Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) Q2 2023 Earnings Conference Call August 1, 2023 8:30 AM ET Company Participants Luis Sanay - Head, Investor Relations Dr. Jeffrey Dayno - President and CEO Jeffrey Dierks - Chief Commercial Officer Dr. Kumar Budur - Chief Medical Officer Sandip Kapadia - Chief Financial Officer Conference Call Participants Alex Sklar - Raymond James David Amsellem - Piper Sandler Francois Brisebois - Oppenheimer Graig Suvannavejh - Mizuho Securities Jason Gerberry - Bank of A ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39450 HARMONY BIOSCIENCES HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or othe ...

Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) Q1 2023 Earnings Conference Call May 2, 2023 8:30 AM ET Company Participants Luis Sanay - Head, IR Jeffrey Dayno - President and CEO Jeffrey Dierks - CCO Sandip Kapadia - CFO Conference Call Participants Charles Duncan - Cantor Fitzgerald Francois Brisebois - Oppenheimer David Amsellem - Piper Sandler Graig Suvannavejh - Mizuho Securities Ami Fadia - Needham Corinne Jenkins - Goldman Sachs Jason Gerberry - Bank of America Danielle Brill - Raymond James Operat ...

Our Corporate Growth Strategy Acquire New Assets WAKIX® Net Revenue Performance U.S. Covered Lives With Formulary Access >80% Average # of Patients on WAKIX ~5,100 Continued Growth in Depth & Breadth of Prescriber Base ~85% In-Person Access to HCPs 1. Includes New Drug Applications and supplemental New Drug Applications. 2. Trial conducted by Bioprojet and Bioprojetsubmitted regulatory package to EMA. Bioprojet received EMA approval on March 15, 2023. | --- | --- | --- | --- | --- | --- | --- | --- | |----- ...

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the quarter ended March 31, 2023, show total assets of $715.1 million, a significant increase in net income to $29.5 million from $21.5 million year-over-year, and positive cash flow from operations of $42.6 million, reflecting continued growth driven by WAKIX sales, a strong liquidity position, and detailed notes on key agreements and accounting policies [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of March 31, 2023, total assets were $715.1 million, an increase from $673.9 million at year-end 2022, primarily driven by an increase in cash and cash equivalents to $288.0 million, while total liabilities remained relatively stable at $272.1 million and total stockholders' equity grew to $443.0 million from $402.8 million, reflecting retained earnings from net income Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $418,087 | $400,285 | | Cash and cash equivalents | $287,962 | $243,784 | | Intangible assets, net | $154,992 | $160,953 | | **Total Assets** | **$715,092** | **$673,870** | | **Total Current Liabilities** | $85,363 | $78,884 | | Long-term debt, net | $185,063 | $189,647 | | **Total Liabilities** | **$272,051** | **$271,032** | | **Total Stockholders' Equity** | **$443,041** | **$402,838** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Unaudited%29) For the three months ended March 31, 2023, net product revenues grew **39.6%** year-over-year to $119.1 million, operating income increased to $40.4 million from $27.6 million in the prior-year period, and net income rose to $29.5 million, or $0.48 per diluted share, compared to $21.5 million, or $0.35 per diluted share, in Q1 2022, demonstrating strong profitability growth Q1 2023 vs Q1 2022 Performance (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Net product revenues | $119,126 | $85,313 | +39.6% | | Gross profit | $98,346 | $70,597 | +39.3% | | Operating income | $40,423 | $27,556 | +46.7% | | Net income | $29,485 | $21,485 | +37.2% | | Diluted EPS | $0.48 | $0.35 | +37.1% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) For the first quarter of 2023, the company generated **$42.6 million** in cash from operating activities, a significant increase from $28.9 million in the prior-year period, driven by higher net income, while cash used in investing activities was $1.8 million, a sharp decrease from $40.0 million in Q1 2022, which included a large milestone payment, and cash provided by financing activities was $3.4 million, primarily from the exercise of stock options Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,559 | $28,852 | | Net cash used in investing activities | $(1,790) | $(40,045) | | Net cash provided by financing activities | $3,409 | $1,383 | | **Net Increase (Decrease) in Cash** | **$44,178** | **$(9,810)** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The notes provide critical context to the financial statements, detailing the company's focus on rare neurological diseases, significant revenue concentration with three specialty pharmacies, terms of license agreements with Bioprojet including milestone and royalty obligations, specifics of the $200 million Blackstone credit facility, and details on stock-based compensation plans - The company's revenue is highly concentrated, with