Harmony Biosciences Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 6, 2024

There are 12 speakers on the call.

Operator

Good morning. My name is Todd, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Biosciences' 2nd Quarter 2024 Financial Results Conference Call. All participant lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Please be advised that today's conference may be recorded. I will now turn the call over to Vernon Doyle, Head of Investor Relations. Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences' Q2 2024 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 our discussion today, including a reconciliation of our GAAP to non GAAP financial measures. At

Speaker 2

this stage

Speaker 1

in our lifecycle, we believe non GAAP financial results better represent the underlying business performance. Our speakers today on the call are Doctor. Jeff Dano, President and CEO Jeffrey Dirks, Chief Commercial Officer Doctor. Kumar Bludur, Chief Medical and Scientific Officer and Sandeep Kapadia, Chief Financial Officer and Chief Administrative Officer. As a reminder, we will be making forward looking statements today, which are based on our current expectations and beliefs.

Speaker 1

These statements are subject to certain 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 detail. I would now like to turn the call over to Doctor. Jeffrey Danoneau.

Speaker 1

Jeff?

Speaker 3

Thank you, Brennan, and thanks, everyone, for joining our conference call today. Q2 was another very productive quarter for the team at Harmony, delivering another quarter of strong revenue growth for Wakeix and continued advancement in our late stage clinical development programs, highlighted by the significant progress made on our next generation patelizan high dose or patelizan HD development program, formerly referred to as NG2. During our Q1 earnings call, we shared the initial pilot PK data for the pituloscent gas resistant or pituloscent GR program, formerly referred to as NG1, along with the development plan as the first part of our patellecint lifecycle management activities. This quarter, we are excited to provide an update on our pittolizant HD program with a targeted PDUFA date in 2028 and a provisional patent filed out to 2,044, providing us the opportunity to extend the cotolizant franchise to the mid-2040s with durable long term revenue generation. 1st, let me provide some color regarding the reasons why we are excited about advancing this program because of the unmet medical needs in the narcolepsy community that the total HD is designed to address.

Speaker 3

Later in the call, Kumar will share some of the initial pilot PK data and a few other details from the pettolizan HD development program. Wakeix offers a strong overall benefit risk profile for patients living with narcolepsy has brought a meaningful enhancement to the market as the 1st and only non scheduled treatment indicated for both excessive daytime sleepiness or EDS and cataplexy and has been extremely successful in the market. But given the nature of narcolepsy as a chronic neurological disorder with difficult to treat symptoms, there still remain unmet needs and opportunities for continued innovation. For pettolacin GR and HD, the innovation is more focused on the continued unmet needs in the narcolepsy market and what we can do to address those needs. 1st, we know that greater than 75% of narcolepsy patients experience residual symptoms while on treatment and could benefit from a treatment with greater efficacy.

Speaker 3

This is why we are pursuing a high dose patelisin formulation that also has an optimized PK profile to drive greater efficacy to address this need in the market. 2nd, about 60% of patients living with narcolepsy experience fatigue, which is a different symptom than EDS and a common symptom in chronic neurological diseases. With a higher dose of pettolacin and based on the positive signals that we saw in both EDS and fatigue with pettolacin in our Phase 2 proof of concept study in type 1 myotonic dystrophy or DM1, we plan to pursue a fatigue indication for pitulsin HD in patients with narcolepsy as well as other neurological diseases such as DM1. Next, as we explained for our patelisin GR program, a driving force behind the gastro resistant coating is the fact that about 90% of patients with narcolepsy experience GI symptoms such as nausea, dyspepsia and abdominal discomfort. There is a mechanistic rationale for this, especially in patients with NT1 or Type 1 narcolepsy related to the orexin deficiency since orexin has effects on the vagus nerve in the brain, which is the central controller of gut motility.

Speaker 3

In addition to the underlying disease mechanism, 1 out of 5 patients on narcolepsy medications experience GI side effects related to the common narcolepsy treatments that are used. Waygax is well tolerated with a low incidence of nausea, but the gastro resistant coating feature is designed to address the predisposition to GI symptoms in patients with narcolepsy as well as the GI tolerability issues patients have experienced with other narcolepsy treatments. Taken together, the higher dose, optimized PK profile, cancer resistant feature and our plan to pursue additional indications would address significant unmet needs in patients with narcolepsy and position patelosin HD as a meaningfully differentiated product and result in a differentiated label compared to Wakeix. With a provisional patent filed and potential IP out to 2,044 and a target PDUFA date in 2028, this gives us an opportunity to introduce a differentiated product prior to Wake XL OE in 2,030 to extend the pettolison franchise to the mid-2040s and drive durable long term revenue generation. Our commercial team conducted preliminary market research based on the target product profile for pettolisin HD.

Speaker 3

And initial results suggest that the features I described to you would be of real interest to patients, be viewed as offering meaningful benefits by healthcare professionals and perceived as clinically superior compared to Wakeix by payers. To round out our SleepWake franchise, we were very pleased with the FDA approval of Wakeix for EDS in pediatric narcolepsy patients ages 6 years and older, and we're excited to launch this new indication into the market on July 1. As a reminder, the pediatric narcolepsy data along with data from the ongoing Phase 3 TEMPO study in Prader Willi syndrome keeps us on track toward obtaining pediatric exclusivity and an additional 6 months of regulatory protection on the back end of our longest patent, which would take us to September 2030. We are on track to submit an sNDA for idiopathic hypersomnia later this year and are very excited about our potential best in class orexin 2 agonist program for TPM1116. We are working with our partner BioPerge and are on track towards filing an IND mid-twenty 25 and then initiating 1st in human studies second half of twenty twenty 5.

