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spk05: 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 Bioscience's second quarter 2023 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 may be recorded. Lastly, if you should require operator assistance, please press star zero. I will now turn the call over to Louis Finney, head of investor relations. Please go ahead.
spk06: Louis Finney Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences' second quarter 2023 financial results and provide a business update. Before we start, I encourage everyone to go to the investor 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 this stage of our life cycle, we believe non-GAAP financial results better represent the underlying business performance. Our speakers on today's call are Dr. Jeffrey Dano, President and CEO, Jeffrey Dirks, Chief Commercial Officer, Dr. Kumar Badur, Chief Medical Officer, and Sandy Kapadia, Chief Financial Officer. Moving on to slide two. 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 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 details. I would now like to turn the call over to Dr. Jeffrey Dano. Jeff? Thank you, Louis, and thank you, everyone, for joining our conference call today and for your interest in Harmony. Before I comment on our strong second quarter performance, which is reflective of our focused execution and operational excellence, I want to highlight why Harmony continues to be a growth story and outline the key elements driving our growth. We continue to drive growth in our core business for WACICS and narcolepsy and, based on this, are confident that WACICS represents a $1 billion plus opportunity in adult narcolepsy alone. Our current life cycle management programs for Pitocin, notably our Phase III program in idiopathic hypersomnia, or IH, continue to demonstrate strong momentum, and if we are successful in IH and our other current life cycle management programs, these indications could generate up to an additional $1 billion opportunity. Our work with our partner BioPregé on new formulations of Pitocin is progressing with the goal to potentially extend the Pitocin franchise with new IP out beyond 2040. And with a profitable business and strong balance sheet, we are in a favorable position to bring in new assets through business development to build out a robust pipeline and portfolio of products. In fact, it is the ongoing confidence in our core business and our conviction in the long-term growth potential for Harmony that is the reason behind this morning's announcement that our Board of Directors authorize a $125 million share repurchase program. This program reflects our confidence in the strength of the company and our commitment to deploy capital to maximize shareholder value. Starting with our core business, our strong commercial performance is a result of the unique and meaningfully differentiated product profile of WCAG in the proven excellence of our commercial organization. For the second quarter of 2023, we reported WCAG's net revenue of $134.2 million representing an increase of 25% year over year, driven by the continued underlying demand for WCAG, tapping into a large market opportunity of approximately 80,000 diagnosed patients with narcolepsy in the U.S. The momentum we highlighted last quarter carried into this quarter, during which time we saw the highest top-line prescription demand since our first full quarter of launch in 2020, and the strongest quarter of new patient starts in our history. This is unique as it is not typical to see sustained growth in year four post-launch for an orphan rare product. With another strong quarter of growth behind us, we continue to be confident in Wakex being a $1 billion plus market opportunity in adult narcolepsy alone, and Jeff Dirks will provide further insights into the reasons we remain confident in the future of this opportunity. In addition to our strong commercial performance in Q2, We are also extremely pleased with the progress that we've made across all of our current pitocin life cycle management programs. Our clinical teams have been very busy advancing all three programs with key catalysts coming from each of them later this year. Notably, we are on track for top line data from our phase three registrational in tune study in adult patients with idiopathic hypersomnia in the fourth quarter. As a reminder, last quarter we announced completion of enrollment in this study nine months ahead of our base plan, reflective of the significant interest from patients and healthcare professionals in Pitocin as a potential treatment for IH. We are very excited about this opportunity, which, if successful, could represent the next new indication for WACICS. In follow-up to a positive end of Phase II meeting with the FDA to discuss our Prader-Willi syndrome, or PWS, development program, we plan to initiate a pivotal Phase III trial in patients with PWS six years of age and older in the fourth quarter. And we are on track for top-line data from our Phase II proof-of-concept signal detection study in type 1 myotonic dystrophy, also in Q4. Altogether, IH, PWS, and DM1 represent about 100,000 diagnosed patients in the U.S. So if successful, our current life cycle management programs could contribute up to an additional $1 billion of revenue to the WAKETS franchise. In addition to our current life cycle management programs for Pitocin, we are making progress on new formulations of Pitocin that we are co-developing with our partner, Bioprojet, with the goal to generate new IP and extend the Pitocin franchise out beyond 2040. Lastly, we've advanced our strategy in pediatric narcolepsy and plan on submitting a supplemental new drug application for a pediatric narcolepsy indication in the fourth quarter. And in addition, are actively pursuing pediatric exclusivity for WACICS. As you can see, we have made major progress across all of our development programs, and Dr. Kumar Bidur will provide you with more details on these later in the call. Another key component of our growth strategy is acquiring new assets through business development to expand our portfolio beyond WCAGS. To achieve this, we intend to leverage our strong financial position with approximately $430 million in cash, cash equivalents, and investment securities at the end of the second quarter to acquire additional assets across a range of development stages, including both early and late stage, with the potential to launch both during and after the WCAG lifecycle. Since taking on the CEO role at the beginning of the year, the team and I have been actively engaged in business development, evaluating a number of opportunities focused on rare orphan neurology assets, and or assets in other neurological diseases where we can leverage our existing expertise and infrastructure. This is a high priority for us, as it is a key component of our long-term growth strategy. While we are disciplined in our approach, ensuring not only a strategic fit, but also appropriate valuation, we are also working with a sense of urgency and understand the importance of having a robust portfolio in place. Overall, I am extremely proud of the outstanding progress that our team has made across every aspect of our business, which demonstrates that Harmony continues to be a growth story. I will now turn the call over to Jeffrey Dirks, our Chief Commercial Officer, to provide more details on our commercial performance. Jeff?
