Harmony Biosciences Holdings, Inc.

Good morning, everyone. My name is Beau, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Bioscience's fourth quarter and full year 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 is being recorded. Lastly, if you should require operator assistance, please press star zero at any time. I will now turn the call over to Mr. Brendan Doyle, head of investor relations. Please go ahead, sir.

Brendan Doyle Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Bioscience's fourth quarter and full year 2024 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 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 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. 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 our CEO, Dr. Jeffrey Dato.

Jeff? Thank you, Brennan. Good morning, everyone, and thank you for joining our call today. 2024 was a year of strong execution and meaningful progress for Harmony Biosciences. We continue to strengthen our leadership position in SleepWake while advancing and expanding one of the most robust late-stage CNS pipelines in the industry. Beginning at our investor day last October, we outlined a clear path toward becoming the leading CNS company focused on developing and delivering innovative treatments for patients with unmet medical needs. That path includes advancing our late-stage pipeline to deliver one or more new product or indication launches each year over the coming years. We remain committed to delivering on our promise to patients while generating long-term, durable value creation for shareholders. In fact, our current pipeline, if successful, is poised to deliver over $3 billion in net revenue going forward. 2024 was also a year of exceptional growth in both our commercial business and in our pipeline through strategic acquisitions. Our net product revenues in 2024 were $714.7 million, representing 23% growth year over year. In Q4 alone, we generated $201.3 million in net revenue. This momentum is reflective of the continued durable growth of WAKIX in narcolepsy based on its broad clinical utility and differentiated profile. as the first and only FDA-approved once-daily non-scheduled treatment for narcolepsy and our proven commercial execution. We remain confident in WCAGS being a billion-dollar-plus opportunity in narcolepsy alone, and we are on our way to achieving that milestone well before WCAGS-LOE in 2030. On that topic, Today, we are also announcing our first generic settlement agreement with Novagen Pharma, resolving the patent infringement litigation related to Novagen's abbreviated new drug application for a generic version of pitolicin hydrochloride. As part of the agreement, Novagen will have a license to sell its generic product beginning January 2030 or earlier under certain circumstances. In addition, we are on track in pursuit of obtaining pediatric exclusivity for Ptolemy, which, if granted, would add an additional six months of regulatory exclusivity. This settlement reinforces the strength and durability of Harmony's intellectual property portfolio. As you can see, we remain committed to vigorously defending our intellectual property estate. Commercial Engine has allowed us to finance our growing pipeline from our balance sheet as a profitable, self-funding biotech company. Harmony was founded on our leadership in sleep-wake, and our pipeline is now made up of three orphan rare neurology franchises, each with potential peak sales opportunities of $1 billion to $2 billion each. Before turning to the opportunities ahead of us in 2025, I want to address the recent update on our supplemental new drug application for Pitocin in idiopathic hypersomnia, or IH. While we recognize the challenges with this submission, given that the Phase III in-tune study did not meet the primary endpoint during the four-week randomized withdrawal phase, we made the decision to submit the SMDA for Pitocin in IH based on the following three factors. First, the overall benefit-risk profile of pitocin in IH based on the totality of the data. Second, the unmet medical need in IH based on limited treatment options. And third, our deep commitment to the IH patient community. In fact, the Hypersomnia Foundation and more than 650 members of the IH community signed a petition to the FDA requesting a review of the Pitocin SNDA file for IH, citing the burden of disease and significant lack of treatment options, especially ones that are non-scheduled. While this outcome is not what we had hoped for, it is only a short-term setback that in no way affects the progress we are making toward our strategic priorities. In fact, 2025 is shaping up to be a transformational year for Harmony. This is a pivotal moment in our growth story, one where we are advancing important late-stage programs poised to deliver key clinical milestones and reinforce our leadership in sleep-wake and rare CNS disorders. Our long-term vision has always been to extend our leadership in sleep-wake through the development of Pitocin high dose or Pitocin HD and enhanced higher dose formulation of Pitocin designed to deliver an optimized PK profile and therapeutic benefits. Kumar will share more about our development plans for our next generation Pitocin formulations But what I want you to take away is that this program is the result of patient-focused drug development. These formulations are designed to build on the innovation of Pitocin as a first-in-class molecule with a novel mechanism of action while addressing some of the most common unmet needs in people living with narcolepsy and idiopathic hypersomnia. In addition to demonstrating enhanced efficacy for excessive daytime sleepiness, The Phase III registrational trials for Pitocin HD, both set to initiate in Q4 2025, will also evaluate the common symptom of fatigue in the narcolepsy trial and the very common and burdensome symptom of sleep inertia in the IH trial. With top-line data anticipated in 2027 toward PDUFA dates for both narcolepsy and IH in 2028, along with a provisional patent extending to 2044, the Tolleson HD is the foundation of our long-term growth strategy and path toward durable long-term value creation. Beyond sleep-wake, 2025 will bring another major milestone with the top-line data readout from our Phase III Registrational Trial of ZYN002 in Fragile X Syndrome, the ReConnect Study. in the third quarter. This study was designed to confirm the positive findings from the pre-specified analysis of patients with complete methylation in the Phase 2-3 CONNECT study and, if positive, could put us on a path toward bringing the first approved treatment for Fragile X syndrome to patients and their families. Importantly, we possess global rights to ZYN-002. which provides us an opportunity to expand access worldwide if successful. And that is just the beginning. Kumar will share more details with you on our Fragile X program, as well as the exciting work we are doing in 2025 to advance our innovative rare epilepsy franchise with EPX100, the most advanced 5-HT2 agonist clinical development program in the clinic. With registrational trials in both Gervais syndrome and Lennox-Gastaut syndrome, we are building a rare epilepsy franchise with the potential to have a meaningful impact on the lives of these patients, with plans to go broader in the developmental and epileptic encephalopathy space. Based on our strong foundation of commercial success with WAKIX, we have been very busy over the past two years building out our pipeline, and we are just getting started. The acquisitions we did were thoughtful and strategic, leading to our three Orphan Rare CNS franchises. And we remain actively engaged in identifying and evaluating additional opportunities that could expand our leadership in sleep-wake, neurobehavioral disorders, or rare epilepsies, and other seizure disorders. With over $576 million in cash and cash equivalents in the balance sheet, we are in a solid position to deploy our resources to expand our pipeline and create meaningful value for patients and shareholders alike. As you can see, these upcoming catalysts underscore why 2025 is shaping up to be a transformational year for Harmony. Harmony is a growth story built for long-term success with a market-leading sleep-like franchise, a robust late-stage pipeline, and the experience and strategic ability to navigate short-term challenges that make us stronger and even more committed to our long-term mission to develop and deliver innovative therapies for patients living with rare neurological diseases. When we deliver on our promise to patients, we generate long-term, durable value creation for our shareholders. Thank you, and I will now turn the call over to Jeffrey Dirks, our Chief Commercial Officer, to give you an update on our commercial performance. Jeff?