Speaker 3

Beyond our strong sleepwake franchise, we are also advancing late stage programs in our other two franchises, neurobehavioral and rare epilepsy. ARMY has expanded its pipeline and diversified its portfolio that now includes 3 orphan rare CNS franchises, each one of which has peak sales opportunities of $1,000,000,000 to $2,000,000,000 I want to highlight that our pipeline now has 8 assets advancing across 13 development programs and 3 of them are in Phase 3 with a 4th Phase 3 trial to begin later this year. Importantly, this pipeline is poised to deliver at least one new product or indication launch each year over the next 5 years. This along with ptolecen HD PDUFA date targeted for 2028 translates into the potential for significant durable long term value creation out beyond 2,040. Kumar will be providing you updates on our development programs later in the call.

Speaker 3

While we advance our pipeline programs, we remain focused on execution across the company and delivered another solid quarter with WaiQiq's net revenue of $172,800,000 representing 29% growth year over year. With these strong results, we are once again reiterating our 2024 net revenue guidance of $700,000,000 to $720,000,000 and remain confident that WACX represents a $1,000,000,000 plus market opportunity in narcolepsy alone, and we are well on our way. What reinforces our confidence in the durability of the WAYCX franchise is the news we shared earlier this morning regarding the WAYCX Polymorph patent being upheld once again after the second and final attempt to challenge the patent. Late last week, the U. S.

Speaker 3

Patent and Trademark Office or USPTO issued its final denial of the petition for reexamination of the Wakeix patent, which was filed by a short seller. We have always stood by Wakeix and our intellectual property. This reexamination request represented the second attempt to challenge the Wakeix patent And in its decision, the USPTO stated, and I quote, this decision is final and non appealable. We remain very confident in the strength of our patents, the validity of the patent portfolio and our ability to rigorously enforce the intellectual property rights protecting Wakeix. This bolsters our confidence in the durability of the patelosin franchise with the PDUFA date for patelosin GR in 2026, the target PDUFA date for patelosin HD in 2028, the IP for Wake XL to 2,030 and provisional patents filed for pitulosin GR and HD out to 2,044.

Speaker 3

This puts us in a solid position to expand the patelosin franchise out to the mid-2040s. We also remain active in business development with the goal of building out our pipeline even further. With approximately $434,000,000 in cash, cash equivalents and investments as of June 30, we are in a solid financial position to execute on additional BD opportunities that are consistent with our growth strategy and offer the potential to drive further value in our overall business. Lastly, we look forward to hosting our inaugural Investor Day on October 1 in New York City, where we will have an opportunity to highlight our robust late stage pipeline and share some new data with you. With that, I will turn the call over to Jeffrey Dirks, our Chief Commercial Officer for an update on our commercial performance.

Speaker 3

Jeff?

Speaker 2

Thanks, Jeff. We saw another solid quarter of continued commercial progress for Wakeix in the 2nd quarter, highlighted by continued product adoption and growth in our underlying business fundamentals. Net sales for the quarter were $172,800,000 representing 29% growth from the same quarter prior year. The solid net sales performance in Q2 reaffirms our confidence in our net sales guidance of $700,000,000 to $720,000,000 for the full year 2024. We saw continued growth in the average number of patients on Wakeix and in the Wakeix prescriber base, both facilitated by favorable market access as seen on Slide 45.

Speaker 2

The average number of patients on LACIKS increased to approximately 6,550 in the Q2. We're extremely pleased with the sequential increase of approximately 250 patients from what we reported last quarter and the durable growth in year 5 of our rare orphan commercialization. The growth in average patients in Q2 was in line with our expectations and reaffirms our confidence in our guidance of approximately 7,000 average patients

Speaker 3

by the end of the year.

Speaker 2

We also saw the Wakeix prescriber base increase again in the Q2. We're seeing continued growth in the Wakeix prescriber base beyond the oxybate REMS enrolled healthcare professionals. And we're approaching 40% penetration in this segment of approximately 5,000 healthcare professionals at the end of the Q2. This segment of healthcare professionals represents an insulated group of prescribers and patients from the Oxibates that we continue to tap into each quarter to drive performance. The growth in this segment demonstrates Wakeix is broadening the branded writer segment beyond the oxibates by providing a meaningfully differentiated product profile and one that offers broad clinical utility across the entire narcolepsy treating healthcare professional universe.

Speaker 2

Coupled with the growth we're seeing beyond the oxybate REMS enrolled healthcare professionals, we continue to see utilization of Wakeix among the approximately 4,000 oxybate REMS enrolled healthcare professionals, even with the availability of new and generic oxybate options. We're highly penetrated within this prescriber audience and see Waikis being prescribed to additional narcolepsy patients each quarter in this segment. As we've shared during previous earnings calls, our ability to call on the broad approximately 9,000 narcolepsy treating healthcare professional audience allows us to tap into the full diagnosed narcolepsy patient opportunity, giving us confidence in the $1,000,000,000 plus opportunity for Wakeix in narcolepsy. Supporting the growth in patients and prescribers is our favorable market access and formulary coverage for Wakeix. We've seen no changes to the overall broad payer coverage for Wakeix over the past year with the introduction of new branded and generic options.

Speaker 2

And we believe we are well positioned to support future growth. And as we are closing out another solid quarter of performance, we are excited to receive the news of the approval of Wakeix for the treatment of excessive daytime sleepiness in pediatric narcolepsy patients 6 years and older on June 21st. Wakeix now represents the 1st and only non scheduled treatment option for pediatric narcolepsy patients. And importantly, all narcolepsy patients have EDS. So with this approval, we have the opportunity to access the full diagnosed pediatric narcolepsy patient opportunity.

Speaker 2

The pediatric narcolepsy opportunity is a small but meaningful opportunity. It represents approximately 5% of the diagnosed narcolepsy opportunity or approximately 4,000 patients. And this approval was contemplated in our full year 2024 net sales guidance. Our commercial team was prepared for this approval and started our now approved outreach the week following the approval. Our field sales team is trained later that week and without educating healthcare professionals about the new indication starting July 1.