spk04: Thanks, Jeff. The second quarter was another strong quarter for WAKIX. With continued growth and momentum in our underlying business fundamentals, and top-line performance metrics that were the strongest we've seen since launch. Net sales for the second quarter were $134.2 million, which represents 25% growth from the same quarter prior year. The strong double-digit growth in net sales for Wacox in year four of our commercialization demonstrates the continued high interest and adoption of Wacox in the narcolepsy market. and reinforces our long-term belief that WACIX is a billion-dollar-plus opportunity in adult narcolepsy alone. I'd like to share a few key highlights from our performance in the second quarter on slides five and six. The average number of patients on WACIX in the second quarter increased approximately 350 patients sequentially to approximately 5,450 patients. This impressive growth in average patients in the second quarter was driven by a strong performance in top line demand and new patient starts. In the second quarter, we saw the highest top line prescription demand since our first full core of launch at the beginning of 2020. And we also had the highest number of new patient starts in our history. The growth in average patients on WCAG speaks to the continued product adoption and solid business fundamentals. Strong top line prescription demand, growth in new patient starts, along with continued patient refill behavior. We exited the second quarter with approximately 5,600 patients on WACICS, with strong momentum coming out of the second quarter. We believe this metric of exiting patients helps to provide additional context to our strong performance leading into the third quarter. Strong patient interest and continued prescriber adoption continue to be key drivers of the growth in the average number of patients on WACICS. The number of unique prescribers of WACIX increased again in the second quarter. And importantly, we continue to see the WACIX prescriber base expand beyond healthcare professionals enrolled in the OxyBate REMS program. As we've shared in previous earnings calls, the meaningfully differentiated product profile of WACIX and the unique feature of being the only FDA-approved treatment for EDS and cataplexy that is not scheduled as a controlled substance offers broad clinical utility. and appeals to our broader narcolepsy healthcare professional audience and patient base, which drives the continued growth in the depth and breadth of our prescribers. Across the nearly 9,000 narcolepsy-treating healthcare professional prescriber base, we continue to see meaningful penetration and growth. We see growth in the depth of prescribing among the approximately 4,000 healthcare professionals enrolled in the Oxibate REMS program, an expanded breadth of new prescribers, and the approximately 5,000 healthcare professionals not enrolled in the OxyBait REMS program. The availability of a generic OxyBait and the launch of a once-nightly OxyBait at the end of the second quarter has impacted the continued growth of WCAGS. We continue to see meaningful growth in prescribing and patients on WCAGS, along with strong payer coverage. Our ability to reach and educate the broad narcolepsy-treating healthcare professional universe and tap into the full diagnosed adult narcolepsy patient opportunity gives us confidence in continued growth and the long-term growth potential for WACICS. Recent market research conducted by Harmony supports our view of continued growth for WACICS. Research conducted in June of this year with approximately 70 healthcare professionals with and without experience with WACICS prescribing showed the following. 100% of the healthcare professionals surveyed with WACICS clinical experience stated they would prescribe the same or increase their prescribing of WAKIX in the next six months. Nearly 40% of those healthcare professionals surveyed who had not yet prescribed WAKIX to date indicated the intent to prescribe WAKIX in the next six months. And consistent with previous waves of research, one of the highest performing drivers and differentiators for WAKIX was the unique feature as the only non-scheduled treatment option. In summary, I continue to be excited by the strong commercial performance of WAKIX in adult narcolepsy. In the second quarter, we saw the highest top-line prescription demand since our first full quarter of launch in 2020, leading to the all-time high in new patient starts. Strong growth in the average number of patients on WAKIX. Continued expansion and strengthening of the WAKIX prescriber base beyond the Oxibate REMS healthcare professionals. and payer coverage remains strong even with the availability of newer versions of OxyBase. These are tremendous achievements, and I appreciate the dedication and impact of the entire commercial team and the passion they have for our business. This strong performance gives us confidence in the long-term growth potential for Wacus and reinforces our belief that Wacus is a billion-dollar-plus opportunity in adult narcolepsy. I would like to now turn the presentation over to Kumar Badur, our Chief Medical Officer, to provide an update on the clinical development and current lifecycle management programs for Harmony. Kumar?
