Q3 2022 Harmony Biosciences Holdings Inc Earnings Call
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Yes.
Yes.
Please standby your program is about.
To begin.
Good morning, My name is Gretchen and I will be a conference operator today at this time I would like to welcome everyone to the harmony Biosciences third quarter 2022 financial results Conference.
Carl.
All participant lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you'd 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 require operator assistance. Please press star zero.
I will now turn the call over to Louis <unk> head of Investor Relations. Please go ahead.
Thank you operator and good morning.
Everyone and thank you for joining us today as we review Armani Biosciences third quarter 2022 financial results and provide a business update.
Before we start I encourage everyone to go to the investors section of our website.
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 presenters on today's call are John Jacobs, President and CEO .
Dr. Jeff <unk>, Chief Medical Officer.
Jeffrey <unk>, Chief commercial officer, and Sandeep, <unk> 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.
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 John Jacobs John .
Thank you Louis and thank you everyone for joining our conference call today.
We delivered another strong quarter in Q3, as we continued to execute on our three pillar growth strategy and we are excited about the momentum we see in the business positioning us well for the remainder of the year.
I would now like to highlight our progress on each of the three pillars of our growth strategy in the context of Q3 2022 performance or so on slide three.
Starting with pillar, one which is to optimize the commercial performance of <unk> in.
In Q3, 2022, we delivered another strong quarter for <unk> with net sales of $117 2 million up 45% year over year increase for the quarter.
Our performance reflects the continued demand for <unk> and the significant unmet need that remains in the narcolepsy market.
For the remainder of the year, we expect continued growth for <unk> and we believe that the vast market opportunity, which remains in narcolepsy provides us with the opportunity to grow where it takes for years to come.
Let's move on to pillar, two which is to expand the clinical utility of wake X beyond narcolepsy.
This morning, we announced topline results from our phase II proof of concept study in patients with <unk> Willi syndrome top.
Top line data showed a positive signal on the primary outcome of excessive daytime sleepiness and we intend to advance this clinical program and PWM.
Dr. Jeffs, Dana will provide more details on the top line study results later in the call.
We also continue to make excellent progress on our phase III <unk> study for <unk> in idiopathic hypersomnia or IH.
This opportunity if successful could be the next potential indication for <unk>.
The IH opportunity is synergistic with our existing expertise and infrastructure with the same HCP call universe is narcolepsy, which will allow for significant efficiencies for the launch if we succeed.
We are excited with the continued advancement of our pipeline programs and are hopeful that these efforts could lead to additional indications for <unk>.
And finally pillar III acquiring new assets through business development to expand our portfolio beyond <unk>.
In late September we closed our new agreement with buyer per J, which will enable us to pursue new therapeutics based on <unk> for the treatment of narcolepsy and potentially other indications mutually agreed to by the parties.
If successful these efforts could expand harmonies franchise in narcolepsy and potentially other indications by yielding one or more new products with the potential to launch during the <unk> lifecycle.
We look forward to providing additional updates as we advance these efforts.
As we have said before we began our business development efforts early in our company history. So we could take the time to be thoughtful and prudent in what we acquire and flexible on the types of transactions, we're able to consider.
Over time, our intention is to develop a broad portfolio of rare orphan neurology assets <unk> assets and other neurological diseases, where we can leverage our existing expertise and infrastructure.
To achieve this we intend to leverage our strong financial position to acquire additional assets over time and across a range of development stages, including both early and later stage with the potential to launch both during and after <unk> lifecycle.
We are in a solid position to execute on pillar three as our business fundamentals with <unk> remained strong we had approximately $316 million in cash cash equivalents and investment securities as of Q3, and we anticipate that we will continue to generate cash moving forward.
Overall I am extremely pleased with the progress on our three pillar growth strategy.
We remain confident in <unk> being a potential $1 billion plus franchise in the coming years via narcolepsy in additional indications and with that as a foundation I am truly excited about what we can achieve next at harmony.
I would now like to turn the call over to Jeff <unk>, Our Chief commercial officer to provide more details on our commercial performance Jeff.
Thanks, John we continued to see strong momentum in our business and made significant strides in the third quarter of 2022, both in net revenue and underlying business fundamentals shown on slide four.
Net revenue for the third quarter was $117 2 million.
Which represents a 45% increase from the same quarter previous year.
We're also pleased with the 10% sequential growth from the second quarter of 2022, demonstrating continued strong performance and growth for wake in the adult narcolepsy market.
I'd like to take a moment to highlight a few of our underlying business fundamentals on slide five that drove our performance in Q3 2022.
The average number of patients on <unk> increased to approximately 4600 in the third quarter.
The growth in Q3 reflects the continued strong underlying demand for Waco building upon the strong second quarter, we saw earlier this year.
Q3 top line prescription demand new patient starts and resold behavior remains strong through the typical summer seasonality in part due to the following factors.
First how many field sales in person engagement with health care professionals and their office staff increased in the third quarter.