Speaker 2

Although it's still early, we are seeing positive indicators from the launch. We're getting very positive feedback and interest from the patient healthcare professional community and payers have begun to add Wakeix for pediatric narcolepsy to their formularies within the 1st 30 days from approval. In summary, we had another strong quarter of durable growth and performance in net sales, patient adds and growth in prescribers of Wakeix, reaffirming our full year net sales guidance and average patient guidance that we issued earlier this year. With the addition of the pediatric narcolepsy approval for the treatment of EDS, coupled with the strong fundamental business in our adult narcolepsy, we're seeing good leading indicators in our underlying business fundamentals. Heading into the Q3, we anticipate the typical summer seasonality of fewer patient visits, lower foot traffic in offices consistent with previous years and other chronically managed conditions.

Speaker 2

And we remain confident in continued growth in average patients and prescribers of Wakeix moving forward. I'm excited about our performance and confidence in Wakeix representing a potential $1,000,000,000 plus opportunity in narcolepsy alone, and we're well on our way. I would like to now turn the call over to our Chief Medical and Scientific Officer, Kumar Badur, to discuss the advancements in our clinical development programs. Kumar?

Speaker 4

Thank you, Jeff. Good morning, everyone, and thank you for joining us today. We continue to make great progress in advancing our pipeline programs, several of which are in late stage development. As just mentioned, we now have 13 different development programs ranging from preclinical to registrational studies across 8 different assets and under 3 distinct franchises focused on rare neuro indications with high unmet medical need. Our full clinical development pipeline is shown on Slide 6.

Speaker 4

It is important to note that we currently have 3 ongoing Phase 3 registrational studies that are actively recruiting patients for Starting with our sleepwake franchise, the pitalophene's high dose of Starting with our SleepFX franchise, the pitaloscent high dose or pitaloscent HD program. It is an enhanced formulation of pitaloscent designed to deliver an optimized PK profile along with a higher dose, ZR coating and target unique symptoms. We conducted a pilot PK study with 4 different prototype formulations in a 5 way crossover study, comparing the 4 prototype formulations with Vakix as a reference formulation at a dose strength of 35.6 milligrams, the highest label dose for VACIDS. Based on the pilot PK data, we are pleased to advance this program forward. The preliminary data from the prototype formulation showed a meaningful differentiation with at least approximately 20% increase in relative bioavailability and a decrease in the variability compared to Matrix.

Speaker 4

Alongside further work on formulation optimization, we will progress this program and study up to 2x the current highest labeled dose of Matrix, where we expect to demonstrate a further increase in relative bioavailability and decrease in variability in the PK profile. In addition, the CR coating is designed to address the predisposition to GI tolerability issues in patients with narcolepsy and enable to start at the beginning of the therapeutic dose range. Therefore, an optimized PK profile along with a higher dose, GR coating and targeting unique symptoms such as fatigue in narcolepsy, is expected to provide a differentiated label and product profile. We will pursue an abbreviated clinical development program based on the leading edge work, including establishing safety margins for pfetolacin up to 180 milligrams in a repeat dose study and qualitative research study on fatigue in narcolepsy that were completed over the past couple of years to support the PDUFA study. We are targeting a PDUFA date in 2028.

Speaker 4

Provision patents have been submitted with the potential for patent protection until 2,044. Moving on to pitologence gastros resistant or GR program. We are on track to initiate the dosing optimization study in the Q4 of this year and a pivotal bioequivalence study in the Q1 of 2025 with Udupha in 2026. For the idiopathic hyposomia, or IH program, we are on track to submit an sNDA in the Q4 of this year. The submission will be based on the totality of the data generated from the INTEUNE study, including data from the ongoing long term extension study, which strongly supports mitalosan's efficacy in patients with IH.

Speaker 4

We have also identified other supporting information that will be included in the sNDA, including real world evidence from pitonasent use in idiopathic hypersomnia in Europe to further strengthen our submission. We are optimistic and remain committed in bringing a new treatment option to patients living with IH. In our neurobehavioral franchise, we remain on track to report top line data from the Phase III RECONNECT registration trial of VY-two in Fraizer Lec syndrome in mid-twenty 25. In the rare epilepsy side chest, patient enrollment continues in the EPX-one hundred Phase 3 ARGUS trial for Douay syndrome with the top line data expected in 2026. We are also preparing to initiate a Phase 3 study in LGS, another rare and severe developmental epileptic encephalopathy with high unmet medical need later this year.

Speaker 4

In summary, we have made significant progress in advancing our late stage pipeline across 3 distinct franchises. If successful, these programs could result in at least one new product or indication launch each year over the next 5 years, along with the potential to help hundreds of thousands of patients across all the rare neurological disorders we are investigating. On behalf of Harmony, I would like to thank all the patients and their families who are participating in our clinical trials as well as the clinical investigators and site personnel for their efforts and commitment in helping us to advance our development programs. I'll now turn the call over to our CFO, Sandeep Kapadia for an update on our financial performance. Sandeep?

Speaker 5

Thank you, Kumar, and good morning, everyone. This morning, we issued our 2nd quarter earnings release and filed our 10 Q, where you'll find the details of our Q2 2024 financial and operating results. Our financial performance is also shown on Slides 10 through 13. We delivered another quarter of solid financial performance with continued double digit top line growth, profitability and strong cash generation. Our financial performance and profile positions us well to continue advancing our growth strategy for the remainder of the year and beyond.

Speaker 5

We reported net revenues of 172,800,000 dollars compared to $134,200,000 in the prior year quarter, representing a growth of 29%. Performance in the Q2 reflects the continued strong underlying demand for Waking. We also reported growth in income and margin. Non GAAP adjusted net income for the Q2 of 2024 was $60,600,000 or $1.05 per diluted share compared to $45,900,000 or $0.76 per diluted share in the prior year quarter. We believe non GAAP adjusted net income better reflects the underlying business performance.

