Harmony Biosciences Hldgs Q3 2026 Earnings Call Transcript

Harmony Biosciences Hldgs (NASDAQ:HRMY) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Access the full call at https://event.on24.com/wcc/r/5503662/AC8B49039C95DEDAE92DF19FFDEA49C2

Summary

Harmony Biosciences Hldgs reported strong financial performance with WAKIX generating $269 million in net revenue for Q3, marking a significant milestone as the company expects to exceed $1 billion in revenue for WAKIX this year.

The company is undergoing a CEO transition, with Peter Anastasiou set to become the new CEO from January 1, 2027, ensuring continuity in strategic priorities.

Harmony continues to advance its clinical-stage pipeline, with key developments in BP205, an orexin 2 receptor agonist, showing promising preliminary results in Phase 1 studies.

The company has settled with 6 of 7 ANDA filers, reinforcing confidence in WAKIX exclusivity until March 2030, with legal proceedings ongoing to protect its intellectual property.

Harmony plans to expand its business through strategic acquisitions, supported by a strong balance sheet with over $1 billion available for meaningful transactions.

The company maintains a positive outlook with a commitment to extending its leadership in the CNS market, driven by robust R&D and strategic initiatives.

Full Transcript

Nikki (Conference Operator)

Good morning. My name is Nikki and I will be your conference operator today. At this time I would like to welcome everyone to Harmony Biosciences Hldgs third quarter financial results conference call. All participant lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question at that time, please press star 1 on your telephone keypad.

Please be advised that today’s conference is being recorded. Lastly, if you should require operator assistance, please press star zero. I will now turn the call over to Brennan Doyle, Head of Investor Relations. Please go ahead.

Brennan Doyle (Head of Investor Relations)

Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences Hldgs third quarter 2026 financial results and provide a business update. Before we start, I encourage everyone to go to the investors section of our website to find the materials that accompany today’s discussion. Our speakers on today’s call are Dr. Jeffrey Dayno, President and CEO; Peter Anastasiou, Senior Executive Vice President, Chief Operating Officer and incoming President and CEO; Adam Zaeske, Chief Commercial Officer; Dr. Kumar Budur, Chief Medical and Scientific Officer; and Steve Malakela, Interim Principal Financial 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 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.

Jeffrey Dayno (President and Chief Executive Officer)

Thank you, Brennan. Good morning everyone and thank you for joining our call today. Before I get into the quarter, I first want to say a few words about the CEO transition we announced last month. I will be stepping down at the end of the year, and Peter Anastasiou, our Senior Executive Vice President and Chief Operating Officer, will succeed me as President and Chief Executive Officer effective January 1, 2027. I am confident that Harmony is in very good hands with Peter and you will hear from him next.

The main themes regarding the CEO transition are continuity, strength and growth. This leadership transition does not signal any change in our overall business or our strategic priorities. We are doing this from a position of strength and executing a well-coordinated plan. Harmony continues to be a growth story, and during Q3 we moved that story forward in each of our four priorities of value creation: continue to grow WAKIX in an evolving market; advancing a novel and robust clinical-stage pipeline; transact on strategic business development deals; and protect the pitolisant franchise.

I will provide some more color on our first two strategic priorities of value creation and then turn it over to Peter to expand on our other two strategic priorities. The key highlights that I want you to take away from today’s call are sustained patient-demand–driven growth for WAKIX in its seventh year on the market, keeping us firmly on track to exceed $1 billion in net revenue this year; and preliminary multiple ascending dose data for our orexin 2 receptor agonist BP205 that further strengthen its emerging best-in-class profile.

First, growing the WAKIX franchise. In the third quarter WAKIX delivered $269 million in net revenue with 400 net patient adds, resulting in approximately 9,350 average patients on WAKIX in the quarter. For the first time in company history, we expect to exceed $1 billion in revenue for WAKIX this year. We want to recognize our commercial team for their executional excellence, and Adam will take you through our commercial performance in more detail later in the call.

Our second strategic priority is advancing our novel clinical-stage pipeline. The strength and durability of the pitolisant franchise gives us the flexibility to fund our pipeline, creating new growth drivers for the company. The centerpiece of our pipeline is BP205, and we continue to have firm conviction in its best-in-class potential. Today we announced preliminary results from the multiple ascending dose portion of our Phase 1 study for BP205.

After 14 days of once-daily dosing, the safety, tolerability and PK profile were consistent with what we saw in the single ascending dose study, giving us confidence in the emerging best-in-class profile of BP205. We initiated a study in sleep-deprived healthy volunteers in the third quarter with data expected in the first quarter of 2027, and Phase 2 studies across multiple CNS indications are planned to initiate in mid-2027. There is a clear line of sight to multiple catalysts for BP205, and they are right around the corner.

Kumar will provide more color on BP205 and the rest of our pipeline programs during his R&D update. Peter will now walk you through our two other value creation priorities related to business development and protecting the pitolisant franchise. Peter.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Thank you, Jeff, and good morning everyone. First, I want to thank Jeff for his leadership and for everything he has done for Harmony over the last nine years. WAKIX is on track to exceed a billion in net revenues this year. We have a novel pipeline led by BP205, and we have a strong balance sheet to fund our business development efforts. That is the foundation I get to build on, and I am honored to become Harmony’s next CEO. Our ambition is to build Harmony into an enduring leading CNS company with multiple products across multiple franchises, and our strategic priorities will enable us to achieve this ambition.

You heard Jeff speak to our first two strategic priorities regarding our strength in the WAKIX business and the advancement of our pipeline. Our third strategic priority is transacting on business development. With over $1 billion on our balance sheet, we have both the capacity and the conviction to execute on meaningful transactions. We are pursuing assets that can add near-term revenues to support our self-funded model and assets that can continue to drive long-term value creation.

