considered to drive shareholder value.

Q:What is your life cycle management plan for pitolisant GR and HD?

A:The GR formulation targets new WAKIX patients and previous patients who discontinued. The HD formulation targets new, previous, and existing WAKIX patients, with a focus on those who are better but not well. Both formulations have utility patents through 2044, extending the Sleep/Wake franchise.

Q:What would you like to learn from your Phase I orexin-2 receptor agonist study?

A:The Phase I study aims to determine dosing and safety/tolerability profiles. The company is leveraging data from other orexin receptor agonists to accelerate its program and plans to share clinical data in 2026.

Q:What clinical data gives you confidence in the EPX-100 epilepsy program?

A:The ARGUS open-label extension study shows promising efficacy and safety data for EPX-100 in Dravet syndrome. Recruitment for Phase III studies in Dravet and LGS is ongoing, with top-line data expected in 2026.

Q:What proportion of your WAKIX patient base is NT1 versus NT2?

A:Approximately 45% of WAKIX patients are NT1, and 55% are NT2. This distribution has been stable over the years.

Q:What findings in the Fragile X data set would make you consider reactivating the 22q deletion syndrome trial?

A:The company is conducting post-hoc analyses of the Fragile X data and will decide on the 22q deletion syndrome trial based on these findings. Updates are expected early next year.

Q:What effect size are you powering for in the Phase III pitolisant HD study, and what would be a clinically meaningful difference?

A:The pitolisant HD study aims to improve efficacy in excessive daytime sleepiness, fatigue in narcolepsy, and sleep inertia in idiopathic hypersomnia without compromising safety. The safety profile has been consistent even at doses up to 180 mg.

Q:What are the drivers of the record 500 patient adds for WAKIX in Q3, and can they continue?

A:The growth is driven by WAKIX's differentiated profile as the only nonscheduled treatment option and strong execution across sales, marketing, payer coverage, and patient support. The momentum is expected to continue into Q4 and 2026.

Q:What is resonating most with physicians and payers about pitolisant HD?

A:Physicians appreciate the promise of improved efficacy, no titration, and unique indications like fatigue in narcolepsy. Payers expect broad coverage with minimal step edits, even post-LOE, especially for patients presenting with fatigue.

Q:What have you learned from the Fragile X and idiopathic hypersomnia studies about managing placebo response in neurodevelopmental trials?

A:Placebo response is a challenge in neuropsych trials with behavioral endpoints. The EPX-100 trials focus on seizure frequency, which is more observable and definitive, reducing the risk of high placebo response.

Q:Where is new patient growth for WAKIX coming from?

A:Growth comes from increased penetration among existing prescribers and the addition of new prescribers. The company calls on over 9,000 physicians, including those not enrolled in oxybate REMS programs.

Q:What defines a good switch patient for WAKIX to pitolisant HD, and is switching an option for GR patients?

A:Good switch candidates for HD are patients with residual symptoms or fatigue. Switching to GR is an option, but the strategy focuses on new and previous patients.

Q:What gives you confidence in the pipeline despite recent setbacks in IH and Fragile X?

A:The company has strong conviction in its pipeline, with learnings from past trials informing future strategies. Programs like EPX-100 and the orexin-2 receptor agonist show promise.

Q:Can WAKIX achieve $1 billion in revenue by 2026, and how urgent is it to hit this before orexin agonists launch?

A:The company expects strong momentum to continue and is confident in achieving $1 billion in revenue well before LOE. The differentiated profile of WAKIX supports its growth even with new entrants.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the timing of the full data set disclosure for pitolisant GR formulation and the exact timing of the ARGUS study enrollment progress. Additionally, they did not provide precise guidance for 2026 revenue or elaborate on the specific findings needed to reactivate the 22q deletion syndrome trial.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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Harmony Biosciences Holdings, Inc. (HRMY) Q3 2025 Earnings Call Transcript

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