spk00: Thank you, Jeff. Good day, everyone. Moving on to our clinical development pipeline to expand the clinical utility of pitholosan towards potential new indications in patient populations living with rare neurological diseases, as shown on slide number seven. Starting with our development program in IH, We were extremely pleased to complete enrollment in our Phase 3 registration trial in adult patients with IH, also known as the Intune Study, at an accelerated pace and nine months ahead of schedule. The strong interest we have seen, both from the patient community and clinical investigators, resulted in this accelerated timeline, and we are now on track for top-line results in the fourth quarter of this year. If this phase 3 trial is successful, it could represent the next new indication for wake-up in adult patients with IH. Pitolacent could offer a new mechanism of action to treat patients with IH as Pitolacent works through histamine to promote wakefulness. We view this as a significant market opportunity with approximately 40,000 patients diagnosed with IH. In addition, this opportunity could have significant synergies with our existing commercial footprint, as there is a significant overlap in the physicians who treat patients with narcolepsy and those who treat patients with IH. For Prader-Willi syndrome, we recently had a positive end-of-Phase II meeting with the FDA, where we discussed the results from the Phase II proof-of-concept trial and aligned on the Phase III trial in patients with PWS. We now plan to initiate a phase 3 trial in patients with PWS, ages 6 and older, in the fourth quarter of this year. Moving on to myotonic dystrophy type 1, or DM1, we are on track for top-line data from the phase 2 proof-of-conflict signal detection study in the fourth quarter of this year. In addition to our current lifecycle management program, progress on new formulations with our partner BioProJ with a goal to generate new IP and extend the pathologic franchise beyond 2040. We will provide an update later this year on the status of this program. Regarding pediatric narcolepsy, we are working with BioProJ towards the submission of a supplemental new drug application to FDA for an indication in pediatric narcolepsy, which we expect to find in the fourth quarter of this year. Regarding pediatric exclusivity, we have made progress with FDA in gaining alignment on the requirements for pediatric exclusivity for vacants. The phase 3 study in PWS planned to be initiated in the fourth quarter is part of the requirements. To conclude, we have made significant progress in advancing our clinical development programs with pitoloscience. further updates later this year as we enter a catalyst-rich second half of 2023 regarding our development programs as highlighted on slide number eight. All of our current LCM programs will reach an important milestone in the fourth quarter, and we look forward to sharing the news with you when that occurs. I would like to take this opportunity 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 clinical development programs for Ptolemaic. I will now turn the call over to our CFO, Sandeep Kapadia, for an update on our financial performance. Sandeep?
spk05: Thank you, Kumar, and good morning, everyone. This morning, we issued our second quarter press release and filed our 10-Q, where you'll find the details of our financial and operating results. Our financial performance is shown on slides 9, 10, and 11. We're pleased to report growth across several of our key metrics, including strong revenue growth, improved profitability, and continued cash generation. This quarter, we also have several important updates with respect to the strength of our balance sheet and the additional opportunities to drive value for shareholders. Our financial performance also gives us the confidence for the remainder of the year as we continue advancing our growth strategy. So let me take a moment to take you through the details of our financial results. For the second quarter of 2023, we reported net revenues of $134.2 million compared to $107 million in the prior year quarter, representing a growth of 25%. Performance in the quarter reflects the continued strong underlying demand for weight kicks. In the second quarter, specialty pharmacy buying patterns resulted in a lower trade inventory levels at the end of the quarter as compared to the beginning of the second quarter. In the second quarter of 2023, operating expenses were $62.3 million compared to $55 million in the prior year quarter. The higher operating expenses were primarily driven by our ongoing commercialization of Waitix and the advancement of our clinical development program. Operating income improved, with second quarter 2023 operating income of $46.9 million compared to $33.1 million in the prior year quarter. representing an increase of 42%. Non-GAAP-adjusted net income for the second quarter of 2023 was $45.9 million, or $0.76 per diluted share, compared to $34.7 million, or $0.57 per diluted share, in the prior year quarter, reflecting our strong revenue growth and prudent expense management. We believe non-GAAP-adjusted net income better reflects the underlying business performance please see our press release for a reconciliation of GAAP to non-GAAP results. During the second quarter of 2023, we ended the quarter with $429.6 million of cash, cash equivalents, and investment securities on the balance sheet. In addition, last week, we entered into a new $185 million term loan facility led by JPMorgan, which further reduces our cost of capital, ensures a strong balance sheet, and provides us with greater financial flexibility. We use the net proceeds from the term loan and existing cash balance to repay our existing debt of approximately $197 million in related fees and expenses. The new facility has a lower interest rate, reducing our annual interest expense by approximately $6 million. Financing is another step in the growth evolution of the company as we continue to optimize our balance sheet. Looking ahead for the remainder of the year, we expect continued quarter-over-quarter growth in revenues and average number of patients on WACICS. We also expect to continue to invest in R&D and SG&A as we advance our clinical development program and support the commercialization of WACICS. Overall, we remain confident in WayTix being a billion-plus opportunity in adult narcolepsy with the potential to contribute up to an additional billion if approved in idiopathic hypersomnia and other current lifecycle management programs. As you heard from Jeff, given our confidence in our core business and our conviction in the long-term growth potential of the company, This morning, we announced that the Board authorized a $125 million share repurchase program. Our strong balance sheet and cash generation allows us to opportunistically return capital to shareholders while still maintaining sufficient capital to advance our growth strategy. In conclusion, we're very pleased with our strong financial performance and remain well-positioned to continued growth. And with that, I'd like to turn the call back to Jeff for his closing remarks. Jeff?