Approximately 85% of all harmony fueled sales engagements with healthcare professionals and their office staff were in person in Q3, an approximate 10% increase from the previous quarter.
The increase in access allowed for further education and engagement with health care professionals on the meaningfully differentiated product profile of weakness and provided an opportunity for our expanded field sales team to drive <unk> growth in both new and existing prescribers.
Second the weakest prescriber base continued to grow we saw growth in new writers of wages as well as growth in prescribing from existing wake its writers.
Growth in new prescribers continue to come from writers of traditional narcolepsy treatments as well as health care professionals, who have been reluctant to prescribe other available scheduled narcolepsy treatments.
Existing prescribers continue to find new adult patients with narcolepsy and their practices for wafers, both naive patients as well as the existing patients currently on other treatments with the residual symptoms of excessive daytime sleepiness or cataplexy.
The continued growth in both the depth and breadth of our prescriber base demonstrates the broad clinical utility weakness in what we believe is a significant opportunity for growth in the years to come for <unk> in adult narcolepsy.
Recent market research conducted by harmony with approximately 70, narcolepsy treating health care professionals reinforces our belief and demonstrated strong attempt to increase future prescribing of <unk>.
The vast majority of weakest writer surveyed expressed intent to increase their prescribing of lakes inside the patient satisfaction and positive feedback on treatment as a primary driver.
And lastly, we saw the impact of our field sales force expansion.
Our expanded field sales team that was in place at the beginning of the second quarter extended their reach and frequency of our educational outreach among narcolepsy treating health care professionals in the third quarter.
The increase in in person access coupled with greater reach and frequency and our education helped to drive new patient starts among new and existing prescribers.
We are excited about what we're seeing from our award winning sales team and the difference they're making in the narcolepsy narcolepsy community.
In summary, we believe our continued strong performance highlight the large remaining opportunity in narcolepsy.
We are beginning to see an anticipated rhythm to our business and we continue to tap into this opportunity as the market allows around the typical seasonal dynamics that the pharmaceutical industry as a whole experiences each year.
Our strong performance and solid underlying business fundamentals of latex affirm our confidence in the future growth opportunity for <unk> in adult narcolepsy and reaffirms our belief that <unk> is a potential $1 billion plus franchise opportunity in narcolepsy and other additional indications.
I'll now turn the presentation over to Dr. <unk> for an update on our clinical development programs Jeff.
Thank you, Jeff and good morning, everyone.
I will provide an update on pillar two of our company growth strategy to increase the clinical utility of <unk> towards potential new indications in additional patient populations living with rare neurological diseases.
This morning, we announced promising initial topline data from our phase II proof of concept trial in patients with product Willi syndrome for PWM.
On behalf of harmony and we'd like to thank the patients with PWM and their families who participated in this clinical trial.
As shown on slide six this trial was a randomized double blind placebo controlled study designed to assess the safety and efficacy of <unk> in patients with PWM.
This proof of concept study was not powered to demonstrate statistical significance, but rather was designed for signal detection.
This study included patients aged six months to 65 years, who were evenly randomized in a one to one to one fashion to low dose <unk> high dose <unk> or placebo treatment groups.
The tolson dosing was based on three age cohorts children six to less than 12, adolescents 12 to less than 18 and adults 18 to 65.
And another objective of the study was to evaluate for a dose response to <unk> in patients with PWM us.
The primary endpoint of this study was the evaluation of excessive daytime sleepiness or eds as measured by change from baseline to end of treatment on the Epworth sleepiness scale for children and adolescence referred to as the ESF Chad.
Parent caregiver version of this scale.
The demographic data showed the following <unk>.
A total of 65 patients enrolled in the trial now.
91% completed treatment and all but one patient opted to continue into the open label extension, which is ongoing.
Mean age of the study population was 12% to 13 with 51% of the patients male and 49% female.
Of the total study population 52% were children.
29% were adolescence and 19% for adults.
The top line study results are summarized on slide seven.
Mean baseline Esf's, Chad scores ranged from $14 seven to $15 seven representing a moderate to severe degree of Etfs at baseline.
Mean change from baseline to end of treatment on the ESF Chad scores ranged from negative $3 seven to negative five five across all age groups and dosage groups, representing a clinically meaningful change in the active treatment groups.
Which is defined as a greater than or equal to two point improvement on this scale as per the American Academy of sleep Medicine treatment guidelines that were published in September .
2021.
In two of the three age groups the children and adult groups there was a clinically meaningful difference.
A minimum of two points between <unk> and placebo driven by the high dose <unk> treatment group.
In the adolescent age group there was a high placebo response of a magnitude three times that seen in the other two age groups.
Which resulted in the lack of a clinically meaningful difference between the tolson and placebo in this age group.
Slide eight shows the results of a responder analysis from the topline data.
Which was defined as an improvement on the ESF, Chad parent caregiver version of greater than or equal to three points or a score of less than or equal to 10 at end of treatment, which is a more conservative definition of response.
Sure.
Response rates were 70% in the high dose <unk> group <unk>.