Our fourth strategic priority is protecting the pitolisant franchise. We have settled with 6 of the 7 ANDA filers, and our multi-layered IP strategy across active legal proceedings reinforces our confidence in WAKIX exclusivity to March 2030 inclusive of 6 months of pediatric exclusivity. In summary, Harmony is a growth story and we are executing on all four strategic priorities. To tell you more about our first strategic priority of growing the WAKIX franchise, I’ll turn it over to our Chief Commercial Officer, Adam Zaeske.

Adam Zaeske (Chief Commercial Officer)

Thank you, Peter, and good morning everyone. We continue to see extremely strong demand-driven growth for WAKIX this quarter. WAKIX achieved estimated average patients of 9,350, an increase of 400 patients in the quarter. WAKIX has now demonstrated a meaningful acceleration in growth in year seven on the market, with 400 net patient additions in five of the last six quarters. Prior to 2025, WAKIX had achieved 400 net patient additions only twice in the history of the brand.

As a result, WAKIX delivered $269 million in net product revenue, which was right in line with our internal expectation, and we remain on track to achieve our full-year guidance of $1.0 to $1.04 billion. The drivers of this growth and performance are clear. WAKIX holds a unique position as the only non-scheduled treatment option for excessive daytime sleepiness and cataplexy in adults and pediatric patients with narcolepsy. With more than seven years of clinical experience, healthcare providers are highly aware of WAKIX and believe in its unique combination of efficacy, safety and tolerability with low drug–drug interactions, as well as its broad payer coverage with more than 80% of lives covered.

This makes WAKIX a familiar go-to option for any adult and pediatric patients with narcolepsy type 1 and type 2, and in any combination with other therapies in a highly polypharmacy market. And this will continue to remain true as the market continues to evolve, including with the introduction of Aurexis. We executed the expansion of our field sales, remote sales, field reimbursement and patient outreach teams in the second quarter and are seeing higher levels of HCP engagement, fueling a strengthening of top-line demand. We also implemented changes to our reimbursement and patient support programs, which are decreasing the time required and increasing the success rate of patients filling prescriptions. In addition, significant growth opportunity remains.

Approximately 170,000 people in the U.S. are living with narcolepsy; fewer than 50% are diagnosed and brand penetration is approximately 20%. Looking ahead, we’re excited about our two lifecycle programs to extend and expand the franchise. Pitolisant GR is on track to launch in the first half of 2027 with a PDUFA date of April 1, 2027, and builds on the WAKIX safety and tolerability profile while enabling patients to start at a therapeutic dose. Pitolisant HD offers an opportunity to extend the pitolisant franchise with differentiated labeling for fatigue in narcolepsy and sleep inertia (SI), with up to two times the highest labeled dose of WAKIX and all the benefits of the GR formulation.

Finally, our orexin program gives us the opportunity to deliver on a promise of efficacy with a favorable safety and tolerability profile, once-a-day dosing, and potential use across NT1, NT2 and IH, in addition to a broad range of CNS indications. To summarize, WAKIX performance has never been stronger. We are on track to achieve more than $1 billion in net sales this year, and our pipeline is positioned to extend our leadership in sleep–wake for at least the next decade.

I’ll now turn the call over to our Chief Medical and Scientific Officer, Dr. Kumar Budur, to discuss the advancements in our clinical development programs. Kumar.

Kumar Budur (Chief Medical and Scientific Officer)

Thank you, Adam. Good morning everyone and thank you for joining us today. We continue to make good progress across our robust clinical-stage pipeline, including five Phase 3 registration studies in five distinct rare neurological disorders, and BP205, our potential best-in-class orexin 2 receptor agonist. The headline for R&D this quarter is again BP205, so let me start there. BP205 is discovered by Casin Pharma and developed in partnership with Bioprojet. It is designed to deliver a differentiated profile with high potency, excellent selectivity, emerging strong PK and favorable safety and tolerability, all supportive of a best-in-class profile. BP205 is built on a unique chemical scaffold and has the highest potency among known orexin agonists in clinical development, and has demonstrated excellent selectivity for orexin 2 receptors over orexin 1 receptors and over 150 other receptors of interest.

As a reminder, we reported top-line data from the single ascending dose, or SAD, portion of the study in August. Today we announced preliminary results from the multiple ascending dose, or MAD, portion of the Phase 1 studies. The multiple ascending dose study was a 14-day randomized, double-blind, placebo-controlled study evaluating once-daily doses of 0.1, 0.6, 1 and 3 milligrams across six cohorts, four male and two female, of healthy volunteers, a total of 94 healthy volunteers. The preliminary data show that the PK profile is consistent with what was expected based on the preclinical and the SAD data. The mean Tmax was approximately 60 minutes with a range of 30 to 90 minutes, pointing to the potential for rapid onset of efficacy.

The mean effective half-life was approximately 39 hours, not meaningfully different from the SAT study, and it supports once-daily dosing and the potential for durable efficacy throughout the day and potentially with no troublesome insomnia, as evidenced by the tolerability profile of BP 205 from the SAT and the MAD data. Exposure was dose-related, and we saw target engagement adverse events, which further highlights its potential to deliver meaningful efficacy at low clinical doses.

The most common adverse event was headache, observed in approximately 25% of participants on treatment. Adverse events of insomnia were reported in less than 20% of participants at all doses evaluated. These events were mild in severity and did not lead to any discontinuations. Adverse events of urinary frequency and urgency were reported in less than 20% of participants and only at the 1 mg and 3 mg doses. These events were also mild in severity and did not lead to any discontinuations.