Jeffrey Dirks, Chief Commercial Officer, Q4 and full year 2024 showed continued strength in our underlying business fundamentals and durable growth as we surpassed $700 million in net sales and over 7,000 average patients on WACICS. Net sales for the fourth quarter were $201.3 million, and full-year 2024 net revenue was $714.7 million, a 23% increase from full-year 2023. We continue to see strong double-digit growth in net revenue for WACICS heading into year six of our commercialization, demonstrating continual high interest of WACICS in the narcolepsy market. The solid net sales performance in 2024 reaffirms our confidence in WCAGS representing a potential billion-dollar-plus opportunity in narcolepsy alone. For the fourth quarter of 2024, we saw continued growth in the average number of patients on WCAGS and in the WCAGS prescriber base, both facilitated by favorable market access as seen on slide five. The average number of patients on WCAGS increased to approximately 7,100 in the fourth quarter. We're extremely pleased with the approximate 300 sequential increase in average patients on WCAGS from what we reported last quarter. We saw continued growth in pediatric narcolepsy prescriptions and prescribers in Q4, but consistent with Q3, the vast majority of our growth came from the adult narcolepsy, which constitutes approximately 95% of the diagnosed narcolepsy opportunity. The growth in average patients in the fourth quarter was in line with our expectation and reaffirms our confidence in future growth with WCAGS. Fueling the growth in patient ads on WAKIX was the strength of the WAKIX prescriber base. We saw solid growth in the WAKIX prescriber base beyond OXYBATE REMS enrolled healthcare professionals, demonstrating that WAKIX continues to expand the branded writer segment of the market beyond the OXYBATES. We're now more than 50% penetrated in this segment of approximately 5,000 healthcare professionals at the end of the fourth quarter. Coupled with the growth we're seeing beyond the OxyBait REMS-enrolled healthcare professionals, we continue to see utilization of WAKIX among the approximately 4,000 OxyBait REMS-enrolled healthcare professionals, even with the availability of new and generic OxyBait options. We're highly penetrated in this prescriber audience and see WAKIX being prescribed to additional narcolepsy patients each quarter in this segment. WCAG provides a meaningfully differentiated product profile and one that offers broad clinical utility across the entire narcolepsy treating healthcare professional universe, allowing us to tap in to the full diagnosed narcolepsy patient opportunity of approximately 80,000 patients. Looking ahead for full year 2025, we expect continued growth in the underlying business fundamentals for WCAG with net revenue guidance of $820 to $860 million. We anticipate a similar rhythm to our business as we've seen in traditional seasonal payer dynamic headwinds that impact the industry as a whole in the first quarter. Tailwinds coming out of Q1 into Q2 with stronger prescription demand. Typical seasonal headwinds in the third quarter with lower patient visits that are common for all products and diseases that are chronically managed. And tailwinds in the fourth quarter with strong patient refill behavior as we close out the year. With Wacoos on track to achieve a billion-dollar-plus in narcolepsy alone and with a robust, scalable commercial infrastructure we have built, we have the strong foundation to drive growth and value in our next-generation Ptolemaic program. We are advancing both Ptolemaic gas-resistant, or GR, and Ptolemaic high-dose, or HD, through the lens of patient-centric drug development. But the goal is improving patient care with meaningful features and benefits and extending durable patient growth and revenues of the Ptolemaic franchise into the mid-2040s. Kumar will share more details on the HD and GR development programs. Preliminary market research that we conducted with healthcare professionals and payers with the HD target product profile showed early excitement and strong anticipated update by healthcare professionals and expected favorable market access coverage from payers. Additionally, our unique commercial model will be deployed to support the transition of the Betulsan franchise. In summary, WAKES continues to deliver strong growth heading into year six of our commercialization. The patient-centric drug development approach to our Ptolemaic Life Cycle Management Program strengthens our franchise and leadership position in SleepWake and is poised to deliver durable patient growth and significant revenues to the mid-2040s. I would like to now turn the call over to our Chief Medical and Scientific Officer, Kumar Badur, to discuss the advancement in our clinical development programs.