<unk> 55, 6% in the low dose <unk> group.
52, 6% in the placebo group.
Lastly, slide nine shows a snapshot of the overall safety Tolerability profile of <unk> seen in this trial, which was consistent with the known safety Tolerability profile of the Tulsa.
Adverse events were reported and 57% of patients onto tolson and 65% of patients on placebo.
Treatment related adverse events were reported in 26% of patients on <unk> and 30% of patients on placebo.
The most common adverse events reported or anxiety irritability and headache.
There was one serious adverse event in a patient in the placebo treatment group.
In summary, we are encouraged with the top line data, which showed that treatment with <unk>.
It resulted in a clinically meaningful reduction in the ESF Chad parents caregivers tours in all age groups and across both low dose and high dose treatment arms.
As well as a clinically meaningful difference from placebo in the children and adult subgroups.
<unk> was well tolerated in this clinical trial with an overall safety tolerability profile that is consistent with the known safety Tolerability profile uptick toalson.
Looking ahead, we expect to receive the full dataset before the end of the year, which will include the results on the secondary outcomes.
Including caregiver and clinician global impression scores.
As well as measurements of behavioral symptoms cognitive function and hyperphagia.
The positive signals observed on the primary outcome of Etfs from this proof of concept study are promising and we look forward to receiving the full dataset from this initial signal detection study, which will further inform our understanding of the data as we plan to advance our clinical development program for <unk> in patients.
With PWM.
In the meantime.
I want to thank our clinical investigators and their teams who partnered with us in the conduct of this trial.
As well as the patient's repeated PWM and their families who participated for whom we are grateful.
As we know there are limited therapeutic options available for people living with PWM, resulting in a significant unmet medical need.
Turning to our other clinical development programs shown on slide 10, we have made significant progress on those as well.
Starting with our development program in idiopathic hypersomnia, where IH.
Which we are very excited about.
After initiating our phase III Registrational trial in adult patients with IH in April known as the <unk> study we.
We are seeing very good momentum in patient enrollment with over 70% of our planned clinical trial sites being active.
If this phase III trial is successful it could represent the next new indication for <unk> in adult patients with IH.
Moving on to our development program, my Atonic dystrophy or DM.
Enrollment continues in our phase II proof of concept study in adult patients with type one my atonic dystrophy or <unk>.
We have activated sites in Canada and areas, where there is a large population of patients with <unk>.
We anticipate top line data from this phase II proof of concept study in 2023, and we will provide an update on the timing of this data readout early next year.
Finally, with regard to pediatric narcolepsy, and a pediatric indication for <unk>.
Our partner Bio <unk> completed a phase III trial in pediatric narcolepsy patients.
<unk> submitted the data to the EMA, a second quarter this year seeking approval for a pediatric narcolepsy indication.
EMA decision on <unk> pediatric narcolepsy submission is anticipated early next year, which could help inform our strategy related to submission of this data to FDA.
In the meantime, we are committed to obtaining pediatric exclusivity for <unk> and submitted a request for a pediatric written request or <unk>.
During the third quarter.
We will provide an update on our interactions with FDA related to this request once we hear back from them.
To conclude we have made significant progress in advancing our clinical development programs at harmony. We are encouraged by the initial top line data from the PWM phase II proof of concept study and the positive signal that was generated for Etfs.
We look forward to learning more when the full data set is available later this year.
After which we will request an end of phase two meeting with FDA.
Our plan is to present the findings at a future medical meeting and submit the full results for publication to a scientific journal.
For IH, we are very excited about the interest and momentum we are seeing in our <unk> study.
<unk> III Registrational trial in adult patients with IH.
We continue to appreciate all the effort to the clinical investigators and their teams who are partnering with us in the conduct of this trial and the interest from the IH patient community.
If this phase III trial is successful it could represent the next new indication for <unk> in adult patients with IH.
I will now turn the call over to our CFO Sandy <unk> for an update on our financial performance Sandeep.
Thank you, Jeff and good morning, everyone. This morning, we issued our third quarter 2022 press release and filed our 10-Q, where you'll find the detail of our financial and operating results.
Our third quarter performance is also shown on slides 11, and 12 and 13.
We experienced yet another strong quarter of performance with year over year growth across several of our key metrics.
We're pleased with our year to date performance and the momentum we're seeing for the remainder of the year.
For the third quarter of 2022, where we reported net revenues of $117 $2 million.
<unk> to $80 7 million in the prior year quarter.
This represents a growth of 45% and reflects the strong underlying demand for <unk>.
In the third quarter of 2022 operating expenses were $82 3 million compared to $45 1 million in the prior year quarter.
The higher operating expenses were primarily driven by the $30 million initial licensing fee part of the new agreement with five per share as well as our ongoing commercialization of <unk> and patient enrollment in our clinical trials.
Operating income for the third quarter was $11 9 million compared to $21 1 million or 43% decrease versus the prior year quarter.
However, excluding the one time $30 million initial licensing fee operating income almost doubled versus the prior year quarter.
