Q1 2023 Harmony Biosciences Holdings Inc. Earnings Call
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Speaker 2: At this time, I would like to welcome everyone to Harmony Biosciences' first quarter 2023 Financial Results Conference call. All participant lines have been placed on mute to prevent any background noise.
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Speaker 2: I will now turn the call over to Lewis and Ahead of Investor Relations. Please go ahead.
Speaker 3: Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony BioScience's first quarter 2023 financial results and provide a business update.
Speaker 3: 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 the reconciliation of our GAP to non- GAAP financial measures.
Speaker 3: At this stage of our lifecycle, we believe non-GAAP financial results better represent the underlying business performance.
Speaker 3: Our speakers on today's call are Dr. Jeffrey Dano, President and CEO , Jeffrey Durks, Chief Commercial Officer and Sandeev Kapadia, Chief Financial Officer.
Speaker 3: 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 reference in our SEC filing for additional details. I would now like to turn the call over to Dr. Jeffrey Dana. Jeff? Thank you, Lewis. And thank you everyone for joining our conference call today.
Speaker 3: I would like to begin this call by expressing my appreciation to the Harmony board of directors for their confidence in me and my ability to lead the company forward in this next phase of Harmony's growth story.
Speaker 3: For this next phase, I will be joined by my colleagues on the management team, a very talented group of experienced farm executives who share a common goal and whom I have worked alongside to build this company.
Speaker 3: I also want to acknowledge and thank the incredibly talented group of people who make up Harmony Biosciences and have generated the strong performance we have demonstrated to date.
Speaker 3: As they often hear me say, it takes a total team effort, which is how we work at Harmony.
Speaker 3: After 12 years as a practicing neurologist taking care of patients.
Speaker 3: followed by 25 years in the industry, touching every aspect of the business, I have seen the impact that developing and delivering innovative treatments can have on patients and their families.
Speaker 3: I was eager to join Harmony at the very beginning of the company's journey, and I am energized by the progress we have made to date.
Speaker 3: In fact, we are pleased to report another quarter of strong performance and operational excellence across our business.
Speaker 3: We saw continued momentum in our commercial business for WAKIX, as well as an advancement of our clinical development programs for Patolism.
Speaker 3: Our strong commercial performance since launch is a result of the unique and meaningfully differentiated product profile of WAKEX and the proven excellence of our commercial organization.
Speaker 3: This quarter we achieved another major milestone, surpassing $1 billion in cumulative net revenues for WAKIX within the first three and a half years since launch, one of the most successful launches ever for a rare disease company. Many of our investors and analysts are familiar with the remarkable journey Harmony has been on since the company was founded in two.
Speaker 3: these many accomplishments. In 2018, we opened the IND for pitollicin and were granted fast-track status and breakthrough therapy designation, reflecting the FDA's belief that pitollicin could address an important unmet medical need for adult patients with narcolepsy. Around the
Speaker 3: We opened an expanded access program to provide treatment with the tollison to appropriate adult patients with narcolepsy while the end day was being prepared and then under review.
Speaker 3: And number of patients who first experienced the tolls in through this Compassionate Use program are still on commercial wake-ups today.
Speaker 3: And most significantly, the FDA approved WAKIX in 2019 for the treatment of excessive daytime sleepiness or EDFs in adult patients with narcolepsy and in 2020 for the treatment of cataplexi in adult patients with narcolepsy. The FDA approved WAKIX.
Speaker 3: along with the other regulatory approvals around the world, was based on a strong body of scientific evidence which demonstrated it to be safe and effective in patients with narcolepsy.
Speaker 3: In fact, the FDA approval was based on clinical data from all 41 clinical trials that were conducted during the development program in over 1,500 patients, which represents a large safety database for an orphan drug approval.
Speaker 3: Most recently, our partner BioPrije was granted EMA approval for WAKIFs for use in pediatric narcolepsy patients down to age six.
Speaker 3: Patient and healthcare professional interest in WAKIS continue to be the fundamental drivers of our business.
Speaker 3: For the first quarter of 2023, we reported Wacox net revenue of $119.1 million, representing an increase of 40% year-over-year.
Speaker 3: Growth continues to be driven by the strong underlying demand for wakix, which Jeffrey Derks will expand on later in the call. In fact, March was the highest month of top line prescription demand for wakix in over three years, and the strongest month of new patient starts in a year. ??.
Speaker 3: For the remainder of 2023, we expect continued growth for WAKIX and believe that the vast market opportunity which remains in narcolepsy, along with a differentiated product profile of WAKIX, provides us with the ability to grow WAKIX for years to come.
Speaker 3: We are confident in WAKIX being a potential $1 billion plus narcolepsy opportunity.
Speaker 3: with the potential to contribute up to an additional $1 billion if approved in idiopathic hypersomnia and other current life cycle management programs.
Speaker 3: As you heard me say before, Harmony remains a growth story.
Speaker 3: with the focus on advancement of our current life cycle management programs for Petolescent and acquisition of new assets to build out our pipeline to drive additional growth.