Kumar? Thank you, Jeff. Good morning, everyone, and thank you for joining us today. In R&D, we continue to make good progress in advancing our pipeline across 13 development programs, eight different assets, and three distinct franchises focused on rare neurological indications with high unmet medical needs. We currently have four Phase III registrational trials ongoing in four distinct indications, and we will have six Phase III registrational trials by the end of the year. This makes our portfolio one of the robust late-stage pipelines in the industry with the potential to deliver one or more new products or indication launches every year in the coming years. Our full clinical development pipeline is shown on slide number eight, and the clinical development highlights are on slide 9 through slide 13. Starting with our Please Break franchise, as we discussed recently, we received an RTF for IHF-NDA. We are deeply disappointed with this outcome. The rationale that the FDA provided for the RTF was based on data from the randomized withdrawal phase of the in-tune study. However, as we have discussed previously, the data from the open-label phase showed the patients experienced improvements on the upper sleepiness scale that were about five times greater than what is recognized as clinically meaningful, and the majority of the patients in the long-term extension study achieved normal levels of wakefulness and sustained this response beyond one year. This data along with real-world data from the physicians treating IH and the compassionate use program, as well as the well-established safety and tolerability profile of VATICS and its non-scheduled status, made a strong benefit-risk proposition for pitulafent in IH. This is why we submitted the SNDA for pitulafent in IH, because it was the right thing to do for our patients. Our commitment to bring pitulafent remains unchanged. We are on track to initiate the Phase III Registrational Trial in Idiopathic Hypersomnia in Q4 2025 with Pitocin-HD, an optimized and higher-dose formulation which is anticipated to provide larger efficacy for EDF and also target symptoms such as sleep inertia, one of the core symptoms in patients with idiopathic hypersomnia. This double-blind randomized placebo-controlled parallel arm study is designed with input from the FDA, and the anticipated PDUFA date for this program is 2028. We are also on track to initiate the Pivotal Phase III registration trial in narcolepsy with Pitonacin XT in Q4 2025 with Atomic PDUFA in 2028. With the optimized and higher dose formulation, Pitonacin-HT is anticipated to deliver larger efficacy in excessive daytime sleepiness, the greatest unmet need in patients with narcolepsy, and also target symptoms such as fatigue in narcolepsy for which there are no approved treatments. Moving on to Pitolafen-GR program, this formulation is designed to address the GI comorbidity prevalent in almost 80% of patients with narcolepsy, and designed to give the patient an ability to start at the therapeutic dose range with no titration. We are on track to initiate the pivotal bioequivalent study this quarter, and the top-line data is expected in Q3 2025, with anticipated to-do-for date in 2026. have been submitted for both Pitolafent-GR and Pitolafent-HP with the potential for patent protection until 2044. Moving on to our Oryxin-2 receptor agonist program, BP1.15205, a potential best-in-class Oryxin-2 receptor agonist currently in pre-clinical phase. The in vitro pharmacology other orexin-2 receptor agonists based on publicly disclosed data. The combination of high potency, excellent selectivity, potential for once-a-day dosing, and robust preclinical data makes our orexin-2 receptor agonists a potentially best-in-class asset. We plan to present the comprehensive preclinical safety and efficacy data at the upcoming annual sleep meeting in June this year, and we are on track towards filing an IMPD in mid-2025 and initiating first in human studies in the second half of this year. Moving on to our neurobehavioral franchise, the next major catalyst in our portfolio is the comprehensive trial Z1002 in fragile X syndrome, the ReConnect study. Fragile X syndrome is a race genetic disorder caused by mutation in FMR1 gene on X chromosome, resulting in decreased or lack of FMR protein production that results in the dysregulation of the endocannabinoid system manifesting itself with intellectual impairment, developmental delay, and significant neurobehavioral symptoms. In fact, Fragile X syndrome is the most common inherited cause of intellectual impairment and autism spectrum disorders with a prevalence of approximately 80,000 patients each in the US and EU. ZYN-002, a pharmaceutically manufactured 100% synthetic cannabidiol is a patent-protected permeation-enhanced gel that offers a unique treatment option homeostasis by interacting with CB1 receptors and treats the neurobehavioral symptoms. The transferment route of administration offers significant benefits from a tolerability and safety perspective compared to oral administration of cannabidiol that results in significant nausea, vomiting, abdominal cramps, and diarrhea. In addition, oral administration of cannabidiol can result in abnormal liver function tests because of the first-class metabolism, and that is not observed with ZY-002. The ongoing Phase III registration trial, the ReConnect study, is based on the data and the learning from last Phase II-III ReConnect study. In a sense, we are attempting to replicate the strong efficacy signals that we observed methylation in the CONNECT study. The re-CONNECT study, if positive, is expected to meet the registration requirements for both the FDA and the EMR, and we have global rights for V1.002. We are on track to report the top-line data in Q3 2025. Based on the pathophysiology of Fragile X syndrome, the mechanism of action of V1.002, the clinical data from the CONNECT study, and the RECONNECT study design. We have a high degree of conviction in the RECONNECT program, and if approved, this will be the first and only approved treatment for any symptoms in patients with fatherless syndrome. We are also on track to initiate the Phase III registration trial in 22-cube deletion syndrome in 2025. 32Q is another rare disorder with a prevalence of approximately 80,000 patients each in the U.S. and Europe and with prominent neurobehavioral symptoms for which there are no approved treatments. Moving on to our epilepsy franchise, we have the most advanced development program in developmental and epileptic encephalopathy. We have two investigational candidates, EPX100 and EPX200 for the treatment of developmental and epileptic insomniac disease. EPX100 works via modulation of 582 serotonin receptors and enhances the serotonergic tone. The serotonergic mechanism of action is a validated mechanism of action in DEs, and EPX100 also showed efficacy in several preclinical models for various other developmental and epileptic encephalopathies, suggesting a broad utility for EPX100 in DEs. EPS100 is administered in a liquid formulation with BID dosing, a simple dosing regimen that is especially meaningful for patients living with DEEs. We are currently recruiting globally for our Phase III registration of trial in Prevacinto, the ARCUS study, and we also initiated the global Phase III registration of trial in LCS, the Lighthouse study, in the fourth quarter of last year. The top-line data for both programs are anticipated in 2026. Our other investigational product in developmental and epileptic encephalopathies, EPX200, a liquid formulation of locasterin, is in the pre-IND phase. Overall, we are progressing our late-stage pipeline across our three distinct franchises. If successful, these programs could result in one or more new product or indication years. And more importantly, we have the potential to help hundreds of thousands of patients with rare neurological disorders for whom there are either no approved treatments or limited treatments that come with significant limitations in efficacy and or safety and tolerability. As always, on behalf of Harmony, I would like to thank all the patients and their families who are participating in our clinical trials. of the clinical investigators and for their efforts and commitment in helping us to advance our development program. I will now turn the call over to our CFO, Sandeep Kapadia, for an update on our financial performance. Sandeep?