In the third quarter of 2022, we released the valuation allowance on our deferred tax asset.
<unk> had a one time $74 5 million income tax benefit for the quarter.
The release was driven by a history of profitability, which is a positive indicator of our ability to realize the value of the deferred tax asset in future periods.
non-GAAP adjusted net income for the third quarter with $58 1 million or <unk> 95 per diluted share compared to $23 4 million or <unk> 41 per diluted share in the prior year quarter.
We believe non-GAAP adjusted net income better reflect the underlying business performance.
Please see our press release for a reconciliation of this measure.
During the third quarter of 2022, we generated approximately $55 million in cash from operations and ended the third quarter with $316 million of cash cash equivalents and investment securities.
As a reminder, the $30 million initial licensing fee to Viper Jay was incurred in the third quarter, but will be paid in the fourth quarter.
Looking ahead, we expect quarter over quarter net revenue growth for Q4, we also expect to see increased and ongoing investments in R&D SG&A as we continue enrollment in our phase III Registrational trial and continued commercialization of <unk>.
In conclusion, our strong performance with <unk> and the resulting cash generation is enabling harmony to make important investments in our business, while maintaining profitability and adding to our strong cash balance to execute on our three pillar growth strategy.
And with that I'd like to turn the call back to John for his closing remarks.
John .
Thank you Sandeep. So in summary, our strong performance positions us well to execute on our three pillar growth strategy.
Based on the year to date results and demand trends, we're seeing for <unk>. We're confident that 2022 can be our best year, yet in company history.
Our intent is to continue growing <unk> sales in narcolepsy via good commercial execution and strong organic demand for this unique and meaningfully differentiated product.
To continue to advance our clinical programs with the goal of expanding the utility of wake X beyond narcolepsy to help bring this innovative therapy to new patient populations.
And to continue to acquire new assets beyond <unk> to develop a broad portfolio of rare orphan neurology assets <unk> assets and other neurological diseases, where we can leverage our existing expertise and infrastructure.
We look forward to updating you on our progress. This concludes our planned remarks today. Thank you for joining our call and I will now turn things back over to the operator to facilitate the Q&A session. Operator can we please open the call to questions.
Thank you at this time, if you'd like to ask a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue. You may do so by pressing star Q, We remind you to please pickup your handset and please limit yourself to one question and one follow up question well take our first question from Francis.
Whereas boys from Oppenheimer.
Hi, Thanks for taking the question congrats on the shop floor to hear so just.
In terms of both the quarter and the data so maybe just on <unk>.
W. S.
Just to be clear EES with gws start.
The placebo response in the adolescent is that something that you.
Thoughts about why that might have been so strong and just I know, it's dangerous to cross compare and this was not powered for stat Sig.
Just looking at your previous trials is there maybe.
Maybe an expectation with this patient population placebo response might be higher than the narcolepsy patient population.
Jeff Andrew you want to take that sure yes. Good morning, Frank Thanks for the question with regards to the placebo response in the adolescent group. So first of all it's a bit too early to tell.
What's happening there without having seen all the data yet.
The first thing in terms of we know that that group.
You look at the numbers.
Small and in that group there were nine patients so there's potential for greater variability.
We also.
<unk> just in the topline data that there was one outlier.
In that group, so given the outlier and these this small and driving some of that variability with regard to placebo response in the other age groups in the children and in the adults. They were consistent with what we saw in the narcolepsy trials. So.
We will obviously be looking into that further.
The one other thing too is that.
When we have the PK data, we'll be able to look at PK PD correlation exposure response, but overall.
We're very encouraged by the overall data in terms of movement.
On the ESF in all of the age groups and in both dosage groups.
More than two points showing a clinically meaningful.
Change in the ISS as.
As well as the separation a clinically meaningful difference in the children and the adults and we'll look at that.
Placebo outlier in the adolescent group can we have the full dataset.
Okay, that's very helpful.
Data Frank we're very excited about it go ahead.
And this is a tough tough patient community to treat as you know there has been.
Many struggles to try to get therapies for patients in this group. So the patient communities encouraged so far with what we've seen and so are we.
Okay, Great and I'll take I'll take the operator, and then follow up quest.
Question. So just any issues I'm just wondering as the sales pitch.
Steadily.
Any have you seen any issues with reimbursement in terms of patients that might also be on <unk>.
Oxidate or has that not been an issue and have you do you have a breakdown what percentage you think of patients are actually on both <unk> and <unk>.
And Alex debate, and whether or not that percentage is wrong. Thank you. Thanks, Frank Jeff Berkes, you want to take that one sure and thanks for the question Frank So.
What we've seen is really strong favorable market access really since very early in our launch Frank's, but we haven't seen any challenges with respect to reimbursement and getting coverage for <unk> patients across commercial Medicare or Medicaid when youre looking at patients that may be concomitantly on both.
<unk> and sodium <unk>, it's a relatively low percentage what we've shared publicly it's low double digits, Frank and given that this is a rare orphan patient community and you've got a small percentage of these patients and they're spread out over about 125 different managed care accounts, we have not seen any challenges in these small cohorts of patients.