Speaker 3: We are extremely pleased with the progress we have made across all of our current life cycle management programs.
Speaker 3: I will provide more details on these during the clinical update later in the call, but let me share some highlights of our progress.
Speaker 3: In idiopathic hypersomnia, or IH, we continue to see strong momentum in patient enrollment in our phase three in-tune study, which led to an accelerated timeline, and we now anticipate top-line data in the fourth quarter of this year about six months ahead of plan.
Speaker 3: In Prada-Willy Syndrome or PWS, we are preparing for an end-of-phase-2 meeting with the FDA scheduled for late second quarter to discuss the results from our Phase II Proof of Concept Study and a proposed Phase III trial in patients with PWS.
Speaker 3: We are committed to advancing our development programs and are hopeful that these efforts could lead to additional new indications for Petollison and address the unmet medical needs in these patient populations.
Speaker 3: In addition to our current light cycle management programs for Patolacin,
Speaker 3: It is our intent to build out a broad pipeline of rare orphan neurology assets and our assets in other neurological diseases where we can leverage our existing expertise and infrastructure. To achieve this, we intend to leverage our strong financial position with approximately $392 million in cash, cash equivalents, and investment securities at the end of the first quarter to acquire additional assets across a range of development stages including both early and late stage with the potential to launch both during and after the wake-up cycle.
Speaker 3: to conclude my opening remarks.
Speaker 3: I am honored to have the confidence of the Board and the support of the entire organization to lead Harmony Forward in this next phase of growth.
Speaker 3: I'm extremely proud of the progress that our team has made to date, and I look forward to our continued growth as we help even more people living with rare neurological diseases.
Speaker 3: I will now turn the call over to Jeffrey Dirk's Archive Commercial Officer to provide more details on our commercial performance. Jeff?
Speaker 4: that throughout the council. Thanks, Chancellor.
Speaker 5: Q1 represented another strong quarter of performance, with demonstrated growth and momentum in our underlying business fundamentals.
Speaker 5: Net sales for the first quarter of 2023 were $119.1 million, which represents the 40% growth from the same quarter prior year.
Speaker 5: We also surpassed a billion dollars in cumulative net sales in the first quarter. A significant milestone achieved in less than three and a half years from our launch. Demonstrating value creation for the organization, and a reflection of the impact that we've had on adult patients living with narcolepsy.
Speaker 5: I'd like to highlight a few of our underlying business fundamentals on Slide 5 that drove our performance in the first quarter.
Speaker 5: The average number of patients on WAKIX in the first quarter increased to approximately 5100.
Speaker 5: The average number of patients on WAKIX grew approximately 1200 patients in the last four quarters.
Speaker 5: demonstrating strong consistent growth in our patient base over the last year.
Speaker 5: The growth speaks to the strong interest in wakeings we're seeing in the narcolepsy community. Growth in new patients starts, growth in new prescribers, along with solid patient refill behavior following the seasonal pair dynamics of prescription reauthorizations early in the first quarter.
Speaker 5: We exited Q1 with approximately 5200 patients on WAKIX with strong momentum coming out of the first quarter.
Speaker 5: In March, we saw the highest month of top line prescription demand for WAKIX in over three years, and the strongest month of new patient starts in a year. The performance coming out of Q1 reinforces our confidence in WAKIX and the long-term growth opportunity in adult narcolepsy.
Speaker 5: The growth in patients on WAKIX continues to be driven by a broadening and strengthening of our prescriber base.
Speaker 5: We continue to see growth in new prescribers of WAKIX in the first quarter. And now with more prescribers of WAKIX, then healthcare professionals enrolled in the sodium oxenbate REMS program.
Speaker 5: We anticipate continued-feature growth of WAKIX given the many-flee differentiated product profile and the unique feature of being the only FDA-proved treatment for both EDF and cataplexi that is not a scheduled substance or a controlled substance. Our award-winning field sales team called on approximately 9,000 narcolepsy treating healthcare professionals who see and treat almost 100% of the diagnosed adult narcolepsy patient opportunity. Both the 4,000-proximate, ATP's enrolled in the Oxidate Rums program and the approximately 5,000 healthcare professionals not enrolled in the Oxidate Rums program. Our ability to reach and educate
Speaker 5: This approximately 9,000 narcolepsy treating healthcare professionals and tap into the broad diagnosed narcolepsy patient opportunity, give this confidence in the long-term growth potential for WAKIFS.
Speaker 5: Recent market research conducted by Harmony supports our view of continued growth for our detectives.
Speaker 5: Research conducted in February of 2023 with approximately 70 health care professionals within without experience with WAKIX demonstrated that more than 95 percent of the health care professionals with WAKIX experience stated they would write the same or increase prescribing of WAKIX in the next six months.
Speaker 5: and greater than 50% of those physicians surveyed who would not prescribe WAKES to date indicated their intent to prescribe WAKES in the next six months.