Speaker 5

Please see our press release for a reconciliation of GAAP to non GAAP results. With respect to expenses during the Q2 of 2024, we incurred 2 one time charges related to business development transactions in the quarter, which impacted the R and D expense line. We incurred a $25,500,000 charge related to the upfront licensing fee paid as part of the 2024 Bioverge sublicensing agreement for TTM1116

Speaker 6

and a $17,100,000

Speaker 5

IP and D charge related to the acquisition of Epigenics. The IP R and D charge related to Epigenics reflects the upfront payment of $35,000,000 offset by assets acquired in the transactions primarily composed of a deferred tax of approximately 18,000,000 dollars We structured both transactions with low upfront and success driven milestones. This allows us to efficiently use shareholder capital and focus future investments on advancing the development program and reaching value inflection points. We ended the 2nd quarter with $434,100,000 of cash, cash equivalents and investments on the balance sheet. The balance reflects continued strong cash generation, which provide us the financial flexibility to execute on business development and to opportunistically return capital to shareholders

Speaker 2

via our share repurchase program.

Speaker 5

Looking ahead, we continue to expect quarter over quarter growth for the balance of the year. We do expect an impact of summer seasonality we typically experience in the Q3. We are once again reiterating our net revenue guidance for 2024 of $700,000,000 to $720,000,000 highlighting our progress towards the $1,000,000,000 plus opportunity in narcolepsy alone. And with that, I'd like to turn the call back to Jeff for his closing remarks.

Speaker 3

Jeff? Thank you, Sandeep. In closing, I am very proud of the accomplishments that were made by the Harmony team during Q2, including significant progress and continued advancement of the ptolecen HD development program toward an expected PDUFA date in 2028. This along with the USPTO's final decision of holding the validity of the Wicked's patent after 2 failed attempts to challenge the patent with IP out to 2,030 puts us in a solid position to extend the pittolacin franchise out to the mid-2040s. Continued strong revenue generation for Wakeix with 29% growth year on year the approval and launch of the pediatric narcolepsy indication for WAYKX advancement of our Phase 3 clinical trials for ZYN-two in fragile X syndrome, EPX-one hundred in Dravet syndrome and pateloscent in Prader Willi syndrome along with a 4th Phase 3 trial of EPX-one hundred on track to initiate later this year in Lennox Gastaut syndrome.

Speaker 3

And 2 business development deals, including the in licensing of the Orexin 2 agonist TPM1116 with our partner Bio Progyz and the acquisition of Epigenix Therapeutics that brought in EPX-one hundred and established an exciting rare epilepsy franchise for Harmony. We remain focused on execution, driven in the advancement of our late stage pipeline, strategic and in our approach to further build out our pipeline and committed to creating durable long term value for our shareholders, while bringing innovative treatments to market to help even more patients living with rare neurological diseases and unmet medical needs. This concludes our planned remarks for this morning. Thank you for joining our call. And I will now turn the call back over to the operator to facilitate the Q and A session.

Speaker 3

Operator, can you please open the call

Operator

We'll take our first question from Francois Brisebois with Oppenheimer. Please go ahead.

Speaker 6

Hey guys, thanks for the questions and congrats on the quarter. In terms of seasonality, you talked about the summer, the Q3 months to be kind of similar to what we've seen in the past. I think last year, the patient ad average is actually very solid and strong and kind of kept going in the Q3. In the past, we have seen some drop. So is it something that they could be downward from the Q2?

Speaker 6

Or just help us understand a little bit more what you mean by saying that it's normal seasonality that you've kind of seen in terms of patient adds in the

Speaker 3

past years? Good morning, Frank, and thanks for the question. I'll turn it over to Jeff Zierks to respond.

Speaker 2

Sure. Yes, so Frank, when we talk about typical summer seasonality, it really relates to fewer patient visits in the lower foot traffic And that's more of a reflection on new patients versus existing patients. So we do anticipate typically a little bit lower in terms of the new patient starts that happens with most chronically managed medication. Most patients don't schedule their medication visits during the summer when they're on vacation and holiday. But we do anticipate continued growth as you've seen in the last 4, 5 years of our commercialization.

Speaker 2

We are obviously reiterating our guidance at approximately 7,000 average patients by the end of the year. And obviously with the addition of the pediatric narcolepsy indication, that's going to help us support future growth as we continue to tap into this opportunity as the market allows around the typical seasonal dynamics.

Speaker 6

That's helpful. And then on that note, you talked about it's about 4,000 patients on the pediatric side. Do you expect penetration in that in the pediatric population to be better or more difficult than the adult penetration?

Speaker 2

So Frank, what I would say is that what we're seeing within the pediatric market is I would expect the pediatric patients to be added over a couple of years versus the bolus of patients, right? This is a brand new audience for us, although there are Wake X prescribers with knowledge of the product and its profile. We have to go out and look at educating not only patients, but more importantly, the parents and the caregivers about the profile. So a little bit different than the adult population when we launched where there were sort of a bolus of patients looking for a new option. We're going to look to tap into this opportunity.

Speaker 2

I would anticipate probably a very similar patient penetration over time. But we're going to be looking to add these patients every single quarter as opposed to a large bolus that you anticipate in the Q3 or Q4 this year.

Speaker 3

Yes. And Frank, I would just add, as the first and only non scheduled product approved for patients with narcolepsy, I think Waygigs is a strong product offering for pediatric narcolepsy patients.

Speaker 6

Thank you.

Speaker 7

Thanks, Frank.

Operator

Thank you. Our next question will come from Charles Duncan with Cantor Fitzgerald. Please go ahead.

Speaker 8

Good morning, Jeff and team. Congrats on a great quarter and appreciate taking the questions. I actually had a follow-up to that last question regarding pediatric patient population. I'm wondering when you consider the prescriber base of the 4 ks ox oxbate patient prescribers versus the 5 ks non oxbate registered prescribers, where do you think the pediatric patient population exists more? And then secondarily, in addition to penetration, what do you think about persistence?

Speaker 8

It would seem to me that persistence could be even greater in the pediatric patient population.

Speaker 3

Good morning, Charles. Thank you for your question. Jeff, thoughts on where the patients are coming from?