<unk> on both oxo bait and wakes continuing to get reimbursement for treatment.
Okay. Thank you very much that's it for me.
Okay.
Our next question comes from David Epsilon from Piper Sandler.
Hey, thanks.
Just a couple first.
Can you comment and I apologize if I missed this on patient persistence and I'm wondering in particular how that.
Has changed if at all.
As youre seeing more and more patients Gregor you see doctors in person.
So talk about that and particularly persistence in the context of other.
Wakefulness promoting agents.
Such as oxidative modafinil.
So that's number one and then secondly.
You've talked a lot about business development and M&A I know you've got a lot of questions about it but I wanted to ask something a little more targeted which is your appetite for adding.
Late stage asset or even a commercial stage assets, where you can in some way leverage the commercial infrastructure you have in place and to the extent you do something thats sort of a larger size. How large can you go in terms of capital allocation. Thank you.
Alright, Jeff our 'twenty you take the first question and I'll take the second one sure so David with respect to patient persistency.
What we've disclosed publicly as it used continue to see discontinuation rates of drugs in this entire category range between 30% to 50% at 12 months and consistent with other chronic medications are usually has an additional discontinuation rate after the first year instead.
It's at a much lower rate.
But it does continue over time, but what we've actually seen recently and it probably doesn't come to any surprise and certainly doesn't come as surprise to some of the health care professionals is as we're coming out of the Covid time period, and as we're getting greater engagement between patients and their health care professionals, we have seen a slight increase.
An improvement in the discontinuation rates among all of these products now health care professionals tell us that <unk> D. C rate is consistent with other products in this category their perception is it's a little bit better.
Then what they are seeing with some of their other traditional medicines and we're seeing great persistency for those patients that stay on the drug about 90 plus percent of patients are compliant taking the drug every day as prescribed by their doctor. So extremely pleased by what we're seeing in the marketplace the recipe or the receptivity of the product and patient feedback.
Yes.
Yeah.
And then David your second question that absolutely, where we are open to later stage assets and assets that may already even be revenue generating as we've said all along we started this journey and business development very early in our company history. So we could be very prudent and choice fill in what we acquire with a distinct focus on what we know.
How to do well at harmony rare orphan neuro <unk> neurology, where we can leverage our strong and proven successful infrastructure and experience base in this arena and so that absolutely includes later stage assets. In fact, our desire is to build a portfolio of both early stage and later stage assets that has the potential.
Central for product launch, both during and post <unk> lifecycle and finally, we're in a very good position on capacity Sandeep did you want to address our capacity for doing deals sure as you mentioned, John we're in a very strong position.
And over the last quarter, we had $316 million on the balance sheet. As you also saw we had a really strong cash generation of $55 million. This past quarter, we generated.
From operations then of course, we continue to have access to capital whether it would be the that additional debt capital we have still a $100 million shelf at Blackstone that we can certainly pull on and then of course, we can also access the public markets. So I think we have a lot of optionality in terms of capital allocation.
Thank you Sandeep. Thank you David.
Thank you.
Operator any additional questions.
Do we still have connectivity in the line.
Thank you.
Okay Gretchen.
Yes. Our next question comes from Charles Duncan from Cantor Fitzgerald.
Super Hopefully you can hear me, John and team congrats on a great.
Great quarter.
So I had two questions one commercial loan pipeline with regard to the commercial question I guess I am wondering if Jeff or John could speak to the current field sales force I guess I'm wondering if you feel like we're seeing incremental growth in it do you feel like it's optimized.
Would you consider I think you mentioned that you are I guess fully understanding the rhythm in your business. So does that point to a possible guidance for next year.
Yes, Jeff why don't you address the Salesforce component and then Sandeep can address via our thoughts around guidance go ahead sure no great question. Charles Thanks, very much for asking so our field sales team. We have 77 individuals in the field and Charles we do believe and feel that it is optimized for the current adult narcolepsy opportunity, we're calling on them.
9000 health care professionals.
Given what we saw earlier in this year about the broadening of the prescriber opportunity outside of those Oxidate rems enrolled doctors for physicians that traditionally did not prescribed scheduled medicines, we added 10% more of our field sales team. What we saw in the third quarter is with greater openness and engagement we are able.
To increase the reach and frequency of our health care professionals, which really helped to drive new patient starts in both new and existing prescribers.
And one of the other things Charles that we've also done.
To help augment.
Our current in person field sales team is what we learned through Covid is that there is always going to be an element of telemedicine and virtual detailing that's going to exist in healthcare professionals practices. We have engaged an inside sales rep or a remote.
Health care professional outreach team. So we've increased that group to six individuals that are starting in the fourth in the fourth quarter of this year that helps us reach some of the white space areas, where there may not be a representative aligned to a health care professional it helps us provide greater reach and frequency to some of the urban areas in our territories and it also allows.