Speaker 5: and one of the highest performing drivers in differentiators for WAKIX with the unique feature as a non-scatial treatment and less potential for abuse.
Speaker 5: To support the continued growth and maximize the long-term opportunity in adult narcolepsy, we continue to evolve our commercial model to ensure we're being both responsive and meeting the needs of our customers.
Speaker 5: Our field CL team has had a year in their territory since the expansion in the first quarter of 2022, building relationships and educating the broad narcolepsy trading healthcare professional audience on the overall risk benefit profile of WAKERS for adult narcolepsy. And our commercial performance is a direct reflection of their effort and dedication.
Speaker 5: To complement our field sales team in-person engagement, we expanded our virtual engagement with healthcare professionals through our remote territory manager team.
Speaker 5: This six-person team are conducting effective outreach to white space narcolepsy trading healthcare professionals who are not covered by our field team.
Speaker 5: Supporting any vacant territories with engagement, as well as serving on-demand requests for a rep contact by health care professionals through our branded website, WakeX.com.
Speaker 5: Our market access field team, for education with payers, has secured broad favorable formulae access for WAKIX.
Speaker 5: and has demonstrated continued growth in coverage and improvement in coverage, helping to ensure and accelerate appropriate adult narcolepsy patients access the WAKIX. Our Field Reimbursement Manager team has been effective in providing subject matter expertise on the reimbursement and access for WAKIX to healthcare professional offices.
Speaker 5: after an unlabeled adult narcolepsy prescription has been submitted to the patient hub. And lastly, our outstanding home office team of tenured and experienced commercial leaders continues to utilize data and insights to drive informed decision making to support our business across the adult narcolepsy patient journey.
Speaker 5: I appreciate the dedication and impact of the entire commercial team, the passion that they have for our business and how they operate in the highly regulated environment of the pharmaceutical industry.
Speaker 5: In summary, I'm excited about the continued strong commercial performance of WAKIX and adult narcolepsy.
Speaker 5: To put our performance into context, we've surpassed sodium oxabate REMS enrolled healthcare professionals in the number of unique prescribers of Wacox.
Speaker 5: We've generated over a billion dollars in net revenue and have over 5,000 patients on WAKIX and less than 3.5 years since our launch, which compares favorably to the Oxidate launch over two decades ago. This strong performance along with our evolved commercial model and strong culture of patient centricity and compliance.
Speaker 5: gives us confidence in the long-term growth potential for WAKIX, and our belief of WAKIX being a billion dollar plus opportunity and adult narcolepsy, with a potential to contribute up to an additional billion dollars if approved in IH and other current life cycle management programs.
Speaker 5: I would now like to turn the presentation back over to Jeff to provide an update on the clinical development and current life cycle management programs for Harmony. Jeff?
Speaker 4: Thank you, Jeff.
Speaker 3: Before I begin the clinical update, I would like to take a moment to announce the appointment of Dr. Kumar Bedoor as Harmony's new Chief Medical Officer.
Speaker 3: Kuhmore joined us last March as the senior vice president and head of clinical development and quickly stepped in and established operational excellence while building out the clinical team.
Speaker 3: His impact has been demonstrated by the efficient completion and top line data readout of our PWS Phase II trial in the second half of last year. And the strong momentum he has been leading in our Phase III Registrational trial in Idiopathic hypersomnia.
Speaker 3: Prior to joining Harmony, Kumar spent six years at ABB and before that six years at Takeda.
Speaker 3: a nationally recognized expert in research and development. He has overseen programs ranging from late discovery, early clinical development to late clinical development and post-marketing studies.
Speaker 3: Kumar was involved in four new drug applications and was the lead for the clinical trial, submission, and approval processes for two of these NDAs.
Speaker 3: He was trained at Cambridge University in the UK and Cleveland Clinic in the US and completed his residency in psychiatry with fellowships in neurophysiology and sleep medicine.
Speaker 3: Kumar is board certified in psychiatry and sleep medicine and holds a master's degree in clinical research from Case Western Reserve University.
Speaker 3: He brings 13 years of experience in drug development in the pharmaceutical industry, along with a keen strategic eye and a steady hand in managing development portfolios.
Speaker 3: I am very pleased to welcome Kumar as a member of our management team.
Speaker 3: Moving to our development pipeline to expand the clinical utility of pitollicin toward potential new indications in additional patient populations living with rare neurological diseases as shown on slide six.
Speaker 3: Starting with our development program in idiopathic hypersomnia or IH, which we are very excited about. We continue to see strong momentum in our Phase III Registration trial in adult patients with IH, known as the Intune Study.
Speaker 3: The strong interest we have seen from both the patient community and clinical investigators has resulted in an accelerated timeline, and we now expect top-line results in the fourth quarter of this year about six months ahead of plan.
Speaker 3: If this phase three trial is successful, it could represent the next new indication for wake-ups in adult patients with IH. Fitolacin could offer a new mechanism of action to treat patients with IH as fitolacin works through histamine to promote wakefulness.
