Harmony Biosciences Holdings, Inc. is a commercial-stage pharmaceutical company that has made significant strides in developing and commercializing innovative therapies for patients living with rare neurological disorders. The company's foundation is built upon its successful launch and marketing of WAKIX (pitolisant), a first-in-class molecule with a novel mechanism of action designed to increase histamine signaling in the brain.
Harmony's Early Beginnings and WAKIX Approval
Harmony Biosciences was founded in July 2017 as Harmony Biosciences II, LLC, a Delaware limited liability company. The company converted to a Delaware corporation named Harmony Biosciences II, Inc. in September 2017 and, in February 2020, changed its name to Harmony Biosciences Holdings, Inc. The company's operations are conducted through its wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc. Harmony gained traction with the FDA approval of WAKIX in August 2019 for the treatment of excessive daytime sleepiness (EDS) in adult patients with narcolepsy. The U.S. commercial launch of WAKIX began in November 2019. This milestone was followed by the FDA's approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020. WAKIX's unique profile as the first non-scheduled treatment option for both EDS and cataplexy in narcolepsy has been a key driver of the product's commercial success.
Robust Pipeline and Expansion Initiatives
Building on the success of WAKIX, Harmony has strategically expanded its pipeline across three orphan rare central nervous system (CNS) franchises. The company's Sleep/Wake franchise, anchored by WAKIX, is being further strengthened through the development of two next-generation pitolisant formulations - Pitolisant GR and Pitolisant HD. These programs aim to address unmet needs in the narcolepsy patient population and extend the longevity of the pitolisant franchise.
Harmony has also made significant advancements in its Epilepsy franchise, which includes the investigational candidates EPX-100 (clemizole hydrochloride) and EPX-200 (a liquid formulation of lorcaserin). EPX-100 is currently in a Phase 3 registrational trial for Dravet syndrome and is poised to initiate a pivotal Phase 3 study in Lennox-Gastaut syndrome before the end of 2024. These compounds target the serotonin (5-HT2) receptor pathway, a validated mechanism of action in the treatment of developmental epileptic encephalopathies (DEEs).
The company's Neurobehavioral franchise is led by the Phase 3 RECONNECT study evaluating ZYN-002 (a synthetic cannabidiol gel) in patients with Fragile X syndrome. If successful, ZYN-002 could become the first approved treatment for any symptom in this rare genetic disorder.
Harmony has also strategically expanded its pipeline through business development activities. In October 2023, Harmony Biosciences completed the acquisition of Zynerba Pharmaceuticals, Inc., a clinical-stage pharmaceutical company focused on innovative pharmaceutically manufactured transdermal cannabidiol therapies for orphan neurobehavioral disorders. This acquisition brought ZYN002 into Harmony's pipeline. Additionally, in April 2024, Harmony Biosciences acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc. As a result, the company now has an exclusive license relating to the use of clemizole (EPX-100), initially for the treatment of Dravet Syndrome and Lennox-Gastaut Syndrome. These acquisitions have bolstered Harmony's rare neurological disease expertise and added promising late-stage assets to its portfolio.
Financials
Harmony's financial performance has been equally noteworthy. In the third quarter of 2024, the company reported net revenues of $186.04 million for WAKIX, representing a 16.1% increase compared to the same period in the prior year. This strong performance was driven by an 11.2% increase in units shipped and a 7% price increase, partially offset by higher rebates and co-pay assistance. The company's net income for Q3 2024 was $46.09 million, with operating cash flow and free cash flow both at $70.50 million.
For the full year 2023, Harmony reported revenue of $582.02 million, net income of $128.85 million, operating cash flow of $219.39 million, and free cash flow of $219.07 million. The company's cost of product sales increased by 32.5% year-over-year in Q3 2024, primarily due to reaching a higher royalty tier under the 2017 LCA.