three customers (Accredo, CVS Caremark, and Pantherx) accounting for **100% of gross product revenues** in Q1 2023[28](index=28&type=chunk) - The company depends on a single source supplier for its product and active pharmaceutical ingredient, representing a concentration of risk[29](index=29&type=chunk) - Intangible assets related to WAKIX® approvals total **$215 million** in gross carrying amount, with a remaining net book value of **$155.0 million** as of March 31, 2023, and a remaining useful life of **6.5 years**[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) - The company has a senior secured term loan facility with Blackstone for an original principal of **$200 million**, with an outstanding balance of **$197.0 million** as of March 31, 2023, and an additional **$100 million** delayed draw term loan available until August 9, 2023[49](index=49&type=chunk)[52](index=52&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong Q1 2023 performance to the continued commercial success of WAKIX, with net revenue increasing **39.6%** year-over-year to $119.1 million, driven by a growing patient base of approximately 5,100, while the company is advancing its pipeline with a Phase 3 trial for pitolisant in Idiopathic Hypersomnia (IH) expecting topline data in Q4 2023, and ongoing development for Prader-Willi Syndrome (PWS) and Myotonic Dystrophy (DM), with operating expenses increasing due to expanded clinical development, sales and marketing activities, and higher personnel costs, maintaining a strong liquidity position with $393.2 million in cash, equivalents, and investments [Company Overview and Pipeline](index=29&type=section&id=Company%20Overview%20and%20Pipeline) Harmony is a commercial-stage pharmaceutical company focused on rare neurological diseases, with its primary product being WAKIX® (pitolisant), actively pursuing lifecycle management for pitolisant with a Phase 3 trial in Idiopathic Hypersomnia (IH) and a Phase 2 trial in Myotonic Dystrophy (DM), with topline data for both expected in Q4 2023, and advancing its program in Prader-Willi Syndrome (PWS) to a Phase 3 trial, additionally developing HBS-102, a MCHR1 antagonist, for potential treatment of PWS symptoms - The average number of patients on WAKIX for Q1 2023 was approximately **5,100**[98](index=98&type=chunk) - The company has secured formulary access for WAKIX for more than **80% of all insured lives** in the United States[98](index=98&type=chunk) - Key pipeline milestones expected in 2023 include topline data from the Phase 3 INTUNE study in Idiopathic Hypersomnia (IH) and the Phase 2 trial in Myotonic Dystrophy (DM) in **Q4 2023**[90](index=90&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Comparing Q1 2023 to Q1 2022, net product revenue rose by **$33.8 million (39.6%)** due to increased WAKIX patient numbers and price increases, while operating expenses grew by **$14.9 million**, driven by a **75.4%** increase in R&D for clinical trials (IH, PWS, DM) and HBS-102 development, a **28.4%** rise in S&M for commercialization efforts, and a **23.4%** increase in G&A from higher personnel and amortization costs - Net product revenue increased by **39.6%** in Q1 2023 compared to Q1 2022, driven by growth in the average number of patients on WAKIX from **4,300 to 5,100** and price increases[122](index=122&type=chunk) - Research and development expenses increased by **75.4%** year-over-year, primarily due to increased clinical development work for IH, PWS, and DM, and an IPR&D charge for HBS-102[124](index=124&type=chunk) - Sales and marketing expenses grew **28.4%** year-over-year due to increased patient engagement, marketing activities, and sales force expansion[125](index=125&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the company had a strong liquidity position with **$393.2 million** in cash, cash equivalents, restricted cash, and investments, with its primary funding sources being WAKIX sales and a **$200 million** senior secured term loan from Blackstone, of which **$197.0 million** was outstanding, and an additional **$100 million** delayed draw term loan available until August 2023, with management believing current capital is sufficient to fund operations for the next 12 months - The company holds **$393.2 million** in cash, cash equivalents, restricted cash, and investments as of March 31, 2023[129](index=129&type=chunk) - The company has a **$200 million** Initial Term Loan and access to a **$100 million** Delayed Draw Term Loan (DDTL) until August 9, 2023, under the Blackstone Credit Agreement[135](index=135&type=chunk) - Future potential payments include up to **$155.0 million** in milestones under the 2022 LCA with Bioprojet and significant development, regulatory, and sales milestones for HBS-102[138](index=138&type=chunk)[139](index=139&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk through its investment portfolio and its variable-rate debt under the Blackstone Credit Agreement, which is tied to LIBOR, though