Harmony Biosciences Holdings, Inc.

Good morning. My name is Madison and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Biosciences first quarter, 2024 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 one on your telephone keypad. Please be advised that today's conference may be recorded. Lastly, if you should need operator assistance, please press star zero. I will now turn the call over to Lewis and I, head of investor relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences' first quarter 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 this stage of our lifecycle, 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 and Chief Administrative Officer. As a reminder, we will be making forward-looking statements today, which are based on our current expectations and beliefs. These statements are subject to 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. We have a lot to share this morning, so in order to allow ample time for Q&A, we will keep our prepared remarks brief this morning. I would now like to turn the call over to Dr. Jeffrey Dano. Jeff?

Thank you, Louis, and thanks, everyone, for joining our conference call today. Earlier this morning, we were excited to announce our third business development deal in the past eight months with the acquisition of Epigenetics Therapeutics. As you may have seen in our earnings release, in addition to this news, we have accelerated our growth strategy and have transformed our business to position Harmony for long-term value creation. Given all the exciting news and upcoming catalysts that we have to share today, We will not be able to go into depth on everything on this call, but the key points that I want you to take away from our call today regarding the Harmony story are the following. Our commercial business is strong and Wacix continues to demonstrate durable growth now year five in the market. Wacix is a $1 billion plus market opportunity in adult narcolepsy alone, and we are well on our way as we expect to continue to grow the brand through LOE in 2030. We are growing organically by advancing our lifecycle management programs for Pitocin with the next generation formulations designed to improve the patient experience and patient outcomes, as well as generate new IP to extend the Pitocin franchise out beyond 2040. We are also pursuing new indications for Pitocin, including near-term catalysts in pediatric narcolepsy and idiopathic hypersomnia. to help even more patients living with unmet medical needs and drive incremental revenue. We are making good progress toward pediatric exclusivity, which would provide an additional six months of regulatory protection on the back end of our longest patent, a commercial opportunity of upward around $1 billion. And we are growing inorganically through business development. With our previous announcement regarding the licensing of TPM 1116, a highly potent and selective orexin 2 receptor agonist to solidify and grow our sleep-like franchise, and today's announcement regarding the acquisition of epigenetics and their rare epilepsy portfolio, we now have three orphan rare CNS franchises in late-stage development. each with potential peak sales opportunities of $1 to $2 billion, and patent protection ranging from the late 2030s to mid-2040s. At Harmony, we believe we are well-positioned to become the leading patient-focused CNS biotechnology company delivering innovative treatments to patients with unmet medical needs, and while doing so, drive significant and durable value creation. I want to take a minute to emphasize the value of our pipeline that we have been building. Across these three franchises, we are currently working with eight assets being studied across 13 development programs. More importantly, we expect these programs to result in at least one new product or indication launch each year over the next five years. We have planned ahead executed smart and strategic business development deals with low upfront costs and risk tied to the achievement of certain clinical regulatory and sales milestones that is successful are poised to generate significant near-term and long-term value creation. And we are not stopping here. While we have made significant progress on our business development goals, we continue to look to build out our pipeline even further. While we do a broad sweep of the BD landscape, our focus is on assets in the orphaned rare CNF space consistent with the three deals we have done over the past eight months. We feel there are other opportunities out there that would fit our growth strategy. And with approximately $454 million in cash, cash equivalents and investments as of March 31st, we are in a solid financial position to execute on additional BD opportunities and have demonstrated our ability to do so. Let me share a few highlights with you from each of our three franchises that are in late stage development. First, building off our leadership position in SleepWake with Wakeix. We began working on extending the Pitollison franchise several years ago by developing new formulations of Pitollison that are planned to come to the market both during and towards the end of the Wakeix lifecycle. Importantly, These products are designed to improve patient experience and patient outcomes and will have new IP that extends our durable growth and leadership in sleep-wake out beyond 2040. We remain committed to the idiopathic hypersomnia patient community and gaining an indication for Pitocin and IH and plan to submit an SNDA to FDA in the second half of this year. After following the erection space for the last few years and doing diligence on several of the assets, we licensed TPM1116, a highly potent selective oral erection 2 receptor agonist with a potential best-in-class profile due to its unique chemical structure and preclinical data. This solidifies our leadership position in sleep medicine and demonstrates our long-term commitment to the field. Our second franchise in rare neurobehavioral disorders continues to make good progress, and the lead program with ZYN002 is in a pivotal phase three registrational trial for Fragile X syndrome and on track for top line data readout in mid 2025. With approximately 80,000 patients living with Fragile X in the U.S., this is a sizable market opportunity, and we also have global rights to this asset with even bigger market potential. And today, with the announcement of our latest BD deal, the acquisition of Epigenics Therapeutics, we established a rare epilepsy franchise and acquired two new assets to serve as the foundation of what could be a larger franchise. The lead program is with Clemazol Hydrochloride, or EPX100, which has received both orphan drug designation and rare pediatric disease designation from the FDA for Dravet syndrome and Lennox-Gastaut syndrome. It is currently in a pivotal registrational trial for Gervais syndrome with top line data expected in 2026. We also plan to start a pivotal phase three trial with EPX100 in patients with Lennox-Gastaut syndrome in the second half of this year. QMAR will be providing more color on the growth of our development enterprise and our robust pipeline programs later in the call. The important takeaway is that we expect these programs to result in at least one new product or indication launch each year of the next five years with multibillion-dollar revenue potential extending out beyond 2040. While I have focused on the significant progress in our catalyst-rich pipeline that has the ability to deliver durable growth out beyond 2040, I don't want you to lose sight of the continued durable growth that WCAG has demonstrated now year five in the market. We delivered another strong quarter with net revenues of $154.6 million, which represents 30% growth year over year. With these strong results, we are reiterating our 2024 net revenue guidance of $700 to $720 million. We believe that we can continue to grow the franchise for years to come and remain confident that WakeX represents a $1 billion-plus opportunity in adult narco FC alone, and we are well on our way. With that, I will turn the call over to Jeffrey Dirks, our Chief Commercial Officer, for an update on our commercial performance in our SleepWake franchise. Jeff?