Sandeep Kapadia Thank you, Kumar, and good morning, everyone. This morning, we issued our fourth quarter earnings release and filed our 10-K, while we applied the details of our fourth quarter and full year 2024 financial and operating results. Our financial performance is also shown on slides 14 through 16. We finished the year with great momentum across the business, delivering strong growth across several of our key metrics, setting us up for another successful year in 2025. We continue to be a profitable, cash-generating company, able to fund the growth and advancement of our pipeline fully with the strength of our balance sheet. We delivered another year of double-digit top-line growth, as we reported $714.7 million in annual vacancy net revenue, while continuing to be a profitable, cash-generating fire tech company. Our strong financial performance combined with a solid balance sheet, including approximately $576 million in cash and cash equivalents, positions us well to continue advancing our industry-leading pipeline, along with driving continued commercialization of WakeX and Narcolepsy. For the fourth quarter of 2024, we reported net revenues of $201.3 million as compared to $168.4 million in the prior year quarter. representing year-over-year growth of 20% and our highest quarter to date. Performance in the quarter reflects the strong, sustained underlying demand for WCAG. We also reported total operating expenses for the fourth quarter of $91.1 million compared to $85.1 million in the same quarter in 2023, representing a 7% increase. The growth was primarily driven by our expanding late stage pipeline, along with investments for the commercialization of wake eggs and narcolepsy. Non-GAAP adjusted net income for the fourth quarter of 2024 was $63 million, or $1.08 for diluted share, compared to $42.8 million, or $0.73 for diluted share, in the prior year quarter. 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. We ended the fourth quarter with $576.1 million of cash, cash equivalents, and investments. The balance reflects robust cash generation of approximately $219.8 million from operations in 2024. providing us with the financial flexibility to execute our growth strategy. Looking ahead to 2025, as we previously disclosed, our guidance for net revenues for 2025 is $820 to $860 million. We believe this guidance reflects the strong expectations for the year and demonstrates that we're approaching the $1 billion-plus opportunity in WCAG and Narcolepsy alone. As a reminder, a comment on seasonality as you think about the phasing for revenues for the first quarter of 2025. We expect to see typical seasonal dynamics that the industry as a whole experiences each year in Q1. This includes higher growth in net deductions due to insurance plan resets and higher copay obligations, along with potential for drawdown in trade inventories. With respect to expenses, we expect increased R&D investments as we continue to build our pipeline. We also expect to potentially incur $29 million in R&D-related milestone payments in 2025, including milestones for the completion of enrollment and positive top line in our ZYN-002 Phase III program, as well as started study in our EREPCN program. In summary, I'm pleased with our strong financial performance in 2024. we once again delivered another year of strong top line growth, maintained healthy operating margins while continuing to generate cash. These positions as well as we enter 2025 with the potential for significant value creation through our catalyst risk pipeline. And with that, I'd like to turn the call back over to Jeff for his closing remarks. Jeff.