as of March 31, 2023, management states that a **10%** change in interest rates would not have a material impact on its financials, and exposure to foreign currency and inflation risk is currently considered not significant - The company's primary market risk is interest rate sensitivity on its investment portfolio and its **$197.0 million** in variable-rate debt tied to LIBOR[151](index=151&type=chunk)[152](index=152&type=chunk) - The company does not believe inflation had a material effect on its business for the three months ended March 31, 2023[155](index=155&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2023, to ensure timely and accurate reporting as required by the SEC, with no material changes to the internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2023[156](index=156&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[157](index=157&type=chunk) Part II. Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently involved in any material legal claims or actions that would have a material adverse effect on its financial condition or results of operations - As of the filing date, management believes there are no pending claims or actions that could have a material adverse effect on the company[160](index=160&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section refers investors to the detailed risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, with no new or materially changed risk factors presented in this quarterly report - The company directs investors to review the risk factors detailed in its most recent Annual Report on Form 10-K[161](index=161&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) On May 1, 2023, the company's Board of Directors appointed Dr. Kumar Budur as the new Chief Medical Officer, following the appointment of Dr. Jeffrey Dayno as President and Chief Executive Officer on April 24, 2023, with Dr. Budur previously serving as the company's SVP & Head of Clinical Development since March 2022 - Dr. Kumar Budur was appointed as the company's new Chief Medical Officer on May 1, 2023, following Dr. Jeffrey Dayno's appointment to President and CEO[165](index=165&type=chunk)

Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) Q4 2022 Earnings Conference Call February 21, 2023 8:30 AM ET Company Participants Luis Sanay - Head-Investor Relations Jeffrey Dierks - Chief Commercial Officer Jeffrey Dayno - Interm CEO & Chief Medical Officer Sandip Kapadia - Chief Financial Officer Conference Call Participants Francois Brisebois - Oppenheimer David Amsellem - Piper Sandler Chris Howerton - Jefferies Charles Duncan - Cantor Fitzgerald Corinne Jenkins - Goldman Sachs Ami Fadia - Needham Gr ...

Forward Looking Statements Our Three-Pillar Growth Strategy February 21, 2023 This presentation includes information related to market opportunity as well as cost and other estimates obtained from internal analyses and external sources. The internal analyses are based upon management's understanding of market and industry conditions and have not been verified by independent sources. Similarly, the externally sourced information has been obtained from sources the Company believes to be reliable, but the accu ...

Product Overview - WAKIX (pitolisant) is the first-and-only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance, addressing a significant unmet need for non-scheduled treatment options [30]. - WAKIX can be used as monotherapy or in combination with other narcolepsy treatments, providing flexibility for healthcare providers [30]. - WAKIX was launched in November 2019, with a dedicated sales team of over 80 members targeting approximately 9,500 healthcare providers (HCPs) in the narcolepsy market [32]. - WAKIX was approved for the treatment of excessive daytime sleepiness (EDS) in adult patients with narcolepsy in August 2019 and for cataplexy in October 2020 [156]. Market Opportunity - The U.S. narcolepsy market had an approximate net sales value of $2.3 billion in 2022, with expected growth driven by new therapies and increased diagnosis rates [25]. - Approximately 165,000 Americans are estimated to be affected by narcolepsy, with fewer than 50% diagnosed, highlighting the need for improved awareness and treatment options [25]. - The revenue from WAKIX will depend on the size of the addressable patient market, competition, pricing acceptance, and reimbursement capabilities [160]. - The market opportunity for WAKIX may be smaller than estimated, with assumptions based on current market size and pricing that could prove incorrect [167]. Clinical Trials and Development - The company initiated a Phase 3 trial for idiopathic hypersomnia (IH) in April 2022, with approximately 85% of targeted clinical trial sites activated [18]. - A Phase 2 proof-of-concept trial for pitolisant in Prader-Willi Syndrome (PWS) showed positive signals for improvement in excessive daytime sleepiness (EDS) [18]. - The company is pursuing new indications for pitolisant, including a Phase 3 trial