Speaker 2

Sure. So Charles, we know there are about 1100 care professionals that manage that approximately 4,000 diagnosed pediatric narcolepsy patients. It probably skews a little more heavily to the oxybate REMS enrolled healthcare professionals because as you know, this is a very difficult lifelong neurologic disorder to treat and ultimately these patients end up in some of those larger sleep centers. But the great news is of those 1100 doctors that a good amount of those were already in our existing call plan. They already have familiarity with Wakeix.

Speaker 2

So a lot of that is simply just getting in touch with the parents, caregivers and patients and bringing them in the office. And I think, again, it's very early, but I would probably assume that we've seen very good persistency rates with Wakeix in adult. So I would assume that the pediatric population may have the potential for equivalent or better persistence. As you know, Wakeix, as Jeff shared, is a very ideally suited product profile for pediatric patients. It's a once daily oral tablet you take in the morning upon awakening.

Speaker 2

So you don't have to worry about patients having to maybe go to the nurse during the day at school or have to schedule med visits for parents to drop off medicine and being a non scheduled treatment option, certainly that profile really appeals to the doctors, but also the parents of these individuals.

Speaker 8

Excellent. Can I ask one quick pipeline question of Kumar and that is regarding the IH, sNDA filing this year? Are you waiting for any additional, call it, clinical data or experimental results to enable that filing? And perhaps can you describe a little more the real world use that you're thinking about including it? And finally, would you anticipate that to be a relatively quick turnaround, so maybe enabling an approval and launch by second half of next year?

Speaker 4

Hey, good morning, Charles. Thanks for the question. First of all, we are on track to submit the sNDA by the end of this year. In terms of the evidence, as we have discussed in the past, the totality of the data from the INTUNE study, the open label part, randomized withdrawal period and also the long term extension study chart, now it's almost close to a year since the study was completed. We still have about twothree of the patients who entered into the long term extension study still participating in the study.

Speaker 4

Almost all of them have completed 12 months, about 1 third of them have completed 18 months and some of them are approaching for 2 years. So this speaks to the persistence of efficacy and persistence on treatment and also the benign safety profile. In terms of the additional data, we are leveraging some real world evidence data from ARO, where acetolacent was prescribed in patients with idiopathic hyperphormia, and we'll be leveraging this data to make a stronger submission. But at the end of the day, Charles, we strongly believe in the unique benefit risk proposition pfetolacent offers in patients with idiopathic hyperphormia, where the currently available treatment scheduled 3 controlled substance or off label of controlled substance versus pidonisant, which has a profile of a non scheduled drug with a very simple dosing regimen of taking once a day in the morning.

Speaker 8

Persistence information, very helpful. Thanks for taking the questions.

Operator

Thank you. Our next question will come from Ami Fadia with Needham. Please go ahead.

Speaker 9

Hi, good morning. Congratulations on all the progress across the pipeline. My first question is for Kumar regarding the pitotasan high dose formulation. Can you help us better understand how the increased exposure rate would translate into higher efficacy and maybe more from a mechanistic rationale and maybe the occupancy and sort of how much what is sort of the unmet need there and how do you see a patient benefit during the course of the day with a higher dose formulation?

Speaker 4

Good morning, Ami. Thank you for the question. Yes, first of all, Ami, we are really excited with the data that we saw with vidonisant high dose formulation. We saw both an increase in relative bioavailability and also decrease in interindividual variability. And also as we had discussed earlier in the press release, we will be studying up to 2 times the highest multiple dose of AKCE.

Speaker 4

We have a body of evidence, Ami, to show a dose response. We are increasing the dose resulting in increased FX size both daytime sleepiness and also some of the symptoms that we plan to target with pitollisent HD program, like fatigue in the higher dose, the gastro resistant formulation, which is designed to quite a slightly prevalent SCI system in patients with narcole SP, the ability to start at the therapeutic low frames and finally targeting the symptom for which there are no approved treatments offers a very unique product profile for our patients, and this product profile was very well received when Jeff Durst and his team did market research. Jeff, do you want to add anything?

Speaker 2

Sure. So, Amit, just from a commercial perspective, we did do some preliminary market research across about 100 narcolepsy patients, 25 sleep specialists and healthcare professionals and 7 pharmacy directors of payers, just to get some feedback with the initial target product profile. And I think as Kumar stated, looking across those 3 audiences, what was coming out of the research was that this is a very meaningfully differentiated product profile and one that looks to be clinically superior than Wakeix simply because the biggest unmet need that's in the marketplace is enhanced efficacy. About 75% of patients that are on treatment still report residual symptoms that impact their daily life. And so we know in a polypharmacy market, physicians and patients are looking for enhanced efficacy.

Speaker 2

Then the other second unmet need was really the untreated fatigue, which no product currently is approved for right now. And data suggests that up to 60% of narcolepsy patients also have untreated fatigue, which is very distinct and different from excessive daytime sleepiness. And then lastly, what we've seen in the literature as well as in research is more than 90% of people living with narcolepsy have GI disturbances, mostly attributed to their pathophysiology of their disease. But up to 20% of them also experience GI issues such as nausea on their medication. So the combination of this profile addressing enhanced efficacy, untreated fatigue and the GI symptom and with the gas resistant coating really seems to present a very clinically superior product, one that payers are going to be broadly covering and one that physicians really see as a very attractive treatment option for the vast majority of their patients.

Speaker 9

Great. Thank you. My second question is for Sandeep. With all of these different programs underway, there is obviously going to be a fair amount of investment from the R and D front as these assets progress. Where is business development in terms of the company's priorities?

Speaker 9

And what type of assets do you think would make sense to bring on? Would it be later stage assets as opposed to in market assets I'm sorry, early stage assets as opposed to in market assets, if you can give us some color there? Thank you.

Speaker 5

Sure. Ami, thanks for the question. I mean business development continues, as Jeff mentioned, as a priority for the company. We've done several transactions as you saw from the last year or so. We've done 3 transactions.