BP 205 was generally well tolerated with no serious or severe treatment-emergent adverse events. In addition, no liver or visual adverse events were reported, and no clinically significant cardiovascular events or EKG abnormalities were recorded. These data strengthen our conviction of BP 205’s emerging best-in-class profile and will inform our dosing strategy as we accelerate the development program. The complete MAD data set will be presented at an upcoming medical meeting. We initiated the phase 1b study in sleep-deprived healthy volunteers in the U.S. in the third quarter, with topline data expected in the first quarter of 2027. DEV study is the one to watch because it will provide the first signals of efficacy for BP 205, reflecting our commitment to investing in a robust development program for BP 205.

We expect to initiate phase 2 studies across multiple CNS indications by mid-2027. Before I move on to the rest of the portfolio, we have highlighted the potential synergistic effects of orexin and histaminergic mechanisms of action based on the neurocircuitry and orexin neurons, resulting in downstream effects on various neurotransmitters, including histamine. At the recently concluded SLEEP EU 2026 meeting, Bioprojet presented a poster showing an in vivo synergistic effect of orexin and histamine on wakefulness in a narcoleptic mouse model.

Specifically, pitolisant added to BP 205 drove maximum histamine release versus BP 205 or pitolisant alone, and this translated into increased duration of wakefulness in this model. The relevance of this data is that they suggest combining an orexin 2 agonist with a treatment that works through histamine could be a new therapeutic approach for patients with narcolepsy and other central disorders of hypersomnolence. Of note, Wakix along with pitolisant GR and HD are the only agents that work through histamine that are either approved or in late-stage clinical development. Speaking of pitolisant, starting with pitolisant, we are on track to launch in the first half of 2027. The NDA was accepted by the FDA with a PDUFA date of April 1, 2027. Pitolisant GR has enteric coating and enables patients to initiate treatment at a therapeutic dose of 17.8 mg without titration, an important clinical differentiation.

Pitolisant HD is our key value driver to extend the pitolisant franchise with differentiated labeling. It’s an enhanced formulation of pitolisant with an optimized PK profile, enteric coating, and a higher dose to drive greater efficacy. Our phase 3 registrational clinical trials Onsite 1 in narcolepsy and Onsite 2 in idiopathic hypersomnia are ongoing, with topline data expected in 2027 and an anticipated PDUFA in 2028. Utility patents are filed for both pitolisant GR and pitolisant HD to extend the pitolisant franchise into the 2040s.

For Wakix, the phase 3 TEMPO study in Prader-Willi syndrome is actively recruiting, with topline data expected in mid-2027 and an anticipated PDUFA date in 2028. We remain on track for pediatric exclusivity. Completion of the TEMPO study fulfills the second and last requirement agreed with the FDA for Wakix pediatric exclusivity, which would provide an additional six months of regulatory exclusivity for Wakix. We are also exploring the amorphous form of pitolisant to pursue broader CNS indications.

This opportunity is based on our exclusive license to Novidiam’s issued amorphous form of pitolisant patent with protection until 2042. Current efforts are focused on formulation optimization and new modes of delivery. Finally, our epilepsy franchise EPX100 is actively enrolling patients in two global phase 3 registrational trials in rare epilepsies, the Lighthouse Study in Lennox-Gastaut syndrome and the AUGUST study in Dravet syndrome, with topline data expected in mid-2027 and anticipated PDUFA dates in 2028. In December, we will present updated 18-month data from the open-label extension of the ORCAS study at the American Epilepsy Society Annual Meeting.

In summary, the MAD data further strengthen the emerging profile of BP 205 as a potential best-in-class orexin 2 agonist, and our next data readout from the sleep-deprived Healthy Volunteer study comes in the first quarter of 2027. We also continue to make progress on the five phase 3 registrational clinical trials across our other pipeline programs, which will contribute to additional data catalysts in 2027 and target PDUFA dates in 2028. On behalf of Harmony Biosciences Hldgs, I want to thank the patients and the families for participating in our clinical trials, along with the investigators and the site personnel for their dedication in advancing our clinical trials. I’ll now turn the call back over to Peter.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Thank you, Kumar. I’ll now provide further color on our final two strategic priorities of value creation: transacting on business development and protecting the pitolisant franchise. Let me start with business development. We are pursuing two types of opportunities. The first is assets that can add near-term revenue in the 2028–2032 time frame. To support our self-funded model, for this category we are prioritizing assets in phase 3, in registration, or on the market. The second category is innovative pipeline assets that drive long-term value creation the way we believe BP 205 can. Our therapeutic areas of interest include sleep disorders, epilepsy, rare orphan CNS, and broader CNS indications.

We see the opportunity to broaden our reach beyond orphan/rare into larger CNS patient populations through both our orexin strategy and business development efforts. We are directing our search and evaluation efforts accordingly, and we are considering a variety of deal types, including M&A and licensing. We have a strong balance sheet with over $1 billion. We will be good stewards of capital, seeking value-creating opportunities. You should not expect that we will allocate all of that capital on one transaction.

Instead, we will likely engage in multiple transactions that together can be transformative for Harmony and drive long-term value creation. With regard to our fourth strategic priority of protecting the pitolisant franchise, our IP estate is multilayered across formulations, methods of use, and next-generation applications. It supports Wakix exclusivity to March 2030, inclusive of six months of pediatric exclusivity. There is potential protection of the franchise through other formulations into the 2040s via additional patents and applications. We have settled with six of the seven ANDA filers.

Harmony is asserting its pitolisant IP in active legal proceedings. First, the Polymorph ‘197 and Method of Use ‘947 patents: the bench trial in the AET ANDA litigation has concluded, and closing arguments were held on October 22. Harmony believes AET’s proposed product infringes the ‘197 polymorph patent and that the ‘947 patent is valid. We expect a ruling from the judge around the time of the 30-month stay expiring in February 2027. Second, the amorphous Form ‘920 patent: Harmony and Novidiam filed a lawsuit alleging patent infringement in April against AET Pharma US and its marketing partner Sandoz.