spk06: Thank you, Sandeep, and thank you, Jeff and Kumar. In summary, Harmony continues to be a growth story, and we are making significant progress on advancing our growth strategy. We will remain focused on growing our core business and helping even more adult patients living with narcolepsy with WACICS. completing our phase three registrational trial in idiopathic hypersomnia and delivering top-line data in the fourth quarter, initiating our phase three pivotal trial in PWS in Q4, working with our partner BioPregé on new formulations to extend the Pitocin franchise to help even more patients living with rare neurological diseases, Delivering on our long-term growth strategy by acquiring new assets to build out a robust pipeline for which we are well positioned to execute on given our strong financial position. And strategically deploying capital to maximize shareholder value. This concludes our plan remarks for today. Thank you for joining our call. And I will now turn the call back over to the operator to facilitate the Q&A session. Operator, can you please open the call to questions?
spk05: Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star 2. We remind you to please pick up your handset and please limit yourself to one question and one follow-up question. We'll take our first question from Danielle Brill with Raymond James.
spk03: Hey guys, this is Alex from Virginia. Thanks for taking our question. I'm just wondering if we could dive a little bit more into the 2Q WCAG dynamics, juggling the numbers a bit. In a normal quarter, I think we would have expected a bit higher revenue than we saw considering the strong patient ads. So firstly, what was the impact on the lower inventory purchasing this quarter on a quantitative basis? And then wondering if you could share a little bit more color on the dynamics of potential impacts of gross to net compliance and whether what we're seeing is patients were added late in the quarter. Thanks so much.
spk06: Sure, Alex. Good morning, Alex. I'm Jeff. So I'll ask Jeff to comment on some of those two dynamics and also provide some color on that.
spk04: So, Alex, what I would say with respect to starting with patient medication behavior, compliance discontinuation rate, persistency, it was relatively consistent with what we've seen in the previous quarters. We've got really strong patient feedback in terms of their satisfaction on the product, and we continue to see a broadening of our prescriber base. When you asked a question about trade inventory, I'll turn that over to Sandeep to talk a little bit about that and the implications on revenue.
spk05: Yeah, sure. I mean, thanks, Jeff. Trade inventory, as I mentioned, was down about a week compared to the beginning of the second quarter. So that gives you an estimate of at least, you know, the impact that we've seen on the top line. But I think importantly, as Jeff mentioned, you know, we've seen good, strong underlying demand. It was one of the strongest quarters in terms of top-line demand. And what we've also seen, what I would also say is in the month of July, we've seen a partial recovery of that. So, again, consistent overall of what we would typically expect. And I think the question regarding gross to net, really nothing to report there, except we did see what we expected. Generally, you see an improvement in the second quarter from the first quarter, and that's exactly what we saw. There was nothing there. It was primarily the impact during the quarter was really around trade inventories. And like I said, it's about a week.
spk06: Yeah, so I think, Alex, really strong patient demand, and as we mentioned, our strongest sort of top-line patient demand since our first full quarter of launch, and really just impacting our timing of inventory is really what you're seeing.
spk03: Great. Thanks so much for the call.
spk06: Sure.
spk05: Thank you. I'm David Amsum with Piper Sandler. Please go ahead.
spk01: Hey, thanks. So just got a couple. So first on the buyback, can you talk about um how you're thinking about capital deployment um beyond just the 125 million here in other words is this something that uh buybacks or something that you may uh revisit down the road and and is that going to be sort of a recurring fixture of your overall capital deployment strategy uh that's number one and then number two does this impact your ability to execute on a BD transaction of significant size? In other words, are you setting your sites smaller, given that buybacks are something that you are now doing? And then just lastly, on the new pitolisant assets, I know you're going to provide an update, so I've got to ask the question, should we think of these as new molecular entities or or new formulations, or a bit of both. Thanks.
spk06: Sure, David. Good morning, David. In terms of the buyback, I'll ask Sandeep to provide some perspective. But I think a high level, it provides us optionality in terms of optionality with regard to deployment of capital, both in repurchase as well as looking at business development deals. And Sandeep can kind of expand on you know, our thinking around that?