Speaker 5

And Steve, we've done them in a financial disciplined manner. We've looked at them at all as low upfront success driven milestones overall. And the filters for us continue to be rare in CNS, looking at things that can help leverage a lot of capabilities that we've already built as a company. And as we have more programs in house, we're building better and better capabilities that we can leverage both on the clinical side as well as commercial. Jeff, any thoughts further?

Speaker 3

Yes. No. Good morning, Ami. Excuse me. I would just add that I think that the strategy that we've taken thus far in regards to business development with the strategic focus in orphan neuro, how we build out sort of the 3 franchises that we have now with our main franchise in sleep wake, the neurobehavioral franchise and the rare epilepsy franchise we bought in.

Speaker 3

I mean, we see that strategy and opportunities in a similar vein going forward. And where we are now with regards to the 3 CNS franchises and doing it in a thoughtful and a prudent manner has set us up each of those with potential peak sales opportunities of $1,000,000,000 to $2,000,000,000 We can potentially add to each of those franchises or if we see an opportunity sort of in an adjacent area in neuro or neuropsych disorders, then we would contemplate that as well. We like our profile. We like the way we've approached it thus far, and we continue to take a similar approach going forward.

Speaker 9

Got it. Thank you so much.

Speaker 3

Thanks, Ami.

Operator

Thank you. Our next question will come from David Amsellem with Piper Sandler. Please go ahead.

Speaker 6

Thanks. Just a couple. So first on the high dose formulation, can you talk through the dosing in contrast to both the legacy formulation and GR? And what I'm wondering in it could cross into controlled substance territory in terms of scheduling? And what kind of are you going to do the full suite of human abuse liability work there?

Speaker 6

So that's number 1. And then number 2, might have missed this earlier, but you talked more about the doctors who are not enrolled in the oxybate REMS. You talk about your penetration there and what your expectation is over time in terms of penetration into that portion of the physician audience? Thank you.

Speaker 3

Yes. Good morning, David. Thanks for your questions. Let me address part of the first one, then I'll turn it over to Shikumar and Jeff Durf. With regards to the potential for changing the abuse potential, Tepulcine HD, David, This is TETULASIN.

Speaker 3

So in terms of mechanistically, I mean, the short answer is no. The higher dose does not change the mechanism with regards to the lack of abuse potential or abuse liability. So the program will not require further abuse liability studies. And then in terms of the dosing and with regards to pittolacin GR, that is based on the demonstration of bioequivalence at equivalent doses to Wakeix within the current labeled range of 17.8 to 35.6. I'll turn it over to Kumar to comment on the plan with regards to the opportunity in the pepulcine HD program and what the thinking is there.

Speaker 4

Sure. Thank you, Jeff. Good morning, Dave. Thanks for the question. Yes, there were like several positive questions, so let me address one after the other.

Speaker 4

Starting with the dosing regimen. Dave, the dosing regimen here will be different compared to the legacy PAMEX program, and we will provide those details at a later point in time in terms of the dosage strength that we'll be pursuing. But as we said earlier, we'll be studying up to 2x the highest weighting we're able to do. And the second question was around safety and the high the safety profile. We have studied already as part of the leading edge work that we did in preparation for the pidolacent HD program.

Speaker 4

We did a multiple ascending dose study up to 180 milligrams of pitollars HD dose study, and we established safety margin. The safety profile is very similar to the safety profile of VACIT, including the impact on cardiovascular system. There was no QTP impact even at 180 milligram repeat dose. And in terms of Abutilis, as just mentioned, EndoV is just not a comfort because multiple studies in the preclinical arena have not shown any release of dopamine in nucleus action plans. That is the one that usually results in obese potential, and we haven't seen that.

Speaker 4

And few one of these potential studies were done up to 6x times of development, and we did not see anything. In fact, vedolifent was very similar to placebo. One other question for Jeff. Yes.

Speaker 3

And the second part of

Speaker 2

Sure. So David, I believe you're inquiring about the penetration within the non oxybate REMS enrolled healthcare professionals. And so within that audience, there's about 5,000 of those healthcare professionals. And what we saw in the Q2 that we're approaching about 40% penetration within that audience. It's been a regular rhythm that we've been able to tap in and see growth within the segment.

Speaker 2

With respect to a goal for penetration, I don't necessarily have a goal per se in mind, but I do believe there is still ample room to grow in this area. We know that all 5,000 of these healthcare professionals have at least a couple of narcolepsy patients under their care. And our representatives are out educating the entire 5,000 networks. So I would say we continue to tap in. We've seen growth from 30% to 33% to north of 35%.

Speaker 2

We're now approaching 40%. So I think there's a regular rhythm of continuing to add to this space and we're anticipating continued growth in this segment. And I do believe that there's ample room to grow for unique prescribers. And then the 2nd phase of that, David, is that they start their first patient on Wakeix. The next phase of growth in this audience is growing the depth of their prescribing.

Speaker 2

And we are starting to see that as well. So it's a very unique audience insulated from the oxibates both branded and generic, certainly as a

Speaker 3

Thank you.

Operator

Thank you. Our next question will come from Gregg Juvanovich with Mizuho Securities. Please go ahead.

Speaker 7

Good morning. Thanks for taking my questions and congratulations also from me on the progress in the quarter. My first question is on the commercial business in Wakeix, and I might have missed this detail before. But as we think about the second half in terms of net patient adds, I think that historically we've seen over the past several years net patient adds for the second half around 600 to even 700. And I think based on what I had heard earlier from Jeff Dirks that you had planned to end the year at 7,000.

Speaker 7

I just wanted to revisit what the second half implies if you ended at 65.50 I think by my math and again if I have my math correct that only implies 450 in additional net patient adds for the balance of the second half. So if you could just provide some commentary around what our expectations should be, for the second half on net patient adds and appreciating that the revenue guidance has remained the same? And then my second question just on the HD formulation, knowing that you're going to be testing higher doses to improve on efficacy. I'm just wondering what the expectation on safety should be. I realize you've got a GR formulation, but are you anticipating that with higher doses that you're going to be evaluating versus legacy Wake X product that the side effect profile relatively will be the same or perhaps even less than legacy Wakeix?