Harmony reiterated its 2024 net revenue guidance of $700 million to $720 million for WAKIX, highlighting the product's robust growth trajectory and the company's confidence in its $1 billion-plus market opportunity in narcolepsy alone. The company expects quarter-over-quarter growth in Q4 2024 and anticipates the average number of patients on WAKIX to be around 7,000 by the end of 2024. Harmony also expects increases in R&D expenses as they initiate their fourth Phase 3 registrational trial during Q4 2024.
Liquidity
Harmony's solid balance sheet, with $504.7 million in cash, cash equivalents, and investments as of September 30, 2024, provides the financial flexibility to execute on its strategic initiatives and pipeline advancement. The company's debt-to-equity ratio stands at 0.41, with total debt of $193.57 million and stockholders' equity of $466.99 million. Harmony has a $185 million senior secured term loan facility with interest rates tied to either a base rate or Term SOFR, depending on the company's senior secured net leverage ratio.
The company's current ratio is 2.75, with current assets of $451.07 million and current liabilities of $163.78 million. The quick ratio is 2.71, indicating strong short-term liquidity. Harmony believes its cash position will enable it to meet operational liquidity needs and fund potential investing activities for the next 12 months.
Addressing Unmet Needs in Rare Neurological Diseases
Harmony's focus on rare neurological disorders aligns with the significant unmet medical needs in this space. Many of the currently approved therapies face limitations in terms of efficacy, safety, and/or tolerability, leaving a treatment gap that the company's pipeline aims to address. Harmony's mechanism-based approach to drug development, coupled with its deep understanding of rare disease patient populations, positions the company as a leader in innovating solutions for these underserved patient communities.
Catalysts on the Horizon
Harmony's robust pipeline is poised to deliver multiple catalysts in the near future. Key upcoming milestones include the submission of a supplemental new drug application (sNDA) for pitolisant in idiopathic hypersomnia by the end of 2024, as well as the highly anticipated top-line data readout from the pivotal Phase 3 RECONNECT study of ZYN-002 in Fragile X syndrome, expected in mid-2025.
These catalysts, along with the company's continued progress in its Epilepsy franchise and the advancement of its next-generation pitolisant formulations, underscore Harmony's commitment to delivering innovative treatments and driving long-term value creation for shareholders.
Industry Trends and Market Opportunity
The narcolepsy market, which is Harmony's primary focus with WAKIX, is experiencing robust growth with a compound annual growth rate (CAGR) of approximately 6-8%. This growth is primarily driven by increased diagnosis rates and the launch of new treatment options. WAKIX's unique position as the first and only approved product for narcolepsy patients that is not scheduled as a controlled substance gives Harmony a significant advantage in this expanding market.
Pipeline Expansion
In addition to WAKIX, Harmony is advancing several promising candidates in its pipeline. ZYN002, acquired through the Zynerba acquisition, is currently in a pivotal Phase 3 trial for the treatment of Fragile X Syndrome. EPX100, acquired through the Epygenix acquisition, is in a Phase 3 registrational trial for Dravet Syndrome and is being evaluated for Lennox-Gastaut Syndrome as well.
The company is also developing HBS-102, a Melanin-concentrating hormone receptor type 1 (MCHR1) antagonist, as a potential treatment for hyperphagia, weight gain, and other metabolic parameters in Prader-Willi Syndrome. Furthermore, Harmony has licensed BP1.15205, an orexin-2 receptor agonist, from Bioprojet in 2024, with plans to evaluate it for the treatment of narcolepsy and other potential indications.
Conclusion
Harmony Biosciences has established itself as a leader in the rare neurological disease space, driven by the commercial success of WAKIX and the company's strategic expansion of its pipeline across multiple therapeutic franchises. With a robust late-stage development portfolio, a strong financial position, and a talented management team, Harmony is poised to continue its growth trajectory and address the significant unmet needs of patients living with rare neurological disorders. The company's focus on innovation, coupled with its solid financial performance and strategic acquisitions, positions it well for sustained growth in the dynamic and expanding market for rare neurological disease treatments.