spk05: Sure. What I would say is, look, it's a natural evolution of the company, right? We have a very strong balance sheet, continued cash generation. So we have the opportunity to opportunity to return capital to shareholders while still maintaining, I would say, sufficient capital for other important priorities, including business development. So this is not an either or. This is, in addition, I would say overall. And, you know, certainly given our stock price right now, it's really a creative use of capital. to execute to really drive, maximize shareholder value from that perspective. So hopefully that gives you a little bit of color in terms of, you know, we don't really see this as either or type of thing. It's really just a natural evolution of the company. We're, you know, $430 million on the balance sheet, and we have capacity to do business development as well. And to your other question, as you know, we also did a recent financing as well that we announced last week, about $185 million. led by very syndicated banks, which, again, gives us continued access to capital if needed for potential business development in the future as well. Yeah.
spk06: Thanks. And, David, just to reinforce, in terms of business development, you know, as I've mentioned before, it continues to be a high priority for us. And, you know, obviously since I took on the CEO role at the beginning of the year, you know, we've been actively engaged, you know, the team in looking at opportunities. We've gone deep on several. So it continues to be a high priority. You know, we have optionality and access to, you know, to capital. And that's how, you know, we'll look at sort of, you know, deploying that in addition to the you know, the potential for share repurchase.
spk00: Good morning, David. This is a question on the pitholocene-based assets. We are working very closely with the buyer process on these efforts, and the formulation work is ongoing. These are Pitocin-based assets with the potential for generating new IP and the potential to extend the Pitocin franchise well beyond 2040. We do expect to provide an update later this year on these new Pitocin-based assets.
spk06: Yeah, thanks, Kumar. So they are, yeah, they are not new molecular entities, you know, basically new formulations, enhanced formulations of the Tolson. And as Kumar said, you know, updates coming later this year on our progress on those programs.
spk05: Okay.
spk06: Helpful.
spk05: Thanks, guys. Thanks, Dave. Thank you. We'll take our next question from Ami Fadia with Needham & Company.
spk02: Hi, this is Kuna for Ami Sadia. Thank you for taking my question. I guess just wanted to ask if you can talk a little bit about where you are on your work in the life cycle management for vapids, like what needs to be completed before you're ready to give the treatment update by end of the year, and if the new formulation that you mentioned could be used in any of the indications that you are pursuing.
spk06: Sure. So in terms of our life cycle management updates, Kumar can provide color in that. But I think as we shared, all of our current life cycle management programs, you know, we're looking ahead to milestones, you know, later this year in the fourth quarter. And advancing those, you know, leading with the IH, idiopathic hypersomnia, and the phase three registrational trial there. Kumar can provide more color on each of those with regards to where we are.
spk00: Good morning, Kunal. Thank you for the question. In terms of life cycle management, as we mentioned earlier, we have a catalyst-rich second half of this year. Let's start with idiopathic hyposomnia. We are on track for top-line results in idiopathic hyposomnia in the fourth quarter of this year. On DM1, We are also on track for top line results in the fourth quarter of this year. Just as a reminder, the DM1 study is a small signal detection proof of concept study that is not powered for statistical significance. In terms of PWS, we had a good meeting with the FDA, the end of phase two meeting, and we aligned on the study design. We plan to initiate this study in the fourth quarter of this year, and also, we are planning to submit pediatric narcolepsy SNDA in the fourth quarter of this year. So really a lot of activities happening in the second quarter of second half of this year in terms of life cycle management of latex.
spk06: Thank you, Kumar. So I think really good progress, really good momentum, and we're excited for the catalyst coming later this year on our development programs.
spk02: Thank you so much.
spk05: Thank you. We'll take our next question from Francois Brisebois with Oppenheimer.
spk08: Francois Brisebois All right, thanks for taking the question. Just a few here. So in terms of the exit numbers, is this something that we should, in terms of a metric, we should start expecting every quarter, or is it just a thing that we've seen in the past few quarters here?
spk06: Yeah, thanks, Frank. Good morning. Jeff Dirks comments on the exit number.
spk04: Yeah, Frank, good morning. So we provided exit number at the end of the first quarter, just given some of the pair seasonality and the headwinds. And I think just given the dynamics of the second quarter and really being able to quantify and be able to share with you the momentum coming out of Q2 and Q3 and the strength of our business, we provided it. As you know, I believe that average number of patients is the most meaningful metric that we can provide because it encapsulates all of the patient medication behavior into one number. It's new patients, it's refill that includes compliance, persistency, and discontinuation rates. And it most closely aligns to net revenue on a quarterly basis. So, you know, I think from an exit number of patient perspective, it provides additional context in some quarters. But I think the number that really is most meaningful is average number of patients, Frank. And as we shared in our prepared remarks, we saw sequential growth of approximately 350 patients From what we reported in the first quarter, we have approximately 5,450 patients on the product. And, again, really tremendous results for year four of our rare orphan launch. And we're really excited about momentum that we're seeing coming into Q3. And we're anticipating, you know, strong sequential growth through the remainder of the year and thereon.
spk09: And we have a lot of conviction that WAKIX is going to represent a potential potential billion-dollar-plus opportunity in adult narcolepsy alone.