The licensed Novidiam patent provides protection to 2042. A scheduling conference was held on October 21. The amorphous ‘920 patent trial has not yet been scheduled, but would be expected to be scheduled for sometime in 2029. Yesterday, November 3, the judge scheduled a preliminary injunction hearing on January 26, 2027, with an expected decision by February 14, 2027, when the 30-month stay expires. This schedule is identical to the preliminary injunction schedule Harmony proposed to the judge on October 26.

In Q1 this year, we obtained the exclusive rights to a patent covering methods of making amorphous pitolisant hydrochloride from our licensee MSN Labs. That patent was issued by the PTO in Q3. The patent strengthens our patent portfolio and protects our development efforts for a new amorphous pitolisant hydrochloride product. Together with our settlements with the six other ANDA filers, these actions reinforce our confidence in Wakix exclusivity to March 2030.

I will now turn the call over to our interim Principal Financial Officer, Steve Molakella, to walk through our financial results for the quarter.

Steve Molakella (Interim Principal Financial Officer)

Thank you, Peter, and good morning, everyone. This morning we issued our third quarter 2026 earnings release and filed our 10-Q, where you can find details of our financial and operating results. We continue to deliver financial results that reflect strong underlying demand for Wakix, as well as our disciplined approach to managing expenses across the business. For the third quarter of 2026, we reported net revenue of $269 million compared to $239 million in the prior-year quarter. Our performance this quarter reflects continued strong demand for Wakix within the large narcolepsy market, coupled with typical quarter-to-quarter buying patterns that the industry as a whole experiences. Cost of product sold was 30% of net revenue compared to 25% one year ago. This year-over-year increase was primarily driven by a new royalty related to the Novidium License Agreement, which we signed in Q1 of this year.

We reported total operating expenses of $134 million for the third quarter compared to $114 million in the prior-year quarter. The increase in expenses was primarily driven by a $25 million charge related to a milestone achieved by MSN Labs, continued investments in R&D, and the expansion of our field-based team which we completed earlier this year. These increases were partially offset by a $15 million charge related to a clinical milestone for ZYN002 in the prior-year quarter.

Net income for the third quarter was $48 million, or $0.81 per diluted share, compared to $51 million, or $0.87 per diluted share, for the prior-year period. The year-over-year decline in net income was primarily due to the Novidium royalty and the MSN milestone charge I mentioned earlier. We ended the third quarter with over $1 billion of cash, cash equivalents, and investments, and $150 million in debt. Looking forward, we continue to expect our operations to generate cash, maintaining our strong balance sheet.

Our capital allocation priorities include investment in R&D driven by our BP 205 development plans, along with potential business development opportunities and contractual milestones which may be triggered by continued success in our pipeline. Finally, we are reiterating our full-year guidance of $1.0 billion to $1.04 billion for Wakix net revenue, and with that, I will turn the call back to Jeff for his closing remarks. Jeff.

Jeffrey Dayno (President and Chief Executive Officer)

Thanks, Steve. In closing, this was another productive quarter for Harmony centered around two key accomplishments: sustained patient demand-driven growth for WAKIX that keeps us firmly on track to exceed $1 billion in net revenue this year, and preliminary MAD data that further strengthened the emerging best-in-class profile of our orexin 2 agonist BP205. We have been leaders in the sleep disorder space for almost a decade now and are leveraging our expertise to accelerate our BP205 development program toward multiple CNS indications to become a leader in the orexin space. We believe that when we execute on our four strategic priorities of value creation, Harmony is well positioned to become an enduring leading CNS company with multiple products across multiple franchises, bringing innovative treatments to patients living with CNS diseases while driving sustained long-term value for our shareholders.

I would like to end this call today on a personal note before I step down as CEO at the end of the year. It has been my honor and privilege to have been a part of building Harmony Biosciences Hldgs from the beginning over the past nine years and leading the organization as CEO these past four years. I am grateful to our Board of Directors for the confidence they had in me and the opportunity to have served in the CEO role, as well as staying on as an advisor to the company throughout 2027.

I want to thank the analysts I have worked with and members of the investment community for your interest in what we have been building at Harmony and recognizing the value of the enterprise that we are advancing. Lastly, I want to thank the entire Harmony organization for their dedication, commitment, and their passion for why we do what we do. That is what I am most proud of because when empathy and innovation meet, a better life can begin for patients with unmet medical needs.

I wish Peter all the best of success in the role of CEO and I am confident in his leadership and the entire organization in driving Harmony’s next chapter of growth. Thanks, everyone, and I will now turn the call back over to the operator for Q&A. Operator,

Nikki (Conference Operator)

Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two. We remind you to please pick up your handset and please limit yourself to one question and one follow-up. We’ll take our first question from Ami Fatia. Please go ahead. Your line is open.

Ami Fatia (Analyst)

Hi, good morning. Thanks for taking my question. Firstly, Jeff, congrats on a fantastic career and it’s been great working with you. So my first question is, with regards to the MAD data, while this was a safety study, can you give your preliminary thoughts on the therapeutic index across the doses studied based on target engagement? And what are your thoughts around being able to explore a dose even higher than the range that you studied in the MAD study, because you went up to 6 milligrams in the SAD study?

And then I have one more question.

Kumar Budur (Chief Medical and Scientific Officer)

Good morning, Ami. Thank you for the question. In terms of the therapeutic index, we do have a wide range of therapeutic index with BP205. Regarding your question about limiting the dose to 3 mg in the multiple ascending dose study, and in the SAD study we went all the way up to 6 mg: the repeat dose of 3 mg at steady state equals something like around 6 mg single ascending dose anyway. So in terms of could we have gone higher on the dose? Absolutely, yes, we could have.