Speaker 3: It is those once daily in the morning rather than in the evening and could potentially address one of the key symptoms of IH known as sleep inertia.
We view this as a significant market opportunity with approximately 40,000 patients diagnosed with IH.
In addition, this opportunity could have significant synergies with our existing commercial infrastructure, as there is significant overlap in the physicians who treat patients with narcolepsy, and those who treat patients with IH.
For Prouder-Willie Syndrome, we are currently preparing for an end-of-phase-to-meeting with the FDA scheduled for late-second quarter to discuss the results from the Phase-2 Proof of Concept trial along with the proposed Phase-3 trial in patients with PWFs. It is our intent to advance the PWFs program to a Phase-3 trial.
anticipate top line data from the SAZ2 Proof of Concept Study in the fourth quarter of this year.
Overall, our current life cycle management programs for pitollicin in total could address unmet medical needs in up to 100,000 diagnosed patients living with IH, PWS, and myotonic dystrophy.
An opportunity that is successful would more than double our diagnosed patient opportunity.
In addition to our current life cycle management programs for Patolson, we continue to make progress on new formulations with our partner, Biofragé, with the goal to extend the Patolson franchise out beyond 2040.
We will provide an update later this year on the status of these programs. Regarding pediatric narcolepsy, our partner BioPrije received approval from the European Medicine Agency or EMA on March 15th of this year for a pediatric narcolepsy indication for WAKIX.
We are working with Bioproject towards the submission to FDA of a supplemental new drug application for pediatric narcolepsy. In addition, we are working with the FDA to gain alignment on next steps in pursuit of pediatric exclusivity for Wacox.
To conclude, we have made significant progress in advancing our clinical development programs with the Pulsin and look forward to providing you with further updates later this year. I also want to take a moment to thank all the patients and their families who are participating in our clinical trials. sophisticated x-rays on investigating new HIV ARB transcript developed by the Pulsin Wave
as well as the clinical investigators for all of their efforts and commitment in helping us to advance our development programs for pitullicin.
I will now turn the call over to our CFO , SunDeeb Kapadia, for an update on our financial performance. SunDeeb?
Thank you Jeff, and good morning everyone. This morning we issued our first quarter press release and filed our 10Q, where you'll find the details of our financial and operating results.
Our financial performance is also shown on slides 7, 8, and 9.
We're pleased to report a great start to the year with growth across several of our key metrics.
including strong revenue growth, improved profitability, and continued cash generation.
Our performance gives us the continued confidence for the remainder of the year, as we remain well positioned to execute on our growth strategy. So let me take a moment to take you through the details of our results.
For the first quarter of 2023, we reported net revenues of $119.1 million compared to 85.3 million in the prior year quarter.
representing a growth of 40%. Our performance reflects the strong underlying demand for weight-ex.
We also successfully navigated the typical Q1 headwind from seasonal pair dynamics and a normalization of trade inventories during the quarter. In the first quarter of 2023, operating expenses were 57.9 million compared to 43 million in the prior year quarter.
The higher operating expenses were primarily driven by an ongoing commercialization of WAKIX and the advancement of our clinical development program.
Operating income improved with first quarter 2023 operating income of 40.4 million.
compared to $27.6 million in the prior year quarter, representing an increase of 47%.
Non-GAAP-adjusted net income for the first quarter of 2023 was $40.1 million, or $0.66, per diluted share, compared to $31.1 million, or $0.51, per diluted share in the prior year quarter, reflecting strong revenue growth and prudent expense management.
We believe non-gap adjusted net income better reflects the underlying business performance. Please see our press release for a reconciliation of gap to non-gap results.
During the first quarter of 2023, we generated approximately 43 million of cash from operations and ended the quarter with 392.4 million of cash equivalents and investment securities. For the remainder of 2023, we expect continued growth quarter over quarter.
in revenue and average number of patients on wake-ups.
We also expect to continue to invest in R&D and SGNA as we advance our clinical development program and support the commercialization of WAPIT.
Overall, we are confident in Waykig being a potential $1 billion-plus narcolepsy opportunity, with the potential to contribute up to an additional $1 billion if approved in IH and other lifecycle management programs. In conclusion, we are pleased with the strong financial performance.
which continues to strengthen our company profile and enable us to execute on our growth strategy. And with that, I'd like to turn the call back to Jeff for his closing remarks. Jeff.
to strengthen our company profile and enable us to execute on our growth strategy. And with that, I'd like to turn the call back to Jeff for his closing remarks. Jeff. Thank you, Sundee.
In summary, as we turn the page on a new chapter at Harmony, we will not rest on our past success.
We will remain focused on helping even more adult patients living with narcolepsy with Wickic.
Completing our phase three registrational trial in idiopathic hypersomnia. Advancing our clinical development program in Prader-Willi syndrome.
working with our partner Bio4j on new formulations to extend the pitullicin franchise to help even more patients living with rare neurological diseases.
and continuing our relentless pursuit of new assets to build out our pipeline.