spk08: Great. And then if I could just follow up with, so, you know, as you mentioned, there's been a new oxibate that's been launched on the market and seems to have no impact on WCAG so far. But can you just talk about reimbursement? Is reimbursement going well if someone is on both anoxicabate and Wakex? And can you just talk about maybe the evolution? Are you seeing more patients that are on both, or is it still a pretty small percentage? Thank you.
spk09: Sure. Go ahead, Jeff. So from a managed care perspective, Frank, we continue to be extremely pleased with the favorable market access coverage for WACICS. We haven't seen any changes to our formula position with the introduction of a generic oxibate earlier this year or, you know, with the launch of the once-nightly oxibate at the end of June. As a matter of fact, we've actually seen some increases and improvement in some of the top one plans within managed care. We have no knowledge of any plans that require WCAG to be stepped through and oxidate. More importantly, there are no plans where there's an NDC block or exclusionary decision made for WCAG. you know, 100% of appropriate adult narcolepsy patients have access to WAKIX either through a positive formulary that's published or through some type of, you know, medical necessity or exceptions policy. With respect to WAKIX and Oxibate, one What we've seen has been relatively consistent. It's been a low double-digit percentage of the WCAG patients are also on anoxibate.
spk04: Again, you're going to see as this category evolves a little bit, as you know, within managed care, there's likely going to be additional things that they're looking to do to manage the category.
spk09: But in a rare orphan space with not a lot of these individuals. You don't see a lot of administrative steps with multiple products. Managed care acknowledges that this is a polypharmacy market. And so, you know, with a low percentage of wake-up patients also on anoxibate, we see really good access for patients
spk04: on the product, and we're really pleased with the strong payer coverage that really has remained unchanged even with the introduction of new products. And we believe we're really well positioned, Frank. You know, it's a differentiated product. It's the only non-scheduled treatment option, and we're well positioned today as well as the evolving managed care landscape moving forward.
spk08: Great. Thank you.
spk05: Thanks, Frank. Thank you. We'll take our next question from Greg Sivanovich with Mizuho Securities.
spk03: Thanks. Good morning. Congrats on the continued progress. I've got two questions, one just on how to think about the third quarter.
spk09: I know that coming out of 350 new patient ads, which is a nice number, we've historically over the past several years years seeing you report in the second quarter 400 patients, and then they've kind of trickled down to 300. And I guess that does reflect a certain element of summer seasonality. So maybe, Jeff Dirks, if I could just ask you kind of thoughts or around the dynamic for the third quarter, any changes relative to what we've seen in the past. I know you've got some nice new momentum in terms of new prescription starts. So just wanted to get additional color there. And then my second question is just I was hoping to get the company's perspective to get the company's perspective on last week's curious patent challenge by Scorpion Capital and kind of any response or any reply to that. Thanks. Sure, Greg. Good morning, Greg. Yeah, Jeff, follow we'll answer the first question, and I'll respond to your second question. Sure. So, Greg, for Q3 dynamics, I mean, I think you're thinking about Q3 the right way. We do anticipate the typical headwinds of the summer seasonality with fewer patient visits to healthcare professionals. We've got, to your point, tremendous Tremendous momentum coming out of Q2. Q2 is one of the strongest quarters in terms of top-line prescription demand. We've seen in three years the highest number of new patient starts ever in our launch, and adding 350 patients in year four of our commercial launch I think is really tremendous results. And although we're not providing forward-looking guidance, I think you're thinking about Q3 correctly. We continue to see growth in new prescribers. We see growth in average number of patients. We do expect sequential growth for WCAG and average number of patients for the remainder of 23. And we have extreme confidence. in the long-term growth opportunity for WCAG and being a potential billion-dollar opportunity. Thank you. Thank you, Jeff.
spk06: And, Greg, with regard to, you know, your second question, you know, regarding the petition for reexamination of, you know, the patent for WCAG that was filed, I believe, on July 19th, you know, I think, as we said before,
spk09: You know, we're very confident in the strength of our IP. We believe strongly in terms of the enforceability and validity of the patent portfolio. And it's our feeling, our position that the petition for reexamination is without merit.
spk06: In regards to the timing of the reexamination, So the PTAB has 90 days to either deny or grant the petition from the date of submission. And the majority of times the petitions are granted, but that has no read-through to the potential outcome of the reexamination by PTAB. And if the petition is granted, the reexamination is between PTAB and the patent holder. And the majority of times, the patent status is often and usually upheld. So I think, you know, with our confidence in the strength of our IP, you know, which we will vigorously defend any challenges, you know, that is why we have confidence in WCAG being a billion-dollar-plus opportunity in adult narcolepsy. And then, obviously, it's successful in our current life cycle management programs, you know, could also contribute an additional up to a billion dollars.