For us to continue to engage with health care professionals should we see a vacancy in a territory, which really helps make sure that the patient and the healthcare professional community continue to get supported from harmony during those times. So hopefully that helps thank you Jess.
With respect to guidance as you mentioned I mean that next year would be the natural point, where we would certainly consider I can't really provide guidance on guidance at this stage, but.
But generally that that would be the point that we would consider I think look we've got a good history of proven success over over our launch we have a good cadence there. We're pleased with the overall performance and see continued growth opportunity is John .
John mentioned contingency white goods is a $1 billion plus franchise in the coming years with narcolepsy and other indications so more to come we will update you in.
As we go into next year. Thank you guys. Thank you Charles.
Hey.
Can I ask a question on the pipeline.
Sure.
Okay Super So just quickly with regard to the PWM results nice to see now that you are waiting for some additional details, but I guess I'm wondering if you could speak to what you would like to do could you anticipate moving into next stage of development.
And next year and could that be pivotal and then is there any way to provide information on how many of the patients or percentage roughly decided to continuing the open label extension.
Go ahead, yes sure Charles Good morning, So in terms of our plan I think that.
We're encouraged by the positive signals that we've seen from the top line data and obviously the next step is to look at the full data set which will further inform our understanding around the data and then it's our intent to request an end of phase II meeting with FDA as we do plan on advancing.
Our clinical development program for <unk> in <unk> Willi syndrome. So obviously next steps look at the full dataset in.
Informed the this strategy of approaching FDA end of phase II meeting.
And then planned to.
Go into a pivotal phase III trial.
With regards to.
The last part of your question.
We saw that 65 patients were enrolled in the trial.
91% completed.
The treatment and all but one patient opted to go into the open label extension.
So the majority of the patients that completed went into the open label extension.
And.
That's what we saw from the initial top line data.
Yeah Ralph.
We're excited about this data, especially on behalf of the patients caregivers and all of this.
<unk> and folks who work with us to do this this is a community who are really need therapeutic options. Dr. Dana when his team really did a great job, leading us through the Covid pandemic, while the challenges to complete a clinical trial time, Jeff like you and your team did you should be really proud of this accomplishment on behalf of patients and it is our intention.
Into a phase III, but as Dr. Danos as next step in the postpaid.
And we look forward to future growth.
And Charles got those numbers, yes, 65 enrolled.
59 completed the treatment and then 58 of the 59 went into open label extension and that and that is ongoing.
Excellent thanks for the update.
Sure.
Okay.
Our next question comes from Corinne Jenkins from Goldman Sachs.
Hey, good morning.
Good morning.
So I think it looks like gross to nets have been proved pretty considerably year over year, I think list prices up 5%. It looks like net revenue per patient is up about 10%.
Could you talk about what Youre seeing with respect to your gross to net and how we should expect that to continue moving forward and also just if theres any impact of stocking.
What that looks like in this quarter.
Yeah, Hi, Karen its in the bear in terms of gross in that.
As you know you had a gross to net increases typically in the first quarter and then relatively.
Stable for the balance of the year, what we've seen is.
Similar evolution this year as well.
Last year, we did have a price increase earlier this year.
That price increase over last year, but generally it's been relatively stable.
At quarter, two and quarter correct Jeff.
Additional color you want to add to that.
One other thing when you are kind of looking at the average cost per patient.
And just as a reminder, our patient assistance program demand has been relatively flat. So as we continue to add the average number of patients. We're starting to see a higher percentage of revenue generating patients, which is likely reflective in the average cost per patient that you are seeing so I thought that might be helpful. As well as youre looking at your data.
Yes, yes, that's really helpful. Thank you.
Maybe could you just contextualize the data that we saw greater willy's syndrome versus other wake promoting agents that might be used off label in that population.
Dr. Dana you want to take that.
So Korea, and I think that.
In terms of contextualized, so probably.
The reference with regards to what we saw with the Tulsa.
In the Narcolepsy studies, we see similar.
Similar trends with regards to clinically meaningful change.
And across all the age groups in both dosage groups.
Greater than two point difference on the ISS.
In terms of there.
Theres not a lot of data in terms of other wakefulness agents used off label in product <unk>. So it's hard for me to comment on that.
In terms of the other agents used off label there is no.
Randomized controlled trials to give a frame of reference well said, Jeff there are a few very small studies Corinne maybe ISS as other things out there that just had results.
And I think just the general takeaway from that is that it's a very unsatisfied marketplace. There is a tremendous need for new therapeutic options and as you know a lot of a lot of companies have made valeant efforts to try to help these patients to no avail, and that's disappointing for everyone. Our industry in that patient population, we're very excited about and encouraged about these initial topline.
Results in this POC study right now.
Great. Thank you.
Our next question comes from Chris Howerton from Jefferies.
Chris.
Hey, good morning, Thanks, so much for taking the questions I guess, two probably both for the jets on.
On the commercial side.
Yes, I just wanted to better understand how you anticipated seasonality impacting the quarter. I think you signaled ahead of time that you would've anticipated some headwinds to new patients due to the end of the summer. So I guess I just wanted to see like did you actually see that and what were your learnings.