This concludes our planned remarks for today. Thank you for joining our call, and I will now turn the call back over to the operator to facilitate the Q&A session. Operator, can you please open the call to questions?
Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star 2. We remind you to please pick up your handset and please limit yourself to one question and one follow-up question.
We'll take our first question from Charles Duncan with Cantor Fitzgerald.
Hey, good morning and congratulations, Jeff, on the appointment to CEO . Thanks for taking our question. I did have a commercial question and a pipeline question. I guess he did a great job addressing the commercial dynamics. Thanks.
but it seems like exit number of patients, new patients were notable in the first quarter. I guess I'm wondering how do you see that business ramping now about halfway through the second quarter?
then the second question is related to the pipeline. I'll wait for that. Okay Charles, all right, good morning. Thank you. I'll, you know, let Jeff Zurbz answer the first question about exiting numbers. Sure. Good morning Charles. Thanks for the question. So clearly we're extremely pleased with our continued growth in both the average number of patients as well as the the strong patient count
And we're very pleased with the performance that we're seeing heading into Q2. So hopefully that gives you a little perspective in terms of what we're seeing heading into the second quarter and how to think about the remainder of the year. Just as a follow-up to that, how is persistence tracking? You may not actually have the actual data, but how do you feel about patient staying on drugs? Sure, Charles. So when you take a macro view of sort of looking at the narcolepsy category, you know, this is a lifelong, you know, non-curative type of disorder and patients continually turn through medicines. So if you look overall in the category, on average, patients stay on the product between six and 10 months. And what we're seeing with WAKIX is WAKIX is on the higher end closer to 10 months.
I'm extremely pleased with the feedback that we're getting from health care professionals and patients, and we're really excited about our ability to continue to grow our patient population.
Okay, super. Quick question, pipeline, idiopathic, hypersomnia, need to see the enrollment pace picking up or picked up and ahead of schedule but question that I have is regarding patient heterogeneity. I guess how do you maintain
In terms of the acceleration in the study, I think is a result of the high level of interest from both the patient and HCP community in terms of the phase three IH and tune trial. The patients obviously come in, have a diagnosis of idiopathic hypersomnia. Have a replica.
this condition. So, you know, we continue to be excited for the opportunity, you know, as you know, tracking about six months ahead of plan. And, you know, we're on track to complete enrollment in the second quarter. And then I think, you know, if successful, we look at this opportunity, you know, as a potential next-new indication for WAKIFS.
Sure, thanks Rob.
Sure, thanks Raul.
and we'll take our next question from Franslaw's Brisbane with Oppenheimer. All right, thanks for taking the questions and congrats on a great border here. In terms of the growth here, you talked about the exit number. Remember last year in the first quarter, it was that normal seasonality, the growth to net that happens in the first quarter, but there seemed to be some additional, maybe COVID-related one-offs. Can you just help us maybe understand why that didn't happen? This year, why, yeah, strong first quarter.
moving forward. So one related to changes in the business rules around our patient assistance program. The second related to foundation support Medicare patients. So, you know, we obviously had no additional changes to the business rules in our path this year. We didn't see any disruption in terms of foundation support for Medicare patients. So that helps to explain a little bit more about the
The exiting number of approximately 5,200 really speaks to the strength that we see in the momentum coming out of Q1, and we're really excited about what we're anticipating for the remainder of the year and beyond.
Great. And you mentioned how strong March was and a record setting for new patients. And I'm just wondering, you know, three and a half years into launches, are there ones paying particular, they comes up as to why all of a sudden there's still, you know, some, this much kind of growth?
Sure. Well, there's a couple reasons one. I would say first thing, Frank, is obviously our expanded fuel sales team has now had a year in their geography. So our ability to extend our reach and our frequency to healthcare professionals and educate prescribers and it continues to drive both the breadth and the depth of our prescriber base.
But the other thing I shared in my prepared remarks is, you know, we've compared our launch very favorably to Oxibait. And so you look at that product, I mean, certainly very successful product in the market, helped a lot of patients, and we continue to watch that product grow over its life cycle. And that gives us a lot of confidence in our growth potential, right, because we have the ability to access, you know, most of the...
You know, the oxybate prescribing, healthcare professionals, the non-oxybate prescribing, healthcare professionals, and tap into that approximately 9,000 narcolepsy treating healthcare professionals. But then the other component that I shared in my remarks to Frank is we've just conducted some market research and it's very consistent with what we heard last year. It was done in February with approximately 70 healthcare professionals.
And we continue to see those healthcare professionals with wake-ix experience, 95% of them, had shared that they're gonna write the same or increase prescribing. And even more importantly, 50% of the doctors with zero experience with wake-ix stated their intent to prescribe in the next six months. So we continue to see growth in the depth of breadth of our prescriber base. I think it speaks to the meaningfully differentiated product profile and we're looking forward to growth for years to come with wake-ix and adult narcolepsy.