spk09: revenue to the franchise. Thanks very much. Thanks, Greg. Thank you. We'll take our next question from Jason Gerberry with Bank of America. Hey, good morning, guys. Thank you for taking my questions. First, just curious, with the introduction of generic OxyBait, mindful that it's not impacting wake, but do you have any insights into what's going on? Is it expanding the market for pharmacotherapy for OxyBait, taking just a share from Xyrem or taking a share from other products? And then as my follow-up, I think it's to the Needham question. As you think about next-gen pitolisant, I guess like the curiosity is why develop weight for these following indications if the IP could be at risk towards the back end of this decade? Why not prioritize the next-gen pitolisant so you could have visibility in sort of a product lifecycle a little bit less well into the 2030s. Thanks. Good morning, Jason. Thanks for your question.
spk06: You know, in terms of, Jeff, you wanted to expand in terms of, you know, the dynamics and the oxidase franchise and the new products.
spk09: Sure. Jason, what we're seeing, and again, you know, the HICMA data is visible within Symphony Health claims, and it looks like it's simply just there's a churn that's exhibiting in the Oxibate marketplace. You know, as I've shared in my prepared comments and one of my earlier responses, We haven't seen any impact, obviously, on the generic on our launch or even the early introduction of the once-nightly Oxibate at the end of the second quarter on our business. So what I'm observing in the data is simply just a little bit of a churn that we're seeing in the Oxibate marketplace. I think what we see with Wake Experts, is that we've had a branded version of OxyBait available since our launch back in 2019, and we continue to see strong growth through that time period and really strong growth in the first and second quarter this year in average number of patients. We continue to add new prescribers, and I think our ability to call on the approximate 9,000 narcolepsy treating healthcare professionals. Approximately 5,000 of those are not enrolled in the Oxibate REMS program. It really provides our ability to tap into that broad diagnosed adult narcolepsy patient population. It gives us a little bit of insulation as newer forms of Oxibate come in. obviously the overall benefit-risk profile of WACICS, the broad clinical utility. It appeals to a broader healthcare professional treating audience as well as a broader patient base. So I think we have tremendous confidence in our business.
spk04: There's a Significant unmet medical need in here. There's a large diagnosed and even undiagnosed patient population in here. And I think what we've observed over the last couple years is there's plenty of room for multiple therapeutic options in here. And so we feel really good about where WAKIX is. But to answer your question on the generic OxyBait, I haven't really seen it expanding the market. It's more so just a change within the OxyBait vertical.
spk06: Yep. And, Jason, with regards to your second question about, you know, the IP runway for WICX and the current lifecycle management programs and new formulations. So, you know, really good question. And I think, you know, what we have done to date, you know, we've generated good momentum, obviously, you know, in our IH program and the strong momentum and the pace of enrollment in that program, you know, with Ptolemy.
spk09: And, you know, the same. in terms of, you know, Prader-Willi syndrome in that program and where we are. But with regards to the longer-term outlook, you know, we do see the potential, you know, new formulations where we would have options potentially to take those development programs, obviously, with, you know, longer patent protection, longer runway, and shift some of those to the new formulations of the Tolson, you know, depending on, you know, what we see in the clinic and as those programs advance. So we see, you know, kind of optionality going forward for the longer-term outlook of our life cycle management programs, while oftentimes management programs while optimizing the current momentum we have now obviously with the interest in IH and you know the completion of enrollment and looking forward to top line in the fourth quarter as well as interest in the the Prader-Willi syndrome program, you know, from that patient community that we've been kind of working with over a number of years now and interest in advancing into phase three at this point. Can I just ask a quick follow-up on that? Sure. Sure. Would the thinking be to launch a next-gen before going to market for PWS or IH just thinking, you know, if you had to launch a reformulation against a generic version of your own WCAG, the track record on that could be a little bit more challenging versus a If you can get a reformulation out first, it would seem like that would have a more competitive pathway in the market. Yeah, I mean, I think that, you know, Based on the new formulation programs we're working on, that's a potential scenario as well. And I think we're looking at that potential sort of in the near term, along with a longer-term outlook with some of the formulation work that we're doing. So we'll have, you know, more color on that as the new formulation programs progress, you know, later this year. Got it. Thanks. Yep. Thanks, Jason. Thank you. We'll take our next question from Corinne Jenkins with Goldman Sachs.
spk07: Yeah, good morning. A couple from me. Maybe first, you talked about the new patient growth in the corridor. What portion of these patients are coming through via the sleep specialist population versus the prescribing population you've described as not being enrolled in the Oxibate REMS program?
spk06: Good morning, Corinne. Jeff, in terms of the patients and where they're coming from in terms of the prescriber base? Sure.
spk04: Corinne, I mean, we're seeing patients come through both those that are healthcare professionals enrolled in the Oxibate REMS program, the sleep specialist, but we're also seeing patients come through in the approximate 5,000 healthcare professionals that are not enrolled in the Oxibate REMS program. I know there have been, you know, questions in the past looking at proportionality of what percentage of the patients reside more in the Oxibate REMS-enrolled doctors versus the And what you would say is that the majority of the patients tend to be in the Oxibate REMS enrolled healthcare professional audience.