Thank you, Sandeep. And thanks everyone for joining our call today. As you have heard, 2025 is set up to be a transformational year for Harmony. With a market-leading sleep-wake franchise, a catalyst-rich pipeline, and a clear path for continued growth, we are in a strong position to execute on our vision of becoming the leading CNS company focused on delivering innovative treatments to patients with unmet needs. 2025 will be a pivotal moment in our long-term growth strategy. I am proud of the progress that the Harmony team has made, and we are well-positioned to deliver on our promise to patients while also generating durable, long-term value creation for our shareholders. Thank you again, and I will now turn the call back over to the operator. Operator?

Thank you, Dr. Dano. Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you do wish to remove yourself from the queue, you may do so by pressing star 2. We do remind you to please pick up your handset and please limit yourself to one question. We'll go first this morning to Charles Duncan at Cantor Fitzgerald.

Hey, good morning, Jeff and team. Congrats on a nice fourth quarter of patient ads for WakeX. Since I'm going to answer just one question of the multi-part, it's on CYN002 and the phase three study Kumar suggested you're pleased with how it's going. I'm wondering if you can provide any color on, I guess, beyond the methylation rates. How do you feel about the range of weights in terms of the patients being enrolled or ages? And then finally, how is the open label extension going? What's been the rollover rate into that?

Yes. Good morning, Charles. And thanks for your question on CYN-002 and the ongoing ACE3 ReConnect trial tomorrow. More color on Charles' question.

Yeah. Hey, good morning, Charles. Thanks for the question. We are very pleased with the way the trial is ongoing, Charles. We are on track for top-line data in the third quarter of this year. The primary endpoint is in patients with complete methylation. But we are also enrolling a nominal number of patients who also have partial methylation. If the primary endpoint in patients with complete methylation is positive, and if we see a strong signal in patients with partial methylation, there is an opportunity for a broader label. In terms of your question, in terms of age, we are enrolling patients in the age group of 3 to 30 years. And in terms of weight, the weight is variable, obviously, depending on many factors, including the age. And one of the things that we did in ReConnect study is went higher on the dose in patients who weigh more than 50 kilograms. The dose is 750 milligrams per day administered in two equally divided doses at 375 BID. In fact, the open label study, a good proportion of patients are rolling over into long-term extension study, and we have discussed this in the past. Currently, if you look at all the way back to the patients who enrolled in the very first father-like syndrome study, some of these patients are exposed to G1002 for over eight years now. This level of persistency is unprecedented in neuropsychiatric trials. It just speaks to the durable efficacy or effectiveness of ZYN-002 in this patient population. I hope that answers all of your questions. I know it was a multi-part question. We did not want to miss anything. Thank you.

Super. That's helpful. Looking forward to the data.

Thank you, Charles. Thank you. We go next now to Francois Brisebois at Oppenheimer.

And this is John Gregory Dean on for Frank Brisebois at Oppenheimer. Thank you for taking our questions. I was wondering, why should we feel comfortable that tolufen HD has a higher likelihood of success in IH patients?

John, thanks for your question. I think we have data with regard to, and Kumar can expand, showing dose response and exposure response with Pitocin over the years in the clinical trials that have been done.