Yeah, and I think what I would add to that, Frank, is I think one of the drivers in terms of the market research, Jeff, was the non-scheduled status as an important component in terms of the product profile driving some of that interest in continued prescribing.
Okay, great. And then just, I'll sneak in a quick last one here. Can you, both Park, maybe the percentage has a change of patients on both oxo-bates and weight kicks and any update on maybe how reimbursement works for those patients? Thank you. So Frank, it's been relatively consistent. It's been, you know, low double digit percentage of weight kicks patients are also on an oxo-bate.
And what we've seen within the reimbursement landscape is there really hasn't been any changes over the last few quarters. Again, this is a rare orphan population, so it's a small percentage of patients that are spread over about 125 different payers. So, you know, when you're looking at a category when patients are seeing benefit on both products, it is being reimbursed very successfully, and, you know, we're really pleased with our continued growth and uptake.
Great, thank you. And we'll take our next question from David M. Selim with Piper Sandler. Okay, thanks. So, just a couple. First, can you talk about the attrition rate?
associated with wake eggs and is it fair to say that it that a potentially lower rate of attrition could be driving that number in terms of average patients on drug number one number two can you talk about the cadence of gross to net as the year
and then kind of growth to nets and Sundeep can discuss a, you know, philosophy on share buyback. Sure. Thanks for the question, Dave. So from a nutrition rate, you know, looking at in terms of just discontinuation rate, I mean, we've shared that looking across the category to macro level, at about 12 months within the first year, you see about 30 to 50% of all narcolepsy patients discontinue.
products in that category. So hopefully that helps provide a little bit of insight in terms of patient medication dynamics and then maybe I'll turn it over to Sandeep to talk about grossing that in some of the cadence.
Yeah, no thanks chef. With respect to Grossinat, I think we were seeing basically the same dynamic we see across the industry You know what the pandemic we've seen in the past you know Grossinat tends to be higher in the first quarter as we have higher obligation for certain deductions but but generally normalizes in the second quarter and can be on so we Nothing different from what we've seen in the past and nothing different
business development or as you mentioned maybe return of capital to shareholders. So that's something that certainly has a company we'd evaluate. And as you know we're in a very unique position of the company. We have a strong balance sheet of 392 million of cash and cash equivalent on the balance sheet. We're generating positive cash flow as you saw in the last quarter. Again another quarter of strong cash generation.
and we're a profitable company. So, we have flexibility to execute on multiple of these fronts and certainly something that we're going to continue to evaluate. Thank you. Thanks, David. And we'll take our next question from Greg Subenovitch with Mizzoujo Securities.
Thanks so much. First of all, congrats, Jeff, again, on being named permanent CEO and my best and great success. My first question, it might be might be an obvious answer, but I figured I'd ask the question anyway, but
Now that you are permanent CEO , is there any change in harmonies, corporate goals, and perhaps any change to the near term or longer term? Corporate strategy? So that's my first question.
I'll wait for that before I ask my second question. Yes, sure Greg. Thanks for your comments. With regards to our strategy and my new role, our strategy and focus for the company remains the same.
And I was an integral member of the team who designed our growth strategy along with many folks around the table here. So as I mentioned, we'll continue to focus on obviously growing our core business and helping even more patients with narcolepsy, with Wacix. And then advancing our clinical development programs, which is a key focus.
on new formulations of Patolacent with our partner, BioPrije, with the goal to extend the Patolacent franchise out beyond 2040. In addition, obviously, sort of the last pillar of our growth strategy, looking at new assets to build out our pipeline, an important priority for us.
and with a lot of focus on that as well. So I think in summary, our strategy remains the same and Harmony remains a growth story. And I think given the focus of our growth to advance our less like a management programs, build out.
you know, our pipeline developed new formulations of the Tolison. I think, you know, I'm well positioned to lead Harmony, you know, forward in our next phase of growth. Great. Thanks so much for that. And just maybe follow up questions just more on the commercial side of the business. My first, just in terms of the ability to commercialize Waykix.
just wondering if at this stage in time given what you're seeing out with the sales force, are you basically at 100% back to where you were pre-COVID? I just want to know kind of...
where you're able to engage and whether there's still opportunities to engage even better. And then beyond that, you were able to add about 1200 patients over the last several quarters. And I'm wondering if that's
a good run rate for the company on a go-forward basis or not. Okay, Jeff. Sure. So, Greg, with respect to commercialization of Wacox and sort of where are we, so when you look at in-person engagement with our field sales team, we're at about 85% or so of all of our engagements being front and center in front of a healthcare professional in his or her office.
are in person, engaging with our field team. So we do have a six person virtual remote territory management team that ends up supporting outbound contacts with healthcare professionals in some white space areas, vacant territory management, as well as supporting any requests for healthcare professional.
rep contacts on our branded website. We obviously have implemented a Field Reimbursement Manager team, which is a very standard place across this group. I know that Jazz and Avid all certainly have a team for their respective organizations. In terms of providing subject matter expertise for reimbursement and access for WACICS.