We limited the MAD at 3 mg, starting at 0.11 mg, because based on our preclinical PK/PD modeling and the modeling that we have from the single ascending dose study, at 3 mg multiple ascending dose we will get more than enough exposure that we need based on what we find in the preclinical PK/PD relationship. So we are actually quite happy with the range that we have studied. And more importantly, as we disclosed this morning, in terms of target engagement, we saw target engagement at a very low dose of 0.1 mg where we saw insomnia, which is a class-related AE, and we saw other target engagement AEs like urinary frequency and urgency at 1 and 3 mg. So what it says is in the dose range that we have evaluated, the drug crosses the blood-brain barrier, interacts with orexin 2 receptors, and is doing what it is expected to do.

So these data support the potency of BP205, which is highest compared to other orexin 2 receptor agonists in clinical development, and gives us an opportunity to explore low doses to treat all three central disorders of hypersomnolence.

Ami Fatia (Analyst)

Got it. Thank you. One other quick question. You know the half-life obviously supports once-daily dosing. However, based on what we’ve seen from the other orexin programs, what are your thoughts around exploring a split dosing when you initiate the Phase 2 planned middle of next year? Thanks.

Kumar Budur (Chief Medical and Scientific Officer)

Yeah, a great question, Ami. In terms of what we have seen with the half-life and the target engagement AEs that we are seeing, we remain confident that once-a-day dosing is what’s going to work with BP205.

Jeffrey Dayno (President and Chief Executive Officer)

Yeah, I would add to that, I think that the data from the sleep-deprived healthy volunteer study, Ami, will inform that in terms of the ability to demonstrate sustained wakefulness throughout the day and until late day, early evening. So that data set will also inform the potential, what we believe could be once-daily dosing.

Kumar Budur (Chief Medical and Scientific Officer)

Yeah. And there are also other factors other than half-life, like the ability to cross the blood-brain barrier, the potency, the self-activity, the features that we have talked about, especially that are very unique for BP205.

Ami Fatia (Analyst)

Sorry. Thank you.

Jeffrey Dayno (President and Chief Executive Officer)

Thank you, Ami.

Nikki (Conference Operator)

Thank you. We will move next with Greg Zuvanovich with Mizuho. Please go ahead.

Greg Zuvanovich (Analyst at Mizuho)

Good morning. Thanks for taking my questions. Jeff, congrats on a great career. Look forward to connecting with you on whatever might be next for you. But that being said, I have two questions, if I could. One just on the existing business. WAKIX seems to be in a good place, but I think we’re within the month that Takeda’s Orzafil may be launching, and maybe this is a question for Adam, but how should we think about that launch and what the impact might be to WAKIX both in the very near term or perhaps in the midterm?

Just thinking about, you know, you’re getting good traction on new patient adds, but just if you could give some other higher-level comments because we are pretty much here—we’ve been talking about it for a while now. And then second, if I could just revisit the patent litigation. It is very complex. I know you had mentioned that the amorphous patent litigation, the timing there would be perhaps a trial start in 2029, but if we get to know a final decision in the original ANDA-based litigation, which could come, I guess, in February, if you end up losing on that, could you just remind us around the risks around really a potential launch at risk? I know you’ve got the PI hearing, but just trying to think about how we all should be thinking, given the many moving parts of this multi-layered IP strategy that you have.

Jeffrey Dayno (President and Chief Executive Officer)

Yeah, sure, Greg. Good morning, Greg, thanks for your kind words. Over to Adam, first for thoughts on potential impact of the launch. Adam?

Adam Zaeske (Chief Commercial Officer)

Yeah. Hi, Greg. We’re thrilled with the results that we saw this quarter—another now five out of the last six quarters of 400-plus patient adds. Really, really excited and enthusiastic about that continued growth. We expect Orzafil launch probably this month. It’s looking like DEA scheduling will be wrapped up potentially this week. We expect Orzafil to be scheduled for. So what that means for WAKIX—and Orzapo will be indicated only in NT1—so for WAKIX, we expect everything that’s driven the performance to date will continue to drive our performance in the future, and we’re confident in continued growth through the end of this year and into next year. WAKIX will remain the only non-scheduled treatment option. Broad clinical utility across NT1 and NT2 pediatric and adult patients with EDS and cataplexy.

So broad indications and broad utilization, with strong efficacy, very clean safety and tolerability profile, which really differentiates and makes it a great addition for any combination of treatments in a highly polypharmacy market. We continue to enjoy broad coverage with more than 80% of lives covered, and we believe all of that will remain unchanged with the launch of Orzafil and will continue to propel our growth through 2027.

Greg Zuvanovich (Analyst at Mizuho)

Thanks, Peter.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Yeah. And on your second question about the patent litigation, you’re right, it is complicated, Greg, and I’ll try to make it as simple as possible. The headline basically is that the schedule is proceeding exactly as we expected and actually even proposed. So there is a schedule. Yesterday the judge issued a scheduling order that there is a scheduled preliminary injunction hearing. To be clear, we’re the ones asking for the preliminary injunction, and she granted that.

We proposed it in two forms. We proposed it on October 26th in a letter that she asked us to provide on our proposed schedule, and we actually proposed it yesterday again in the morning in a letter we sent to the judge. And then in the afternoon she issued the schedule. So this is progressing exactly the way we expected and wanted. So this is a positive for us. And so the preliminary injunction hearing will take place on the 26th. That then gives her a couple of weeks prior to the stay—the 30-month stay—ending in mid-February, and then we expect a decision both on the injunction and the end of case. Importantly, the amorphous case still has not been scheduled, and as you pointed out, just based on past history those things typically get scheduled a couple of years out. So we expect it to be scheduled in 2029 and then a ruling from the judge sometime after that.

