Executive Summary / Key Takeaways

• Harmony Biosciences is successfully transforming from a single-product success story with WAKIX into a diversified, self-funding neuroscience leader, boasting a robust late-stage pipeline across three rare CNS franchises.
• WAKIX continues its strong commercial trajectory, delivering 16% year-over-year revenue growth in Q2 2025 to $200.5 million and is on track for $1 billion-plus annual revenue in narcolepsy alone, well before its 2030 loss of exclusivity.
• The company's pipeline, featuring 8 assets across 13 development programs and up to 6 Phase 3 trials by year-end 2025, is poised to deliver multiple new product or indication launches annually, with a total peak sales potential of $3 billion to $6 billion.
• Harmony's strong liquidity, with $672.3 million in cash and investments as of June 30, 2025, enables it to self-fund its ambitious R&D and strategic business development efforts, providing a significant competitive advantage.
• Upcoming catalysts, including top-line Phase 3 data for ZYN002 in Fragile X Syndrome in Q3 2025 and PDUFA dates for next-gen pitolisant formulations (GR in 2026, HD in 2028), are expected to drive substantial long-term value creation.

The Genesis of a Neuroscience Leader: WAKIX and Beyond

Harmony Biosciences Holdings, Inc. has rapidly evolved from its 2017 founding into a differentiated neuroscience company, deeply committed to addressing the unmet needs of patients with rare neurological diseases. The company's foundational success stems from WAKIX (pitolisant), a first-in-class therapy with a novel mechanism of action. WAKIX enhances histamine signaling in the brain by binding to H3 receptors, acting as an antagonist and inverse agonist. This unique approach provides significant benefits, positioning it as the first and only non-scheduled treatment for excessive daytime sleepiness (EDS) and cataplexy in adult patients with narcolepsy, and EDS in pediatric patients aged six and older.

WAKIX's commercial launch in November 2019 marked the beginning of a remarkable growth trajectory. By February 2022, it had achieved $500 million in cumulative net sales in the U.S., demonstrating strong market acceptance. This success has allowed Harmony to cultivate a unique profile: a profitable, self-funding biotech company. This financial strength has been strategically deployed to build a robust late-stage pipeline, transforming Harmony into a multi-franchise enterprise spanning Sleep/Wake, Neurobehavioral, and Rare Epilepsies.

WAKIX: A Durable Commercial Engine and Technological Moat

WAKIX continues to be the bedrock of Harmony's financial performance, demonstrating consistent double-digit revenue growth. In the second quarter of 2025, net product revenue reached $200.5 million, a 16% increase year-over-year. This growth was fueled by a 10% increase in units shipped and a 7% price increase implemented in January 2025, partially offset by higher rebates. For the first six months of 2025, net product revenue climbed to $385.2 million, representing a 17.7% increase over the prior year period. The average number of patients on WAKIX reached approximately 7,600 in Q2 2025, underscoring its broad adoption.

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The commercial success of WAKIX is underpinned by its technological differentiation and strategic market positioning. As the only non-scheduled treatment option for narcolepsy, WAKIX offers a distinct advantage over controlled substances like oxybates and stimulants. This differentiation resonates with both healthcare professionals and payers, leading to high brand awareness and broad formulary access for over 80% of insured lives in the U.S. This favorable payer landscape has remained stable, with plans typically not requiring WAKIX to be stepped through an oxybate therapy. Harmony's commercial model effectively taps into both oxybate REMS-enrolled and non-oxybate REMS-enrolled clinicians, ensuring continued prescriber growth.

Harmony has vigorously defended its intellectual property for WAKIX against multiple Abbreviated New Drug Application (ANDA) filings. The company has successfully reached settlement agreements with Novugen Pharma, Annora Pharma, and Lupin, allowing generic sales to commence in January 2030 or earlier under certain circumstances. These settlements reinforce the strength and durability of Harmony's intellectual property portfolio, providing clarity on WAKIX's market exclusivity. The company is also pursuing pediatric exclusivity, which, if granted, would add an additional six months of regulatory exclusivity, further extending its competitive moat.

Expanding the Sleep/Wake Frontier: Next-Gen Pitolisant and Orexin Innovation

Harmony's commitment to the Sleep/Wake franchise extends beyond WAKIX, with strategic investments in next-generation pitolisant formulations and novel mechanisms of action. These life cycle management programs, Pitolisant Gastro-Resistant (GR) and Pitolisant High-Dose (HD), are designed with a patient-centric approach to address ongoing unmet needs and extend the pitolisant franchise's patent protection into the mid-2040s.

Pitolisant GR aims to improve patient tolerability and convenience. This formulation is designed to address gastrointestinal (GI) side effects, which affect approximately 90% of narcolepsy patients, and to eliminate the need for titration, allowing patients to start directly at a therapeutic dose. The pivotal bioequivalence study for Pitolisant GR was initiated in Q1 2025, with top-line data anticipated in Q4 2025 and a potential PDUFA date in 2026. This formulation is expected to expand the pitolisant patient base by activating previous WAKIX patients who discontinued due to GI issues or insufficient clinical benefit, as well as attracting new patients.