And we have a great organization here. We have an outstanding home office team that continues to utilize data and insights to really drive and inform business decision-making for our business across the adult narcolepsy journey. So I think we are very pleased with our Evolve commercial model. Our main goal is to make sure that we are meeting the needs of our customers and adding value and I think that we're at a
operating at a very high impact level with our field teams, with our remote territory managers, our FRMs, our market directors, as well as our home office team to really be able to commercialize this. And then lastly, with respect to patient ads, so, I mean, obviously, we've seen very strong continued success over the past, you know, 12 months. You know, we've seen approximately 1200 average patients being added the last four quarters. We obviously talked about our average number of patients increasing to approximately 5100.
in the first quarter. Certainly we're not providing any forward-looking guidance, Greg, but I think if you kind of look about moving forward, I think the best analog that we're looking at is really how our launch has been comparing to Oxibate. You know, there's a product that obviously has been very successful in being able to continue to grow throughout its life cycle. Very successful product, has helped a lot of patients, and you continue to see how that product continues to grow over its life cycle.
And it gives us a lot of confidence in the growth potential moving forward, as we talked about. Not only can we tap into the patient opportunity that exists within the approximate 4,000 REMS-enrolled oxabate prescribers, but we can also access an additional approximately 5,000 narcolepsy treating doctors that are not in the REMS program, which gives us access to almost 100 percent of the diagnosed patient opportunity.
And so we do expect continued growth for WACIS for the remainder of 23 and beyond. And as we talked about, we have extreme confidence that WACIS in terms of the long-term growth opportunity is going to be a billion-plus opportunity in narcolepsy, and if successful, an additional billion-plus in other current life cycle management programs.
And Greg, the way we sort of summarize that concept is, you know, WAHIS provides broad clinical utility just from a sort of, you know, kind of a medical clinical perspective, you know, reflective of that larger, you know, sort of HCP universe and, you know, which is based on the overall benefit-risk profile.
Thanks again. Yep, that'd be great. And we'll take our next question from Ami Fadia with Needham.
Hi, good morning. Thank you for taking my question. Firstly, Jeff, congratulations on your being announced as the permanent CEO . I have two questions. Thank you. I have two questions.
Can you talk about how the number of healthcare professionals that are prescribing vacics has evolved over the last year or so? And where are the incremental prescribers coming from? Are they ones that are enrolled in the Octaveg Rems program or out of the group that? And then also if you can talk about the number of patients being prescribed vacics.
the evolution of our number of unique prescribers of WAKIX, what we've seen is a very consistent growth in the number of new prescribers even going all the way back to COVID. And I think it speaks to our ability to tap into 9,000 eligible narcolepsy treating healthcare professionals. So our rate of new ads has been, as I said, very consistent every single quarter that we've had since COVID.
They're coming from the oxyby, REMS enrolled, healthcare professionals, but certainly we have a very, very high number of prescribers within that universe. Those healthcare professionals tend to be more comfortable in diagnosing and treating narcolepsy. So we've penetrated that audience very deeply, but where we're really seeing continued growth is in that additional 5,000 healthcare professionals that are not enrolled in the REMS program.
We did a lot of analytics that really supported our expansion of our field sales team. And there were about a thousand healthcare professionals that had just only prescribed wake promoting agents really in a refill capacity. And we started to see those healthcare professionals initiating treatment with WakeX, which speaks to the broad clinical utility that Jeff spoke of earlier.
The fact that it's the only non-schedule treatment option, you can write it with refills, health care professionals that really aren't comfortable with DEA scheduled medicines. So we're seeing growth more predominantly from that 5,000 audience in the 4,000 because we're very penetrated. But the growth that we're seeing in that 4,000 oxibute rems and role doctors is in the depth of their prescribing. Right, there's a higher...
continues to grow as we get further in. We're very, very pleased with the fact the vast majority of healthcare professionals that start one patient on Wacox ultimately find a second, a third, a fourth within their practice to start them. Given the rare orphan model on me, that evolution, it's not, I start two people in the same month.
prescriber base but also the depth.
Great, that's helpful. Just in regards to business development, I believe you indicated that you're exploring opportunities that could result in a new product launch both during and after the LOE for????? to take an easy approach to theerna so it would be more resourceful and are more likely to
Can you talk about the type of assets you are evaluating at the moment and if there were maybe more than late stage, any color on that would be helpful.
Yes, sure, Ami. I think we continue to be active in the space evaluating the BD landscape and potential opportunities. And as I mentioned, it is a strategic priority for us. Obviously, we're in a solid position to execute on business development, but they're strong cash position, approximately 309, 2 million.
as of end of March. In terms of it continues to be a target rich environment and we're looking at across both early phase and late phase of development to launch both during and beyond the wake it's life cycle.
We want to be strategic in the decision making so when we announce a deal, it will make sense and be a good fit for Harmony. So we're really looking at...
a lot of different opportunities across development phases focused on orphan rare neurology, which is sort of the sweet spot, but also looking at adjacencies and other neurologic disorders where we can leverage internal expertise and our infrastructure.