So this is progressing exactly as we had proposed, and we are looking forward to the upcoming PI hearing and stating our case. And we continue to reiterate the confidence that we have in March of 2030, when you look at both the ANDA case, the still outstanding amorphous case, and our requested preliminary injunction hearing.

Greg Zuvanovich (Analyst at Mizuho)

Just a quick follow-up. I mean, just the request for the preliminary injunction, which sounds like it’s going the way that you had proposed, I guess from a more bearish perspective it gives a sense that you’re already anticipating that you could lose in the final ruling. So could you just address, like, how those who are trying to think about all the implications—the fact that you did request a hearing for the preliminary injunction—how that may, you know, how people may interpret that, whether rightfully or wrongfully?

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Yeah, I mean, no one should interpret that as our belief that we won’t prevail in the ANDA trial. We still have very strong confidence that we will prevail in the ANDA trial. But as you’ve seen, we’ve vigorously defended our IP and we’re going to take advantage of every opportunity we have to continue to defend our IP. So it’s well within our rights to ask for a preliminary injunction, and we asserted that right. And you also have seen that we asserted our rights by suing AET and Sandoz with the amorphous trial.

So it just is consistent with the very assertive approach that we have taken to defend WAKIX IP. And we believe we will prevail ultimately, but we also believe we’ll prevail specifically on the ANDA trial. Thank you very much. Thanks, Greg.

Nikki (Conference Operator)

Thank you. We will move next with Jay Olson with Oppenheimer. Please go ahead.

Jay Olson (Analyst at Oppenheimer)

Thank you, Jeff, for your leadership over the years, and congrats on all the impressive progress you’ve made on behalf of patients.

Jeffrey Dayno (President and Chief Executive Officer)

Thank you. Thank you, Jay. Thank you.

Jay Olson (Analyst at Oppenheimer)

We look forward to staying in touch with you. We have a question about BP 205, which is already demonstrating clear points of differentiation based on the clean safety and favorable PK profile. Can you talk about what to expect from the sleep-deprived volunteer study? Beyond demonstrating wake-promoting activity, will you assess late-day efficacy, next night’s sleep, or other points of differentiation? And then as a follow-up, how will those findings factor into your clinical development plan, especially in terms of potential indications you would pursue?

Thank you.

Jeffrey Dayno (President and Chief Executive Officer)

Yeah, Jay, thank you for your question. I’ll turn it over to Kumar, but I think you’re highlighting the multiple catalysts for BP 205 that are coming right around the corner, and the important one, the sleep-deprived healthy volunteer study data. Kumar can provide more color on what we anticipate and how that will inform the multiple phase 2 trials.

Kumar Budur (Chief Medical and Scientific Officer)

Right. Good morning, Jay. Thank you for the question and thank you for highlighting some more performance features that we discussed today in terms of the PK differentiation, and in terms of safety and tolerability differentiation for BP 205. Regarding the sleep-deprived healthy volunteer study, the goal is that we anticipate wakefulness that is expected from this class of drugs — that’s orexin — and a favorable safety and tolerability profile. This is going to be a single dose in sleep-deprived healthy volunteers. As long as we hit the benchmark, or the ballpark, of what we anticipate in terms of efficacy for this class of compounds, that’s good for us to move to the next stage of development.

What the sleep-deprived healthy volunteer study also does is it will help us to bracket the dose range that we’ll be taking into phase 2 studies. We already have an idea based on what we saw with our single ascending dose study, especially with the multiple ascending dose study, based on the target engagement AEs that we have seen with very small doses — doses ranging from 0.1 to 3 milligrams in multiple ascending doses. So the data from the sleep-deprived healthy volunteers will add to the data that we are generating, and that will help us to determine the dose ranges and the design of our multiple phase 2 clinical trials that we plan to initiate in mid-2027 in multiple CNS indications.

Jay Olson (Analyst at Oppenheimer)

Great. Thank you.

Jeffrey Dayno (President and Chief Executive Officer)

Thanks, Jay.

Nikki (Conference Operator)

Thank you. We will move next with Rudy Lee with Wolfe Research. Please go ahead.

Rudy Lee (Analyst at Wolfe Research)

Thanks for taking my question, and congrats, Jeff. Hope you enjoy your journey out there.

Jeffrey Dayno (President and Chief Executive Officer)

Thanks, Rudy.

Rudy Lee (Analyst at Wolfe Research)

So, follow-up question. For BP 205, can you provide more color on the headache AEs? Are they dose-dependent? Do you have any patients discontinued because of headache AEs? And what doses will you be testing in the sleep-deprived subjects? Are you dosing just QD or include BID split dosing? What do you think would be the right therapeutic dose? Thanks.

Kumar Budur (Chief Medical and Scientific Officer)

Hey, good morning, Rudy. Thank you for the question. In terms of headache, about 25% of the participants experienced headache. They were mild in severity and did not lead to any discontinuations. So headache did not lead to any discontinuation. In terms of headache itself, it’s actually very common in any phase 1 studies to see headache rise to the top one, two, or three most commonly reported adverse events. Because all these studies are done in an inpatient unit, the healthy volunteers are in the unit sometimes for up to 10 days, and it’s actually very common for these healthy volunteer participants to report headache.

And the second question, in terms of QD, BID, split dosing: the data that we have generated thus far — in terms of terminal half-life from our single ascending dose study, in terms of effective half-life in our multiple ascending dose study, and the target engagement AEs that we saw with the QD dosing. Mind you, the multiple ascending dose study was dosed every day in the morning for 14 consecutive days. Based on everything that we are seeing, we are confident that BP 205 will be QD dosing at this point in development.

Jeffrey Dayno (President and Chief Executive Officer)

Thanks, Rudy.