With respect to this quote unquote.
Seasonality and then on the pipeline question.
I guess, what I'm curious is is excessive daytime sleepiness and approvable endpoint for <unk> Willi syndrome, and what might be some other important clinical features in the eventual package to get a label in that indication.
Indication thank you.
Thanks, Chris Jeff <unk> I'll take the first part of that sure. Good morning, Chris. Thanks for the question. So certainly we are extremely pleased with our performance in the third quarter of $117 2 million.
To put that in context, it was about a 10% increase from the second quarter and as a reminder, our growth from Q1 to Q2 was 25%. So if youre looking at the relative rate of growth between those quarters, you could see it's reflective of the impact of that summer seasonality.
As I shared in my prepared remarks, we did see a couple of strong drivers that help to overcome and offset some of that summer seasonality. Obviously, we saw increase in in person engagement, which we know is very meaningful we saw the impact of our expanded field sales team and we also saw the continued growth in the depth and breadth of our.
Prescriber base and so we believe obviously our strong performance is really highlighting the large remaining opportunity in adult narcolepsy and we are starting to begin to see that anticipated rhythm right you get typical seasonal dynamics in the first and the third quarter where rates of growth tend to be a little bit lower followed by stronger traditional second and <unk>.
Fourth quarters.
And we're excited obviously about the growth opportunity for <unk> and moving forward and we remain confident that this has an opportunity to continue to grow for years to come.
And the second part of the question yes.
Yes, Chris Good morning, So in terms of Etfs as an approvable indication in patients with <unk> Willi two Etfs is a common symptom in that patient population seen an over 50% of the patients and based on our dialogue with FDA and this first signal detection study we believe.
It's an approvable indication.
With clinically meaningful data. So we are encouraged by the initial top line results and obviously, we will engage further with the agency towards designing a pivotal phase III trial.
And in terms of the other symptoms. Obviously this phase II proof of concept study we're looking at other outcomes as you are aware the behavioral symptoms cough.
Ignition and hyperphagia.
We look forward to seeing those data and.
If the data supports.
Clinically meaningful changes on those scales than we would incur.
We include that in terms of the design of the phase III trial with regards to other symptomatic indications.
A label so I think that we will wait to see the full data.
Data set and that will inform our approach with FDA and then.
Design, a phase III trial.
Okay, Alright, well very good I appreciate you taking the questions and congrats on the quarter again thank.
Thank you Chris.
Our next question comes from Greg <unk> from Mizuho Securities.
Hey, good morning, Jim how are you congrats on a great quarter.
One of my questions is about.
The trends that you might be seeing for wake as you exit.
Or as you've exited out of September into October .
Any color you can just.
Just provide for us and I just wanted to get it.
I think Jeff you had mentioned this but just get a confirmation on how you are viewing the fourth quarter.
In terms of the.
I guess, the seasonality of the fourth quarter being.
A stronger quarter I just wanted to make sure that those comments still hold up and then I've got a follow up question. Thanks.
Yeah, Greg obviously, we're not providing forward looking guidance, but we have said that we expect continued growth for the rest of this year I don't know, Jeff Berkes, if you want to add a little bit more color to that.
Yes, I appreciate the question, Greg and consistent with John even though we can't speculate moving forward, we continue to see strong momentum in our business and top line.
Demand in new patient starts and refill behavior.
And we do anticipate growth in all of our underlying business fundamentals moving forward quarter over quarter.
It's probably about as much context as I can kind of give you. We're very confident in our ability to continue to grow this brand moving forward and I think Greg overall context is important for the audience to understand right that there are 72% to 80000 diagnosed narcolepsy patients in the U S with tremendous unmet need that remains and so there's we see a lot of long term opera.
<unk> for <unk> to continue to penetrate this marketplace to help patients who are in need to polypharmacy market. <unk> is often combined with other therapies to add synergistic benefit and help these patients. So we see potential growth for <unk> for years to come and that's why we're confident in saying, we see wake acts as a $1 billion plus franchise in narcolepsy and other indications.
<unk> in the years to come.
Okay. Thank you very much and then my.
Final question just had to do with the data that you just shared with US in terms of the proof of concept phase to a trader Willi syndrome, I know that you are expecting.
See the full data set and particularly data on some of the secondary endpoints.
Is there anything in particular that you are trying to get an assessment of that really will help to inform kind of how youre thinking about the.
The next steps are what the pivotal phase III or with the clinical trial design might be.
In terms of what's next for that program.
Dr. <unk> I know you want to take that one sure. Yes. Thanks for the question Greg in terms of the data set obviously the the <unk>.
Primary focus.
Is around excessive daytime sleepiness <unk> mechanism of action the mechanism based approach to our lifecycle management.
That's the primary focus.
Where we had the most confidence so the initial topline data readout and those signals that we're encouraged about as a single detection study and looking at other key symptoms as I alluded to just before.
Other symptomatology, so we'll look for signals on the behavioral aspect of this patient population.