Good morning. Thanks for the question. Look, I would like to answer this question in two parts. First and foremost is efficacy, evidence for efficacy of Pitocin in patients with idiopathic hyposomnia in general. The Intune study clearly showed the magnitude of efficacy. The open label was quite efficacious compared to what is recognized as clinically meaningful. In the long-term extension study, patients continued to derive benefit one year out, and they were within the normal range for wakefulness. And moving on to Pitocin HD formulation, it's an optimized formulation of Pitocin with an optimized PK profile and the higher dose. And there is a body of evidence from all of our clinical trials that show a clear dose response and exposure response. So based on all of this data, we have high confidence that Pitocin-HD will not just be efficacious in patients with idiopathic hyposomnia, but we will see a larger magnitude of efficacy in excessive data and sleepiness, and also impact Symptoms like sleep inertia, which is a core symptom in patients with idiopathic hypersomnia for which there are no approved treatments. And finally, the trial design, Frank. The upcoming study, which we plan to initiate in the fourth quarter of 2025, will be a double-blind placebo-controlled randomized study. And with randomized retoll study design, there are some challenges on how to interpret the data. And the traditional parallel on design study will be much more helpful in interpretation of the data. Thank you.

Thank you. We go next now to David M. Sellam at Piper Sandler.

Hey, thanks. So regarding pitollicin-HD, I'm I want to drill down in your assumption for 2028 PDUFA. There's obviously a number of trials in NT1 and NT2 and eventually IH. for various orexin agonists. So, can you talk to how you're feeling about pace of enrollment of your Pitocin HD trials and how confident you are in your 2028 assumptions, given that you're competing for patients? Thanks.

Yeah, good morning, Dave. No, great question. I think Kumar can give you sort of our assumptions and the plan on the development program.

Hey, good morning, David. Thanks for the question. Yeah, there is competition. Many clinical trials are ongoing. But if you look and compare and contrast to clinical trials in with idiopathic hypersomnia, there are relatively less number of clinical trials in idiopathic hypersomnia. And the good thing is, based on the data from the in-tune study, We have already showed a robust signal, and that will definitely help with the recruitment of the adolescent HD clinical trial compared to other clinical trials that are ongoing or that are coming up. And also, this is a global clinical trial. We just completed idiopathic hyposcomia clinical trial, so we have established relationships with the sites. We know these sites very well. Our long-term extension study is still ongoing, so we have continued relationship with these sites. All of these things will factor into on how we will report for our upcoming phase 3 clinical trial with pitulacin. We are confident in the timeline.

What about competition for patients with narcolepsy?

Yeah, good question, David. We are also on track to commence Phase 3 study in narcolepsy with pit-olephant H.D. in the fourth quarter and anticipated to do for date in 2028. Once again, I would like to refer back to, we have been working with these investigators for a number of years. We know the site, and also this is going to be a global clinical trial. Our partner, BioPlaza, they are very active in Europe. So based on everything that we know about the disease condition, the clinical trial site, the investigators, we feel confident with our timelines.

Yeah, Devon, I would also add, I think we have plans with regard to other regions globally where we're able to sort of access in terms of accelerating that trial, having access to patients, and being able to hit our timelines.

All right, thank you.

Thanks, David. Thank you. We'll go next now to Greg Suvanovich at Mizuho Securities.

Good morning. Congrats on the quarter and the year, and thanks for taking my questions. I just want to first congratulate you on the patent settlement that you announced this morning. I was wondering if you can comment what the status is of the remaining patent challenges. If you could remind us how many other patent challenges there are. And also I believe in your third quarter queue there were some upcoming dates potentially even starting next month in terms of litigation. So if you could just remind us on timelines with the litigation and potential kind of next steps there. Thank you.

Yes, you're great. Yeah, good morning. So I think that, you know, with regards to the ongoing processes, so, you know, obviously, you know, this morning, you know, we announced the first generic settlement agreement with Novagen Pharma, and it's, you know, one of the seven antifilers. You know, with regards to the next steps, I think it's important to remember that, you know, both, you know, the regulatory and legal processes continue forward in parallel, you know, with regards to you know the end of process um so you know while we'll see the um the ongoing process you know i think the the markman hearing as we mentioned is uh scheduled for march um and that sets up the claims construction um and then followed by you know the trial which will take place in in 2026. I think, you know, we are, you know, beyond the first settlement. We're actively engaged with the other antifilers, but obviously we can't comment on ongoing litigation matters, and we'll provide, you know, updates as appropriate. But I think what is important to remember, you know, in terms of, you know, sharing the news, that the Novigin settlement really reinforces the strength and durability of of, you know, Harmony's intellectual property. And I think it also shows how we're committed to, you know, vigorously defend the intellectual property on the state. And we'll provide updates, you know, as appropriate going forward on the rest of the end of litigation process.

Okay. Thank you.

We'll go next now to Amy Fadia at Needham.

Hi, good morning. Thanks for taking my question. I've got one question and a follow-up. Firstly, just on ZYNO2, with the data coming up later this year, it's certainly a focus for investors. Could you sort of frame what would be success for the trial in terms of the endpoints and how much of a clinically meaningful change you would like to see? And can you remind us if uh the sda would accept the first uh sort of phase two three study the connect study as part of the filing you know package um sort of with the two you know phase three trials that are required and then just separately on the idiopathic hypersomnia study for the high dose um maybe you know aside from the change in the trial design what else do you think you need to do in terms of perhaps the duration for which you study the patients, et cetera, to really sort of tease out the benefit of the tolicanidin-IH. Thank you.