Nikki (Conference Operator)

Thank you. We will move next with Patrick Trucchio with HC Wainwright. Please go ahead.

Patrick Trucchio (Analyst at HC Wainwright)

Good morning. I have a question on Wakix. I was just wondering, Steve, where should we be modeling the cost of sales going forward? And did this quarter include catch-up charges or royalty tier effects? Is 30% appropriate going forward? And as far as Wakix buying patterns, could you quantify the third quarter revenue impact of the buying patterns that you referenced and clarify whether you expect the effect to reverse in the fourth quarter?

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Yeah, Patrick, thanks for your question. I think Adam can respond in terms of the buying patterns and Steve can comment on the other impact.

Adam Zaeske (Chief Commercial Officer)

Yeah, sure. Hi, Patrick. I mean, the short answer is we really saw no impact from inventory fluctuations for third quarter results. Steve, over to you on cost of sales.

Steve Molakella (Interim Principal Financial Officer)

Yeah. Hi, Patrick. On cost of sales, third quarter represents the full impact of the new royalty from the Navidia agreement we signed in Q3. So I would expect that you would see that kind of going forward.

Patrick Trucchio (Analyst at HC Wainwright)

Great. And then if I could just, on BP 205, Kumar, separately from the single-dose sleep-deprived study, were any objective overnight sleep measurements collected during the MAD portion of the program, or was the nighttime tolerability assessment based on participant-reported insomnia?

Kumar Budur (Chief Medical and Scientific Officer)

Patrick, we did not collect any information like attention, concentration, things like that. It’s in healthy volunteers. And in terms of AE collection, obviously we collected the AEs based on the standard format that is used in phase 1 studies. And that’s where we noticed insomnia in less than 20% of the participants. We saw urinary urgency and frequency in less than 20% of participants, only at 1 and 3 milligram doses. Both of these AEs were mild in severity.

And importantly to note, neither of these target engagement AEs led to any discontinuations.

Patrick Trucchio (Analyst at HC Wainwright)

Thank you so much.

Jeffrey Dayno (President and Chief Executive Officer)

Thanks, Patrick.

Nikki (Conference Operator)

Thank you. We will move next with David Amsellem with Piper Sandler. Please go ahead.

David Amsellem (Analyst at Piper Sandler)

Thanks. First, Jeff, I just want to wish you all the best. I’ve really enjoyed working with you over the years, so all my best to you. And now to my questions. Just a couple. First on 205, as you think about evaluation of the drug in orexin-deficient patients, how do you think it will behave from a tolerability perspective? In other words, insomnia, polyuria. I know that you have the data in healthies, but do you expect it to behave differently once you’re putting it into actual orexin-deficient patients, as you think about tolerability, particularly insomnia and polyuria?

So that’s number one. And then secondly, I appreciate, Peter, the transparency on business development, M&A. You did talk about a broader aperture within CNS, and that sort of leads me to wonder, are you thinking about, say, psychiatry? And part of the reason I’m asking is because we are seeing a number of psychiatry-focused orexin programs that are moving forward, such as Alkermes’ program in MDD for one of its orexins. So these are obviously much bigger markets, but how are you thinking about that?

That to me is a big change from what Harmony had historically been thinking regarding M&A. So I’d love to hear more thoughts on that. Thank you.

Jeffrey Dayno (President and Chief Executive Officer)

David. Good morning, David. Thanks for your questions. Thanks for your kind words. I’ve enjoyed working with you as well over the years. First, let me frame in terms of BP 205 and disorders beyond orexin deficiency. I think it, you know, as we said, starts with the potential — the high potency. So I think framing this opportunity as the most potent orexin 2 agonist in the clinic and the opportunity for lower clinical doses overall, achieving and driving toward a favorable risk-benefit profile.

And that’s, I think, the opportunity that we see in the emerging data. I think Kumar can expand on that, but that is what we believe is the real opportunity in the high potency of BP 205.

Kumar Budur (Chief Medical and Scientific Officer)

Thank you, Jeff. Hey, good morning, David. Thank you for the question. That’s a great question. Look, from a clinical development perspective, what happens is, in general — I’m not talking specifically for BP 205 or narcolepsy — in general, the tolerability profile is much better in patients compared to healthy volunteers. That’s what we have seen. But specifically in NT1, that’s a question that I don’t know the answer to, to be honest with you, because these are also the patients whose physiological system has never ever been exposed to any meaningful exposure to orexins.

So we just need to see what happens in the clinical setting. But outside of NT1, David, in NT2/IH, in broader CNS indications, these individuals have intact orexin physiology, and the healthy volunteers also have intact orexin physiology. So I’m actually pretty confident that the safety and tolerability profile, which is very favorable that we saw in the MAD dose, extends to patient populations who have intact orexin physiology — that is, NT2/IH and broader CNS indications.

David Amsellem (Analyst at Piper Sandler)

Thanks, Kumar. Peter, on business development.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Yeah, thanks for the question, David. First of all, just to reiterate, our priority areas are where we have franchises now and emerging franchises. So clearly sleep is a high priority given our leadership in the sleep space. We have an emerging franchise in epilepsy, so that’s a high area of interest. In terms of those broader indications that you asked about, we’ve been silent to date on what specific indications we’re pursuing with orexin, but we have said that the broad categories of interest are things that relate to areas of orexin’s role in various disease processes, and those include cognition, attention, mood, fatigue — just as broad categories. And so, as we continue to move forward our planning for our orexin strategy, those final indications that we ultimately start studies in next year will also be areas of interest that we would also pursue BD opportunities in.