Speaker 7

Any comments around what you're anticipating to see on safety relative to Wakeix with HD formulation would be appreciated. Thanks so much.

Speaker 3

Yes. Thanks, Greg, for your questions. First one over to Jeff Dursch on the commercial side.

Speaker 2

Sure. So Greg, with respect to thinking about full year 2024 and patient adds, so yes, we did add about 250 average patients sequentially from the Q1 and the second quarter and reported approximately 6,550 average patients. We are reiterating our guidance of approximately 7,000 at the end of the year. So your math is correct. And I think it's important that, yes, historically, when you're looking at year 2, year 3 and even year 4, we're now in year 5 of our As we shared a little bit earlier, we As we shared a little bit earlier, we do expect the typical summer seasonality that impacts new patient starts.

Speaker 2

You tend to have some patients who are chronically managed scheduling their appointments in the Q4 for med management. So we do anticipate strong refill behavior in the Q4. Typically patients like to fill their new and refill medicines before the end of the year, insurance resets, insurance changes next year. We're seeing good underlying business fundamentals, right? We recently added the pediatric narcolepsy indication approval that ultimately helps support future growth and we'll continue to tap into that diagnosed patient opportunity as those seasonal market dynamics allow each year.

Speaker 2

But we're continued as Sandeep alluded earlier, we're confident in continued growth for the balance of the year and quarter over quarter growth. I think if you're looking at where we anticipate ending the year, our guidance is about 7,000 should kind of help you think about the 3rd Q4 moving forward.

Speaker 3

Yes. And Greg, I would say in terms of the overall the benefit risk profile with regards to the TULSIN HD and our expectation, based on what we've previously seen on dose response and other data in the pivotal program, we expect that same profile to be maintained with regards to the opportunity for improved efficacy with no change in overall safety tolerability. And Kumar, any added color on that?

Speaker 4

I think just you covered everything. Hey, good morning, Craig. The only other thing that I would like to add is, Craig, as I mentioned earlier, we plan to accelerate this program with the PDUFA date in 2028 and we did some leading edge work where we looked at higher dose of pfetolacin. About 18 months ago, we started this study to get multiple doses of pfetolacin and studied up to 118 milligrams in the Rigbydose study. And the safety and tolerability profile were very similar to the highest labeled dose of VACAV, which is 35.6 milligrams.

Speaker 4

So we did not see any change in the safety and tolerability profile. And you mentioned about the gastrointestinal coating. Gastro resistant Coating, if anything, should actually result in a more positive patient experience.

Operator

Thank you. Our next question will come from David Wong with Citigroup. Please go

Speaker 10

ahead. Hi there. Good morning and thanks for taking my questions. So, the first one, I just want to ask about your level of confidence here in meeting the projected PDUFA date of 2026 and 2028 for the TOLASTA and GR and HD formulations respectively? And what are the key gating CPM11 16 molecule, which you're taking forward to IND filing, are there any features there which you believe could differentiate from other orexin agonists that are currently in development?

Speaker 10

And how do you think about developing for various indications, such as narcolepsy versus IH? Thank you.

Speaker 3

Yes. David, good morning. Thanks for your question. With regards to our confidence in the projected PDUFA dates for tatolisin GR and HD programs. I think we are we're confident in terms of the development plan that's laid out and our ability to hit those things.

Speaker 3

I can have Kumar provide further color on that and what some of the key major milestones are

Speaker 1

towards that. Kumar? Hey, good morning, Greg. Thanks for

Speaker 4

the question. Regarding the gastoresistant formulation, as we disclosed earlier during the call, we are on track to start the dosing optimization study in the Q4 of this and we will start the pivotal bioequivalent study in the Q1 of 2019. And we are on track for PDUFA in 2026. We are confident about it. In terms of the HD formulation, we just disclosed the initial PK data from the pilot study.

Speaker 4

And I also mentioned earlier to some of the leading edge work that we have already done to accelerate this program, like establishing safety margins. We conducted a qualitative research study in patients with narcolepsy who have fatigue, identify the right instrument to study fatigue in this patient population. We anticipate this to be in the next stage of the clinical development in 2025, and we will provide more color to this as we solidify some of our plans. Regarding your last question about TTM1116, our Oracin receptor agonist, some of the differentiating features, David, are I mean, first of all, this belongs to a novel chemical space. It has a different chemical scaffold and it's different than any other orexin receptor agonist that we know of.

Speaker 4

And what we have seen in our preclinical experiment is this is the most potent orexin 2 receptor agonist based on the information that is available in the public domain on various orexin information on other compounds, you may have noticed that typically NT2 requires a higher dose than NT1, IS requires a higher dose than NT2. So from that perspective, in terms of avoiding the off target side effects that give us some And also the preclinical safety data that we have seen is actually very encouraging and that makes us believe that CTMP116 could be the potential best in class compound when it comes to orexin receptor agonist.

Operator

You. Our next question will come from Corrine Johnson with Goldman Sachs. Please go ahead.

Speaker 11

Hey, good morning. Maybe from adjuster, you've talked about the $1,000,000,000 target for sales. I guess, maybe you can just talk a little bit more about the path from here where we are today to there, particularly with respect to the patient growth you need to see to get that target? And then on maybe like a little bit more just clarification, can you just provide some color around growth to that through the first half of this year? I think sales are relatively flat versus second half twenty twenty three, but obviously you took price and patients have continued to grow.

Speaker 11

So curious what you're seeing there and how we should think about gross to net for the balance of the year? Thanks.

Speaker 3

Yes, sure, Corinne. Good morning. Jeff?