Yeah, good morning, Ami. Thanks for your questions. Thanks for your interest in ZYN-002. And I think Kumar can address that so you understand, you know, what success would look like on that phase three trial. Kumar?

Hey, good morning, Ami. Thanks for the question. 01002 is our next major catalyst, top line data readout scheduled for third quarter of this year. Regarding your question about what a successful trial would look like, a successful outcome for this trial will be defined by demonstrating a statistically significant and clinically meaningful outcome on the primary endpoint. which is the social avoidance subscale in patients with complete methylation. In essence, Ami, what we are trying to do in ReConnect study is replicating the positive findings that we saw in the Connect study in patients with complete methylation on social avoidance subscale in this particular patient population. In terms of your question about will the FDA accept the phase 2, 3 CONNECT study data, yes, they will, because at the end of the day, this will contribute to the totality of evidence, not just from an efficacy perspective, but also from a safety and tolerability perspective, and also the extensive data that we continue to generate from the long-term extension study. Because Faselix syndrome is a rare condition, what we need is only one adequately and well-controlled study that shows statistical significance. The data from the CONNECT study will be supportive data in our NDA package if the study is positive. Finally, in terms of your question about idiopathic hypostomnia, pituitary and the trial design, We have a good idea, Ami, in terms of the duration of the study and the endpoints, again, based on the in-tune study. The data from the in-tune study, granted that the primary endpoint was not statistically significant in the randomized withdrawal period of the study, the data from the open-label long-term extension study gave us a pretty good idea in terms of what to expect. with Pitolacent in general, and especially with Pitolacent HD, which is an optimized and a higher dose formulation. One last thing which I actually missed to say is you also asked about the clinical meaningfulness. In the social avoidance subscale for patients with Father Leg Syndrome, a change in about three points from baseline is considered as clinically meaningful. I hope I answered all of your questions. Thanks, Ami.

That was very helpful. Thank you.

Thanks, Ami. We'll go next now to David Wong at Deutsche Bank.

Hi there. Congrats on the quarter and taking my questions. So I had two here. So the first one, just with the TOLUS and HB, could you elaborate a little bit more about the the rationale and approach to look at fatigue and sleep inertia in narcolepsy and IH, respectively? And do you plan to, I guess, pursue these as co-primary endpoints? Are you looking for labeled indications? um and how does that sort of enhance the overall uh commercial opportunity and then also on uh your orexin two receptor agonist i was wondering about how you're thinking about the first human study there and would you do what some of your peers have done in terms of looking at uh sleep deprived healthy volunteers thanks a lot yeah thanks david let me let me just start and then kumar can expand you know with regards to sleep inertia

you know, as a key symptom in patients with IH. You know, in addition to EDS and also in pursuit of a, you know, differentiated label, you know, sleep inertia, somewhat pathognomonic, if you will, like cataplexy is for narcolepsy. So, you know, that is the rationale behind that. And it's also there are scales that are fit for purpose that can address that. You know, in terms of the other thinking around, you know, how we'll capture that in the development program. Kumar?

Yes. Hey, good morning, David. Thanks for the question. So in terms of sleep inertia, David, again, we generated a lot of data from the Intune study, and most of it was discussed at our investors meeting last year. The sleep inertia questionnaire that we utilized as one of the insights in the Intune study showed a pretty good response. And the response was sustained beyond 13 months in the vast majority of the patients. So we know Pitilessence works in sleep inertia, and we know we can capture that improvement via sleep inertia questionnaire. In terms of your question on how do we want the label, of course, the goal is always to get it in the label, differentiated label, with Pitilessence-HT in patients with idiopathic hypersomnia. Regarding your question on orexin receptor agonist, Based on the preclinical data, the potency, the selectivity, potential for once a day dosing, novel chemical structures, good preclinical safety and efficacy data, we believe this is potentially a best-in-class fluorescent receptor agonist. We are on track for IMPD submission in middle of 2025 this year, and we will put the first in human studies in the second half of this year. In terms of how we do that, the goal is to have a nimble and an accelerated clinical development program to make sure that we have the right data sets as we move from one phase of development to the next. We will definitely leverage some of the lessons from other development programs which are slightly ahead of us. In terms of details, whether healthy volunteers, sleep-deprived healthy volunteers directly into patients, that's something that we will disclose in due course of time as we approach those clinical trials.

Great. Thanks, Kumar. Thank you. We'll go next now to Ash Verma at UBS.

Great. Thanks for taking my question. So I wanted to ask about the orexin pipeline asset. There's some emerging literature that is pointing that agonizing orexin can accelerate Alzheimer's pathology. And this has been shown in preclinical and clinical models now. But I wanted to understand how do you think about this as an effect on your program? And would that be at higher doses? And lastly, is that something that would be on the radar of the FDA?