Cognitive function and then obviously hyperphagia as the Cardinal symptom.
PWM, so that full data readout will inform.
The overall.
The aspect of the signal detection study and then based on their findings.
We will inform our approach to design of a phase III trial, but really primary focus around excessive daytime sleepiness and we're encouraged by the positive signals that we've seen in terms of movement on the Es at this scale across all the age groups and both dosage groups.
A telephone.
Okay, and if I could have just one last follow up question just on that.
I think you mentioned that you would.
Expect to share the full results at a medical conference is that fair to assume that this would be some time in 2023, maybe first half of 2023.
We haven't provided timing, Greg yet on a particular conference, but what we have said is that we expect to have the full data set prior to the end of the year.
Okay. Thank you so much for the clarification. Thank you Greg.
Our next question comes from Anthony <unk> from <unk> <unk> company.
Hello. This is on for Annie. Thank you for taking the question.
The question on <unk>.
On the clinical trial results.
So on the <unk> patients are usually on polypharmacy I wanted to know if you can add some color on whether there were any John Doug injections.
You needed to.
Changed.
Hi.
James prescriptions.
Patients on the trial needed to take and is there a new rate.
Any changes on that.
Their medication.
Because of job diagnose actions and.
Also you reported.
Around 12%.
Hi placements.
And there are any.
<unk>.
But one thing that makes the confidence that the level of anxiety with decrease in the open label extension is you are not increasing the dose.
Okay.
Okay.
So I mean with regards to with regards to drug drug interactions. So.
The only.
FDA approved drug for patients with <unk> Willi is growth hormone and we know that they are on other medications for behavioral symptoms et cetera. So there were no specific in terms of drug drug interactions.
It's basically guided by B.
The label for wake effects with regard to the known drug drug interactions.
What was allowed and not allow but.
Other therapies that they're on.
That don't have a known drug drug interaction with <unk>, we're allowed in the trial.
In terms of the.
The level of anxiety in terms of the safety Tolerability profile that we saw in this study is very consistent with the known safety Tolerability of <unk>.
In what we saw in narcolepsy as well as other clinical trials.
And I think thats the initial data that that we have when we see.
The open label extension and longer term exposure, we'd be able to comment further on.
On that and just a comment I mean, good question actually you when it comes down to the practicality of using a drug to help patients who may be on polypharmacy in in the narcolepsy space as you all know <unk> can be safely added on to standard of care therapies.
We have the drug drug interaction data right in our label for wake promoting agents as well as sodium OXXO based products. So that's one of the benefits of <unk> is that it has a very clean profile and it's able to be added onto many meds as you heard Dr. Dean or there wasn't a tremendous need to change therapies on these patients. So there may be some need for a salon.
Group of patients down the road, but wake ex generally is well tolerated and can generally be added onto many of the known therapies in the neurosis.
Thank you.
Yes.
Our last question comes from Danielle Brill from Raymond James.
Hey, guys Hey, this is Alex on for Danielle sorry, she could make hey, Alex.
Good morning.
So, yes, I mean as expected <unk>, we expect to be a bit softer, but you still got the normal 300 net patient adds I mean should we expect a ramp up from 300 benchmark and <unk> looking forward and if I could just tack on one more follow up sorry, if I missed it just appreciate any more color.
On how new patient starts compared to the last few quarters.
Thanks, Alex Jeff Darks any comment on Alex's question.
Alex Thanks, very much for the question. This morning, so with respect to how to think about new patient adds moving forward I mean, it certainly we're extremely pleased with our continued momentum, adding about 300 patients quarter over quarter and although again, we're not providing any forward looking guidance on our business. We can kind of point you back to what we've accomplished in that normal seasonality that we've seen over the.
Last couple of years with very strong topline prescription demand new patient starts has been relatively consistent building on the momentum coming out of the second quarter and as John shared earlier, we believe that there is still a large untapped remaining opportunity in narcolepsy.
And we're very excited about our ability to continue to grow the brand and the underlying fundamentals moving forward.
So hopefully those two pieces of information help with respect to how to think about our business moving forward as well as thinking about new patient adds from the third quarter in the second quarter.
Thanks, Jeff.
If I could do one there.
Are you seeing any patterns in <unk> inventory stocking ahead of any expected mid year price increases.
If so could you walk us through what if any inventory impact you expect for the upcoming quarter.
Hi, good morning.
Generally you do see some increases in inventory driven mostly due to just the holiday season Youll see a couple of days.
<unk>.
And then that obviously reverses in Q1 has to have some of those impacts.
Beyond that theres not much I can share it really will be variable depending on the time when the holidays fall.
And those are other impacts as well.
I would say nothing unusual and yes, nothing different from the sale of the years.
Thanks, so much.
Thanks, Alex.
Thank you I'm showing no further questions. This does conclude today's harmony Biosciences third quarter 2022 financial results Conference call. You May now disconnect your line and have a wonderful day.
Thank you everybody.
Yes.
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Okay.
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