Speaker 2

Yes, so great question, Corinne. So past to $1,000,000,000 I mean based on our net average price per patient, achieving $1,000,000,000 basically is looking at getting north of about 9,000 average patients on product. We just finished the quarter and reported approximately 6,550. So our goal to achieve $1,000,000,000 is simply looking at adding another 2,500 average patients between now mid-twenty 24 and mid-two thousand and thirty. So over the next 6 years and I think obviously based upon our 4 years of history and what we believe in continued growth, the path to $1,000,000,000 is very clear.

Speaker 2

We obviously have a very good analog in the oxibates, which was able to achieve $1,000,000,000 on its path with a much smaller ability to tap into only about 4,000 healthcare professionals. It didn't have obviously the access to the full diagnosed patient opportunity. So we believe accessing 9,000 healthcare professionals with a goal of having to achieve another 2,500 average patients, $1,000,000,000 plus opportunity. And I think we're very this as a $1,000,000,000 plus opportunity. And I think we're very excited about the ability to enhance the pittolison franchise by adding both GR and HD along that time period and really building out this franchise and being able to help thousands of patients living with narcolepsy.

Speaker 3

Sandeep, comments on gross to net?

Speaker 5

Sure. Yes. Thanks, Perrin, for the question. Gross to net generally, I would say, behave in line with what we've seen in the past. Typically it's lower in the Q1 of the year.

Speaker 5

And then as you go into the Q2 it tends to improve and that's what we've seen. Roughly, our average per patient is up about 7.5% last quarter. This quarter, we took price increase earlier this year. So I think generally it's in line with our expectations on how the evolution and sort of stabilizes and improves a bit in the second half of the year.

Speaker 11

Okay. Thank you.

Speaker 3

Thanks, Quinn.

Operator

Thank you. Our last question will come from Jason Gerberry with Bank of America.

Speaker 4

Please go ahead.

Speaker 6

Hey, Jeff and team. This is Bhavan Patel on for Jason Gerberry. The first question is that eFlag improves GI side effects that fotilizant and gastric resistant has the potential to address. So given rates were only 6% in Phase 3 and presumably mitigated by titration, is there a higher real world dropout rate with Waitix? And then I have a follow-up question, if I may.

Speaker 3

Sure. Thanks for the question. I think Kumar can address. I think it's the TULSEN GR, the design is it's really the predisposition. So it's not related to the tolerability profile or the weakness and the incidence of nausea.

Speaker 3

But as we said, patients with narcolepsy, the vast majority have GI symptoms related to underlying mechanism of disease. So a lot of them experience the potential for nausea, vomiting and abdominal discomfort. And they see that also with other common narcolepsy treatment. So the predisposition to what is likely sort of comorbid symptomatology on the GR feature can potentially reduce that potential. And then especially in the HD program as we go up on the dose, that GR feature could be beneficial in that regard.

Speaker 3

2 more additional thoughts?

Speaker 4

Yes, I think you covered it, Jeff. I mean the only other thing I may want to add is, look, with the GR formulation, apart from the gastro resistant positive attribute, not just in general for patients with narcolepsy. It also enables us to start at the therapeutic dose range. I mean, as you know, pretty much all the medications that are used by this patient requires some kind of titration, and this enables us to start at the beginning of the therapeutic toe frame so that the patients don't have to wait until they realize efficacy, the faster efficacy, better compliance and better patient experience overall.

Speaker 6

Thanks guys. And then my second question is related to your pipeline. On EPX-one hundred, the 5 HT2 mechanism is similar to UCB's commercial stage FINTEPLA and longboard development stage bexic casiran for which the Phase 3 study is expected to start by year end 2024. So I guess how can DPX-one hundred differentiate itself in the landscape? Is it efficacy or safety improvement that we're looking for in Dravet syndrome with the top line data in 2026?

Speaker 6

And maybe if you can help us understand where you see this fitting into the current treatment landscape? Thank you.

Speaker 4

Yes. That's a great question. Look, as we mentioned, the serotonergic mechanism of action in developmental epilepticencephalopathy is well established, right? And we also saw that with the Zebra Fish model, get clamsol hydroxide very well. And this model has a pretty good predictive ability when it comes to efficacy in developmental epileptic encephalopathies.

Speaker 4

The question about differentiation is a very good one. How do we differentiate? As you know, the drugs that are currently used in developmental epileptic and the law process like DS, Daimler, DLGS, they have significant limitation in terms of safety and tolerability. For example, Epidiolex has significant incidence of nausea, abdominal discomfort and diarrhea in up to 30 percent of patients. And patients also need to monitor liver function test before starting treatment and the regular intervals thereafter.

Speaker 4

For example, you mentioned about UCP's FINTEPLA. Our FINTEPLA has the REMS, at least to it and on top of it, the valvular disease and pulmonary arterial hypertension. What we have seen with EPS-one hundred, which by the way we are developing to the new chemical entity as requested by the FDA, the battery of non clinical tox studies did not show any concern about any cardiovascular issue or hepatic issues, and neither we did see anything I healthy volunteer studies as well anything of concern. So the differentiation really is safety and tolerability. And in our clinical trials, we haven't seen any dose limiting tolerability issues, any laboratory abnormalities.

Speaker 4

So we believe the efficacy will be somewhere in the range that will be meaningful to the patient. But from a safety profile, it will offer a distinct safety profile that would be sufficient.

Speaker 6

Thank you. At this time, I

Operator

show no further questions. I would like to turn the call back to Jeff Dano for any closing remarks.

Speaker 3

Thank you, Todd, and thanks to everyone for joining our call today and for your interest in Harmony. We look forward to our Investor Day on October 1 in New York City, when we'll have the opportunity to showcase and highlight the value of our late stage pipeline, as well as providing you updates later this year as we execute on our long term growth strategy. Thank you, and have a great day.

Operator

Thank you. This does conclude Harmonic Biosciences' 2nd quarter 2024 financial results conference call. You may now disconnect your line and have a wonderful day.

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Earnings Conference Call
Harmony Biosciences Q2 2024
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