Hey, Ash. Good morning, and thanks for the question. Ash, this is something that used to be discussed many years ago, because in some of the preclinical experiments, there was some increase in tau proteins in the cerebral spinal fluid in the preclinical experiments that had more to do with the RXN1 receptor agonist. But really, What eventually was concluded is it's actually the insomnia and the sleep deprivation that increase the PAU levels rather than anything to do with the orexin receptor antagonist or antagonist itself. So this is not something that we have seen in any of our preclinical models, and also this is not something that has been seen in some of the ongoing clinical trials, and some of who actually have long-term data, for example, in the TAS994 study that was discontinued because of safety issues. So for now, that is not a concern. I don't think there is any level of evidence to suggest any increased risk of cognitive impairment with Oryxin 2 receptor agonists. Thanks, Kumar.

Thank you. We'll go next now to Patrick Truccio at HC Wainwright.

Good morning, and thank you for taking my question. This is Luis Santos for Patrick. and GR, the gastro-resistant formulation. The bioequivalent study is expected to read out this third quarter. What key data points do you expect would support the regulatory submission, and is that regulatory submission still on track for later this year, beginning of next year, for PDUFA date next year? Thank you.

Yes. Thanks, Luis, for your question.

Kumar? Good morning. Thanks for the question. We are on schedule to initiate the pivotal bioequivalence study this quarter, and the top line data we expect to be available in the third quarter. This is a standard pivotal bioequivalence study where we aim to show bioequivalence, which is 80% to 125% of the range for within the 90% confidence interval for CMAX and AUC. In terms of the BUDUFA, we are on track for a BUDUFA date in 2026. Thanks, Kumar.

Thank you. We'll go next now to Jason Gerberry at Bank of America.

Hey, guys. Thanks for taking my questions. I wanted to hit on two topics today, and this is Bob and on for Jason. The first is regarding the RFT letter for Pitocin-NIH. Can you elaborate on the specific concerns raised by the FDA regarding the in-tune study data, and how does this inform the phase three trial for Pitocin-HD, which is expected to start in 4K 2025? Maybe if you can provide some more details on the planned trial design, including primary and secondary endpoints and the planned duration of treatment. I'm trying to get at how this trial addressed the limitations of the in-tune study and provide more robust evidence of efficacy. And then my second question is with regards to the next-gen betolosan. Can you remind us what evidence supports the hypothesis that higher doses of betolosan provide greater weight-promoting efficacy without introducing a saturation effect on H3 receptor inverse agonism? Thank you.

Let me address your first question with regard to the RTF. I think that basically the RTF was based on the FDA's review was on the primary endpoint. That was not statistically significant when they were looking at the SMDA submission. a very traditional sort of conservative approach to that analysis, despite the totality of the evidence and the robustness of the signal that was seen. But I think as we shared, you know, really the focus is on Pitocin HD and the longer-term opportunity there with regards to the plan to pursue, you know, a phase three clinical trial to initiate in the current order. you know, with a randomized prospective parallel group design, which was in, you know, concurrence with the agency in terms of the trial design. And then, you know, all of the clinical trials with Pitocin and Narcolepsy utilizing that design and demonstrating the strong efficacy on excessive daytime sleepiness. So that is the focus there, you know, as we go forward, you know, with regards to the IH program Pitocin HD.

Yes. Hey, good morning, Pawan. Thanks for the question. Pawan, in terms of the Pitocin HD program, as mentioned earlier, we are on track to initiate the study in Q4 of this year and with the potential to do for date in 2028. In terms of the evidence itself, there is a body of evidence from all of our clinical trials that show a dose response and exposure response with Pitocin. The original trials, original pivotal narcolepsy trials that were conducted by our partner Bioprocess many, many years ago employed a dose-to-effect dosing strategy. Therefore, some of the higher doses were never really interrogated. So here we have an opportunity to do that with an optimized formulation at the higher dose and capture the larger efficacy that we anticipate with the higher dose based on the data that we have. We will be doing this without compromising on the safety or tolerability associated with pitolosan. We disclosed data where we did a phase 1B study where pitolosan was administered up to 180 milligrams in repeat dose study. And the safety and tolerability was consistent with the established safety and tolerability profile of . So a really nice opportunity to generate efficacy and safety data in narcolepsy, also targeting fatigue, in idiopathic hypersomnia, also targeting sleep inertia, and an opportunity to have a differentiated label in both of these indications. Thank you. Thanks, Kumar. Thank you.

Thank you. And there are no further questions today. Dr. Dano, I'd like to turn things back to you, sir, for any closing comments.

Yeah, thank you, Bo. And thanks, everyone, for your interest in Harmony Biosciences and for joining us all today. And I wish everyone have a great rest of your day. Thank you.

Thank you very much, Dr. Dano. Again, ladies and gentlemen, this does conclude Harmony Biosciences' fourth quarter and full year 2024 Financial Results Conference call. you may now disconnect your line and have a wonderful