Pitolisant HD represents a significant step towards enhanced efficacy. This higher-dose formulation features an optimized pharmacokinetic (PK) profile, designed to deliver greater efficacy for EDS and cataplexy. Importantly, Pitolisant HD will pursue differentiated labels, targeting fatigue in narcolepsy and sleep inertia in idiopathic hypersomnia (IH) – symptoms for which there are currently no approved treatments. Safety margins for Pitolisant HD have been established up to five times the current highest label dose of WAKIX, with the development program targeting doses up to two times the maximum label dose. This optimized formulation also aims to decrease interindividual variability, potentially leading to more consistent patient responses. Phase 3 registrational trials for Pitolisant HD in both narcolepsy and IH are on track to initiate in Q4 2025, with anticipated PDUFA dates in 2028.

Beyond pitolisant, Harmony is advancing BP1.15205, a preclinical orexin-2 receptor agonist, through a sublicense agreement with Bioprojet. This compound has demonstrated significant wake-promoting and cataplexy-suppressing effects in preclinical mouse models, even at very low doses. Its high potency, excellent selectivity (over 600-fold over orexin-1 receptor and over 1,000-fold over 150 other targets), and potential for once-daily dosing position it as a potential best-in-class orexin-2 receptor agonist. An Investigational Medicinal Product Dossier (IMPD) application is anticipated in H2 2025, with first-in-human studies to follow and clinical data expected in 2026. This asset offers Harmony a strategic entry into the emerging orexin landscape, further solidifying its leadership in sleep/wake disorders.

Diversifying the Portfolio: Neurobehavioral and Rare Epilepsy Franchises

Harmony's strategic expansion has created two additional orphan rare CNS franchises, each with significant market opportunities and innovative therapeutic approaches.

Neurobehavioral Franchise: ZYN002 for Fragile X Syndrome

The Neurobehavioral franchise is spearheaded by ZYN002, a 100% synthetic, pharmaceutically manufactured cannabidiol delivered via a patent-protected, permeation-enhanced transdermal gel. This innovative transdermal delivery system offers significant advantages over oral cannabidiol, including improved gastrointestinal tolerability and minimized impact on liver function by avoiding first-pass metabolism. The most common adverse effect observed in clinical studies has been application site pain, occurring in less than 7% of patients. ZYN002 modulates the endocannabinoid system by interacting with CB1 receptors, aiming to restore homeostasis and alleviate neurobehavioral symptoms.

The next major clinical catalyst for Harmony is the top-line data readout from the Phase 3 registrational trial of ZYN002 in Fragile X Syndrome (FXS), known as the RECONNECT study, expected in Q3 2025. This study, which completed enrollment in Q2 2025, is designed to replicate positive findings from a prior Phase II/III study in patients with complete methylation of the FMR1 gene (representing 60-70% of FXS patients). Fragile X Syndrome is the most common inherited cause of intellectual impairment and autism spectrum disorders, affecting approximately 80,000 people in the U.S., a market size comparable to diagnosed narcolepsy. With no FDA-approved treatments currently available, a positive readout from RECONNECT could position ZYN002 as the first and only approved therapy for FXS, marking a transformational moment for patients and their families. Harmony holds global rights for ZYN002, with patent protection extending to 2038. Following a positive RECONNECT readout, a Phase 3 registrational trial for 22q deletion syndrome, another rare neurobehavioral disorder affecting approximately 80,000 individuals in the U.S. and Europe, is planned for later in 2025.

Rare Epilepsy Franchise: EPX-100 and EPX-200

Harmony's Rare Epilepsy franchise, established through the acquisition of Epygenix Therapeutics, Inc. in April 2024, focuses on Developmental and Epileptic Encephalopathies (DEEs) such as Dravet Syndrome (DS) and Lennox-Gastaut Syndrome (LGS). These conditions are characterized by severe refractory epilepsy and high comorbidities, highlighting a critical unmet medical need.

The lead asset, EPX-100 (clemizole hydrochloride), is a 5HT2 serotonin receptor agonist that enhances serotonergic tone. This mechanism of action has been validated in preclinical models, including the zebrafish model, which demonstrated 100% positive and negative predictive value for efficacy. EPX-100 offers a favorable preliminary safety and tolerability profile compared to some currently approved drugs, notably avoiding the routine liver function monitoring required for Epidiolex and cardiac monitoring for Fintepla. It is administered in a liquid formulation with twice-daily (BID) dosing, a significant advantage over three-times-daily (PID) regimens for DEE patients. EPX-100 is currently in two global Phase 3 registrational trials: the ARGUS study for Dravet Syndrome and the LIGHTHOUSE study for Lennox-Gastaut Syndrome, with pivotal data expected in 2026. The total addressable market for EPX-100 is estimated at 5,000 people for DS and 35,000 people for LGS in the U.S. EPX-100 has received Orphan Drug and Rare Pediatric Disease designations for both DS and LGS.