So I can’t be really specific yet, but I think that gives you some broad strokes. And when we become more transparent with you next year, when we kick off those phase 2 studies, I think you’ll have a better understanding of what those areas are and how that could be pulled through in our BD strategy. Yeah, David, just to add, I think that the opportunity with BP 205 and the broader orexin space in broader CNS indications is really what’s opening up the aperture from a BD perspective. So given the excitement there, given the opportunity with BP 205, we see the BD aperture open up with regards to opportunities in those broad CNS indications as well.

David Amsellem (Analyst at Piper Sandler)

All right, thanks, guys. That’s helpful.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

Thanks, David.

Nikki (Conference Operator)

Thank you. We will move next with David Huang with Deutsche Bank. Please go ahead.

David Huang (Analyst at Deutsche Bank)

Hi, good morning, and thanks for taking my questions. Jeff, let me echo everyone else — you know, it was a pleasure working with you and I wish you only the best in your next chapter. Thank you, David. So in terms of questions: first, noticing a little bit of quarter-over-quarter deceleration for Wakix in terms of the net patient adds. Is there anything to read there? And if you could just remind us and maybe speak to the underlying demand this quarter versus last.

And then in terms of the amorphous formulation of the tolosinterior, where you licensed that in from, I believe, Novidium, how does that now fit into your lifecycle management plans alongside the Tolson HD and GR? Thanks a lot.

Adam Zaeske (Chief Commercial Officer)

Hi David, thanks for the question. Very pleased with quarter-over-quarter results, achieving 400 patient adds in third quarter. As you know, over the last six years WAKIX path typically has added between one and 400 patients in a quarter. This quarter marks now five out of the last six quarters with 400 or more patient adds. So that really emphasizes an acceleration of growth in year seven. We’re very pleased with that momentum and we can see continued momentum as we enter the fourth quarter and continue that growth through the end of the year.

We’re fully on track with our estimates internally through three quarters. Very confident in our ability to achieve guidance of 1 to 1.04 billion for the year and looking forward to hitting that major milestone for the company.

David Amsellem (Analyst at Piper Sandler)

Thanks. Adam, Kumar.

Kumar Budur (Chief Medical and Scientific Officer)

Yeah, good morning David. Thank you for the question regarding amorphous form of pitolisant. This is the form of pitolisant that has been issued patent until 2042. In terms of how it fits within the broader pitolisant franchise, one of the things that we always wanted to explore is certain symptoms like fatigue in broader neuropsychiatric indications. And amorphous form of pitolisant offers us that opportunity to look into some of those broader indications that we couldn’t pursue with, for example, WAKIX or pitolisant HCl, where we are specifically looking into rare orphan disorders.

Just as an FYI, with that formulation we actually did generate positive data both in sleep and fatigue in myotonic dystrophy. So we have shown there is a proof of concept that histaminergic mechanism of action can be helpful in fatigue. And that’s what we want to do. We want to look at certain symptoms in broader neuropsychiatric indications with the amorphous form of pitolisant. And it also gives us the opportunity to explore new formulations with that formulation as well. So not just new indication space but also with a new route of delivery.

David Amsellem (Analyst at Piper Sandler)

New modes of delivery. Right. Thank you, Peter.

Nikki (Conference Operator)

Thank you. We will move next with Danielle Brill with Raymond James. Please go ahead.

Danielle Brill (Analyst at Raymond James)

Hey guys. Good morning. Also want to wish you the best, Jeff. It’s been great getting to know you over the years and likewise hope to connect again in the future.

Jeffrey Dayno (President and Chief Executive Officer)

Of course.

Danielle Brill (Analyst at Raymond James)

I just wanted to ask on—sorry—BP205. So you saw target engagement at 0.1 milligrams and urinary AEs at 1 and 3. So how confident are you that you can get clinically meaningful efficacy below the exposure where these on-target AEs emerge? And do you think this separation is being driven more by 205 potency, Cmax, or overall exposure? Thank you.

Kumar Budur (Chief Medical and Scientific Officer)

All right, so Danielle, when you say the separation of AEs, I assume the separation of insomnia that was observed at all four doses, whereas urinary frequency and urgency were observed only at 1 and 3 milligram doses. Good question. What we can say, as I mentioned earlier, is the observation of target engagement AEs at 0.1 mg was not a surprise for us given the potency of BP205 and what we had seen in the preclinical model. In terms of how we can extrapolate these to efficacy, we will be testing these doses.

We haven’t disclosed exactly the doses that we’ll be testing in sleep-deprived healthy volunteers, and we will see. Ultimately the goal is to derive efficacy, good efficacy, clinically meaningful efficacy without causing troublesome AEs. That includes target engagement AEs which are insomnia, urinary frequency, and urgency.

Peter Anastasiou (Chief Operating Officer and incoming Chief Executive Officer)

And if I could just add a perspective, I think people should not expect that we’ll completely avoid those target engagement side effects. They are part and parcel of raising orexin levels, and anything that raises orexin levels is likely to have those. What we aim to do is have them be low enough where they’re not problematic. And that’s what we saw in the MAD study. After 14 days of repeated dosing, they were mild in severity, they didn’t lead to discontinuation, and they were by definition not problematic.

And so that’s what we’re aiming for in terms of striking the right balance in the doses we select to give us that efficacy that we think that will generate from the strong potency that we have, but also minimize, but probably not avoid, the on-target AEs.

Adam Zaeske (Chief Commercial Officer)

Yeah, yeah. I would just add that I was going to mention the same thing, that we’re not going to avoid the on-target AEs, but it’s the overall—again, back to the overall benefit-risk profile—what we’re driving towards. Obviously, Danielle, some of the other orexin development programs, you’re seeing higher rates, you’re seeing some of that in the orthopo label. That is what we are trying to prove out here and achieve. There’s an interesting analog in the market and it’s called WAKIX.

WAKIX has a very favorable overall sa