for idiopathic hypersomnia (IH) initiated in April 2022, with 85% of clinical trial sites activated [42]. - The company anticipates topline results from a Phase 2 trial evaluating pitolisant for EDS, fatigue, and cognitive dysfunction in adult patients with DM1 in Q4 2023 [42]. - The company plans to advance its development program for patients with PWS into a Phase 3 trial following the analysis of Phase 2 trial results, with topline results anticipated in Q4 2023 [52][54]. Regulatory and Compliance - The FDA regulates the drug development process, requiring substantial time and financial resources for compliance [86]. - The FDA aims for a ten-month review period for standard NDAs for new molecular entities, which typically extends to twelve months due to preliminary review processes [91]. - The FDA may require a Risk Evaluation and Mitigation Strategy (REMS) to ensure that the benefits of a drug outweigh its risks, which can include restricted distribution methods and patient registries [92]. - The company must comply with various federal healthcare laws and regulations that restrict business practices in the pharmaceutical industry, impacting operations and marketing [125]. Financials and Revenue - For the year ended December 31, 2022, three customers accounted for 100% of gross product revenues, with Caremark LLC contributing 42% [70]. - The company paid an initial license fee of $150.0 million and milestone payments totaling $165.0 million to Bioprojet for the WAKIX product, with aggregate net sales in the U.S. reaching $500.0 million by March 2022 [72]. - The company entered into a new agreement (2022 LCA) with Bioprojet, paying an initial non-refundable licensing fee of $30.0 million and potential additional payments of up to $155.0 million based on development and sales milestones [74]. Competition and Market Challenges - The company faces competition from various pharmaceutical companies, with key factors for success including efficacy, safety, and pricing of its products [62][65]. - The company faces significant competition from larger pharmaceutical companies and generic drug manufacturers, which may hinder its market share and revenue potential [197][198]. - The commercial adoption of WAKIX will depend on market acceptance and the ability to obtain adequate coverage and reimbursement from third-party payors [157]. - The regulatory approval process for new indications is costly and unpredictable, impacting the company's ability to expand WAKIX's market [157]. Intellectual Property and Licensing - The company relies on license agreements with Bioprojet for core intellectual property related to pitolisant, and any loss of these rights would adversely affect commercialization efforts [168]. - The company’s patent portfolio includes three U.S. patents for WAKIX, with expiration dates ranging from March 2030 to September 2029 [78]. - The HBS-102 patent portfolio consists of three families, with key patents expected to expire between April 2031 and January 2029 [79]. Operational Risks - The company relies on third-party manufacturers for the production and distribution of WAKIX, ensuring compliance with extensive regulatory requirements [66][67]. - The company has experienced minor supply issues with third-party manufacturers prior to the approval of WAKIX, which could impact future product availability [191][193]. - The company relies heavily on third parties for clinical trials and manufacturing, which may lead to delays and increased costs if these parties do not meet their obligations [185][191][189]. Corporate Governance and Social Responsibility - The company is committed to corporate social responsibility, focusing on ethical business practices and community engagement [150]. - The company has established disaster recovery and business continuity plans, but these may prove inadequate in the event of a serious disaster, potentially leading to significant expenses and operational disruptions [210]. Employee and Management Considerations - The company has 200 full-time employees, with 107 dedicated to commercial functions and 44 to research and development [147]. - Future growth will impose significant responsibilities on management, including hiring and retaining qualified personnel [199][201]. - The company faces intense competition for hiring qualified personnel in operations, finance, scientific, and clinical roles, which may increase compensation costs and affect business operations [205].

Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) Q3 2022 Earnings Conference Call November 1, 2022 8:30 AM ET Company Participants Luis Sanay - Head-Investor Relations John Jacobs - President & Chief Executive Officer Jeffrey Dierks - Chief Commercial Officer Jeffrey Dayno - Chief Medical Officer Sandip Kapadia - Chief Financial Officer Conference Call Participants Francois Brisebois - Oppenheimer David Amsellem - Piper Sandler Charles Duncan - Cantor Fitzgerald Corinne Jenkins - Goldman Sachs Chris Howerto ...