The franchise also includes EPX-200 (liquid lorcaserin), a selective 5HT2C receptor agonist in the pre-IND phase, with plans to pursue all DEEs. Its mechanism of action is well-established, and its safety and tolerability profile is supported by extensive short-term, long-term, and real-world data. Further, Harmony has entered a research collaboration with CiRC Biosciences, exploring discovery-stage cell replacement therapies for refractory epilepsies and treatment-resistant narcolepsy. This collaboration leverages fibroblast-derived, GMP-grade cell lines, offering consistency, reliability, and the potential for allogeneic, cryopreserved, ready-to-use therapies without the tumorigenicity or manufacturing inefficiencies associated with stem cells.

Financial Strength and Strategic Outlook

Harmony Biosciences operates from a position of considerable financial strength. As of June 30, 2025, the company held $672.3 million in cash, cash equivalents, and investments, having generated approximately $79 million in cash from operations during Q2 2025. This robust liquidity enables Harmony to self-fund its extensive R&D pipeline and pursue strategic business development opportunities without relying on external financing. The company's TTM financial ratios reflect this strength, with a gross profit margin of 78.34%, an operating profit margin of 28.72%, and a net profit margin of 23.42%. The current ratio stands at a healthy 3.84, and the debt-to-equity ratio is a manageable 0.22.

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Management has reaffirmed its full-year 2025 net revenue guidance of $820 million to $860 million, driven by the continued strong demand for WAKIX. This guidance underscores the confidence in WAKIX achieving blockbuster status in narcolepsy alone. Looking ahead, Harmony anticipates delivering one or more new product or indication launches every year for the next several years, with the entire pipeline holding a peak sales potential of $3 billion to $6 billion. This ambitious outlook is supported by planned R&D investments, including an estimated $29 million in milestone payments in 2025 for the ZYN002 Phase 3 program and $4 million for the orexin-2 program.

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The company is also proactively addressing potential geopolitical and supply chain risks by developing a secondary U.S. manufacturing site for WAKIX and basing Pitolisant HD manufacturing in the U.S., while ensuring its intellectual property remains domiciled domestically. This strategic foresight aims to ensure operational independence and minimize exposure to external volatilities.

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Competitive Landscape: A Differentiated Approach

Harmony Biosciences operates in a competitive landscape dominated by larger pharmaceutical companies like Jazz Pharmaceuticals (JAZZ), Avadel Pharmaceuticals (AVDL), and Biogen (BIIB), as well as indirect competitors offering generic stimulants or behavioral therapies. While Jazz and Biogen boast broader portfolios, extensive distribution networks, and generally higher revenue growth and profitability margins (Jazz TTM Gross Profit Margin: 89%, Operating Profit Margin: 18%; Biogen TTM Gross Profit Margin: 76%, Operating Profit Margin: 23%), Harmony distinguishes itself through a highly focused, patient-centric approach to rare neurological diseases.

Harmony's core competitive advantage lies in its differentiated technologies. WAKIX, as the only non-scheduled treatment for narcolepsy, offers a unique value proposition that allows it to maintain strong market share despite the entry of new branded and generic oxybates. Its H3 receptor antagonist/inverse agonist mechanism provides a distinct therapeutic profile. In the emerging orexin-2 agonist space, BP1.15205's high potency and selectivity are positioned to offer a best-in-class profile, potentially providing greater dosing flexibility and broader utility across central disorders of hypersomnolence compared to rivals.

For neurobehavioral disorders, ZYN002's transdermal delivery of synthetic cannabidiol offers a superior safety and tolerability profile, avoiding the GI and liver-related issues associated with oral formulations. In rare epilepsies, EPX-100's 5HT2 receptor agonist mechanism and established safety profile provide a significant edge over existing therapies like Epidiolex (requiring liver function monitoring) and Fintepla (requiring cardiac monitoring), and potentially over newer investigational drugs like bexicaserin due to its more established safety and convenient BID dosing. Harmony's focused R&D and commercialization strategy allows for efficient resource allocation and faster innovation cycles in its niche segments, contrasting with the broader, more capital-intensive strategies of its larger competitors.

Conclusion

Harmony Biosciences is at a pivotal juncture, successfully executing a strategic transformation that extends its reach and impact in rare neurological diseases. Built on the robust commercial foundation of WAKIX, a differentiated and growing asset, the company has leveraged its profitability and strong cash generation to self-fund an expansive and catalyst-rich late-stage pipeline. This pipeline, encompassing next-generation pitolisant formulations, a potential best-in-class orexin-2 agonist, innovative neurobehavioral therapies, and advanced rare epilepsy treatments, positions Harmony for sustained, durable growth.

With significant clinical milestones on the horizon, including the Q3 2025 readout for ZYN002 in Fragile X Syndrome and PDUFA dates for Pitolisant GR and HD in 2026 and 2028, Harmony is poised to deliver multiple new product and indication launches. The company's technological differentiation, patient-centric development, and strategic focus on underserved rare disease markets provide a compelling investment thesis. Despite ongoing ANDA litigation and clinical development risks inherent in the biotech sector, Harmony's strong financial health, proactive risk management, and clear roadmap for long-term value creation underscore its potential as a leading neuroscience company.