spk09: They tend to be more of the sleep specialists. But there is a meaningful percentage of our new patients that are coming from that approximately 5,000 healthcare professionals outside the Oxibate REMS program. We're seeing our new prescribers coming from the depth of prescribing, and the new patients are coming out of the other portion of the oxidative rems enrolled doctors.
spk07: Okay. And then on that Phase III Prader-Willi study, what assumptions can you share that underpin the size of that study and the powering decisions that went into its design?
spk10: Yes.
spk09: Good morning. Thanks for the question.
spk00: We had a positive meeting with the FDA, and we aligned on the study design. And as we mentioned earlier, we plan to initiate this study in the fourth quarter of 2023. We plan to provide additional details on the study design at the time of study initiation.
spk07: OK. Thank you.
spk09: Thank you. Thank you. And our last question will come from Charles Duncan with Cantor Fitzgerald. Hey. Good morning, guys. First of all, congratulations on the market demand. And so I had a question on the commercial side and then one on the pipeline. With regard to the commercial question, given our challenge in terms of projections, I guess I'm wondering, When or if you're thinking about providing guidance, perhaps next year, if not yet this year, when would you be comfortable providing guidance and what would trigger that? Good morning, Charles. Good morning, Charles. Sandeep, comments on providing guidance? Yeah, no, thanks, Charles, for the question on that. I think, you know, at least we made the decision that, you know, that there's sufficient information. And you saw from the launch and you continue to see this,
spk05: past quarter, good consistency in terms of top-line demand for the product.
spk09: And I think, you know, overall, many of you have a good understanding of our business. So I think that's something that we would naturally revisit, you know, at the start of next year.
spk10: But no promises right now. But, you know, Certainly, something we can take a look at.
spk09: But right now, we feel good about, you know, investors' understanding of our business. And the fundamentals out there, and I think we'll provide...
spk05: to provide additional color on the business to give you more context, just as we did this quarter regarding the trade inventory and so forth. So we'll provide additional color to help guide future.
spk06: Okay, thanks, Sandy. And then to Jack or Kumar, regarding the pipeline and the ongoing IH study with Pitocin, Yeah, congrats on the enrollment rates, but I guess the question that I have for you is, do you think the rapid enrollment may have caused increased heterogeneity in the patient sample? And I guess, what gives you confidence in the readout?
spk09: Could it be, you know, the blinded read on the patients enrolled or the randomized withdrawal design? One error I help us think through that potential readout. Sure, Charles. Yeah, I'll turn it over to Kumar for thoughts on that. As, you know, head of our development programs, I think it starts also mechanistically. I think it starts mechanistically, and Charles, you know this well in terms of the Tolson and how it works, you know, it's away from this agent through histamine and the mechanistic fit in that disorder, that patient population. And Kumar can expand on, you know, in terms of our thoughts on confidence in the readout. All right. Hey, good morning, Charles. Thanks for the question. As you said, the... study enrolled fast and we were very pleased with it. In fact, nine months ahead of schedule. And it's not just the mechanism of action, just as Jeff mentioned, also the interest from the patient
spk00: and the providers as well because of the significant unmet need in patients with idiopathic hyposomnia.
spk09: In terms of heterogeneity, that's a good question. You know, as a clinical development specialist, we always want to make sure that the patients are homogeneous to the extent possible. So we have two sets in place. within the study conduct and also in our protocol to make sure that the patients who come into the study with the inclusion exclusion criteria and they're the right subject for our study we have full confidence that we enrolled the right subjects and we look forward
spk10: for the top line data, which we anticipate the fourth quarter of this year.
spk09: Okay. Regarding that top line read, is it centered more by timelines within the study, or is it driven by, you know, call it data analysis, and can you give us any further insights on that being October versus December? Yeah. I mean, at this time, it's hard to speculate. whether it will be early fourth quarter or late fourth quarter.
spk00: What I can say at this point in time is we are on track for top land results in the fourth quarter.
spk09: Okay. Very good. Thanks for taking our questions. Congrats on the in-market demand. Yes. Sure, Charles. And we are very excited about, you know, for the top-line data readout as well.
spk06: So, obviously, the team is, you know, we'll be working aggressively and focused on producing, you know, top-line results, and we look forward to sharing that with you, you know, when they come. Okay.
spk05: Thank you. And at this time, I will now turn the call back to management for any additional or closing remarks.
spk06: Thank you, Todd, and thanks to everyone for joining our call today and for your interest in Harmony. I would also like to thank the talented team at Harmony Biosciences, who I have the pleasure of working with for their efforts every day to deliver on our mission to develop and commercialize innovative treatments for patients living with rare neurological diseases. As you heard from the team this morning, our business remains strong, Harmony continues to be a growth story, and we have conviction in the long-term growth potential
spk09: of our company. We have built momentum during the first half of 2023, and we are now looking forward to a catalyst-rich second half of the year. Thank you, and have a great day. Thank you.
spk05: This does conclude today's Harmony Biosciences second quarter 2023 financial results conference call. You may now disconnect your line and have a wonderful day.
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