Patient Access and Clinical Trials - As of September 30, 2022, the average number of patients on WAKIX was approximately 4,600, with over 80% of all insured lives in the U.S. having formulary access[103] - The company initiated a Phase 3 registrational trial for idiopathic hypersomnia (IH) and has activated over 70% of the targeted clinical trial sites[97] - The topline data from the Phase 2 proof-of-concept trial for Prader-Willi Syndrome (PWS) showed a positive signal on the primary outcome related to excessive daytime sleepiness (EDS)[97] - The COVID-19 pandemic has impacted the company's ability to gauge growth rates and may adversely affect future growth due to changes in patient access to healthcare[105] - The company has observed a shift of some patients from commercial insurance to free drug and patient assistance programs due to elevated unemployment rates[109] - The company continues to engage and educate healthcare professionals virtually, despite challenges in in-person interactions due to the pandemic[107] - The COVID-19 pandemic has caused disruptions in clinical trials and may continue to affect the company's operations and financial results[116] - The company has implemented remote approaches to clinical trials to maintain patient safety and trial continuity during the pandemic[112] Financial Performance - Net product revenue for Q3 2022 was $117.206 million, an increase from $80.732 million in Q3 2021, representing a growth of 45.2%[141] - Gross profit for the nine months ended September 30, 2022, was $252.951 million, compared to $176.526 million for the same period in 2021, reflecting a year-over-year increase of 43.2%[141] - Operating income for the nine months ended September 30, 2022, was $72.573 million, compared to $58.897 million for the same period in 2021, showing an increase of 23.2%[141] - Net income for Q3 2022 was $87.943 million, a significant recovery from a net loss of $9.620 million in Q3 2021[141] - Net product revenue increased by $36.5 million, or 45.2%, for the three months ended September 30, 2022, and increased by $95.3 million, or 44.5%, for the nine months ended September 30, 2022, compared to the same periods in 2021[142] Expenses and Investments - Research and development expenses for Q3 2022 were $40.548 million, significantly higher than $11.739 million in Q3 2021, indicating an increase of 245.5%[141] - Sales and marketing expenses rose to $20.467 million in Q3 2022 from $16.480 million in Q3 2021, marking a 24.0% increase[141] - General and administrative expenses increased to $21.331 million in Q3 2022, up from $16.856 million in Q3 2021, which is a 26.5% rise[141] - Research and development expenses increased by $28.8 million, or 245.4%, for the three months ended September 30, 2022, and increased by $37.9 million, or 165.3%, for the nine months ended September 30, 2022, primarily due to a $30 million licensing fee[144] - Sales and marketing expenses increased by $4.0 million, or 24.2%, for the three months ended September 30, 2022, and increased by $9.2 million, or 18.8%, for the nine months ended September 30, 2022, driven by patient engagement and marketing activities[145][146] - General and administrative expenses increased by $4.5 million, or 26.5%, for the three months ended September 30, 2022, and increased by $15.7 million, or 34.3%, for the nine months ended September 30, 2022, primarily due to stock compensation and intangible asset amortization[147] Cash Flow and Financial Position - As of September 30, 2022, the company had cash, cash equivalents, restricted cash, and investments totaling $316.8 million, with an accumulated deficit of $320.6 million[151] - Net cash provided by operating activities for the nine months ended September 30, 2022 was $117.8 million, compared to $61.0 million for the same period in 2021[161] - The company made a $40 million milestone payment in March 2022 upon WAKIX attaining $500 million in life-to-date aggregate net sales in the United States[160] - As of September 30, 2022, the company had $235.2 million in investments in money market funds, U.S. treasury notes, corporate bonds, and municipal obligations[172] - The company had $198.0 million in borrowings outstanding as of September 30, 2022, with an Initial Term Loan interest rate of LIBOR plus 6.50%[173] Market and Economic Conditions - The EMA's decision on Bioprojet's pediatric narcolepsy submission is expected in the first quarter of 2023, which could inform the company's strategy for FDA submission[96] - The Blackstone Credit Agreement includes a senior secured term loan facility of $200 million and a delayed draw term loan facility of up to $100 million, with a maturity date of August 9, 2026[155] - An immediate 10% change in market interest rates would not have a material impact on the fair market value of the company's investment portfolio or its financial position[172] - The company is not currently exposed to significant market risk related to foreign currency exchange rates, but may contract with foreign vendors in the future[174] - Inflation has not had a material effect on the company's business, financial condition, or results of operations for the three and nine months ended September 30, 2022, and 2021[175]