So, sort of a broad, you know, looking at the landscape broadly, but then honing in and trying to be strategic for, you know, what would be a good fit and make sense for harmony.
Thank you. Thanks, Ami. And we'll take our next question from Corinne Jenkins with Goldman Sachs. Good morning, everyone. Maybe two for me. First, we talked a bit about the patient growth this quarter. It was about 200, which is a bit shy of your stated...
in line with our expectations. We've not stated moving forward 300 patient ads per quarter. First quarter, as you know, we've got obviously the normal seasonal payer dynamics. You've got reauthorizations of prescriptions. And one of the unique things that we will see as we move further into our launch is the more number of established patients that we carry over year over year, the more patients that are going to be facing these reauthorizations. So if you go back a year, we had a
process that usually takes January and early February . And what we're seeing really is a very, very strong dynamic and momentum coming out of Q1 with March really being, as we've talked about, the highest number of top line prescriptions that we've seen in three years. And new patients starts in a year. So we're looking forward for that momentum to carry forward. But I think our ability to grow 200 average patients, it's 100% higher than a year ago without the one time seasonal, sort of the one time dynamics.
that we talked about earlier in the call, we're really pleased with what we're seeing. We're really excited about the future growth potential for the brand and this product becoming a billion dollar plus opportunity. And then you've mentioned that there was about 5,000 physicians that aren't on REMS but have prescribed WAKIX. I'm curious if you could give us a sense for how many patients on average those physicians are treating that would be candidates for WAKIX.
Sure. So, Corinne, there are 5,000 healthcare professionals that are not enrolled in the REMS Oxibate Program. It's not that all 5,000 of them have prescribed wake exhibits. That is a very unique opportunity for us to tap into over our life cycle. So, we've seen within the 4,000 Oxibate REMS Program doctors.
a large percentage of those individuals have prescribed. You're probably looking at well over 1,000 of those 5,000 healthcare professionals outside the Oxabay program that have prescribed the product. And we continue to see growth at a very regular cadence from that 5,000 group. Clearly, those are individuals that are not a large sleep center.
They probably have three to five narcolepsy patients under their care. Some may have as many as five to ten, some may have as few as one to three, but they all represent opportunity. Our expanded fuel sale team really has been sort of right sized to be able to appropriately reach and frequency with these healthcare professionals to educate them. And lastly, in terms of who's an eligible patient for wake...
response. Yeah, that's helpful. Thank you.
Yeah, and Corinne, I think what Jeff mentioned before, in terms of those HEPs that are in the Oxabate REMs, they tend to be more experienced with more patients that they're managing. So it's the depth of describing in that group where the opportunity continues. The other 5,000 outside the Oxabate REMs, they are probably not managing as many patients.
So, you know, I think the breadth across that group with regards to the opportunity for continued growth in the brand.
Great. Helpful. Thank you. Thanks, Corinne. And we'll take our next question from Jason Garibari with Bank of America.
Hey guys, good morning. Thanks for taking my questions. First one, just ahead of the phase 3 IH readout, I was curious how you'd frame the bogey for commercial success for weight kicks. Do you need to match sort of the treatment effect size?
that Ziwave saw, which I think was like a six and a half point placebo adjusted ESS delta, or is something less than that considering Wake-X's other differentiating factors enough. And then my second question is more about just as we see more Oxivate competitors trickle into the market this year,
How you're thinking about 2024, grossed in net, and just net pricing dynamics for WAKIX DC? Any impact there at all? Thanks. Yes, George A. With regards to the IH, let me answer that and pass over to Jeff Dirk's. With regards to the Intune study, I think what success would look like is obviously defined by a positive outcome on the primary end point around improvement in EDS, it's measured by the airport's sleepiness scale.
I think as you know, it's a randomized withdrawal design and enriched design with four weeks of randomized withdrawal phase. So I think in terms of the magnitude with regards to, we know that the data in the narcolepsy trials showed about a five to six point difference from baseline to endpoint in improvement in F-worth.
And given that IH is an adjacent-seated narcolepsy, anticipating sort of a similar kind of outcome. In addition, looking at other important endpoints around sleep inertia and the idiopathic hypersomnia severity scale. So I think we're confident in terms of the mechanism of action and how pitollicin would perform in patients with IH.
and look forward to top line data readout in fourth quarter this year. And then Jason, answer your second question about just oxybac competition and sort of how we're thinking about 24 and even really what we're seeing now is we continue to be extremely pleased with our growth and what we reported in Q1 with respect to net sales and growth.
more importantly, growing beyond Oxibate, right? As we've talked about this, you know, segment of doctors that are Oxibate REMS enrolled, but we have this unique opportunity in the 5,000-ish healthcare professionals who are not enrolled in the REMS program that we can tap into that, you know, unique diagnosed patient opportunity. You know, moving forward, we've talked with payers. We have not really seen any major changes with respect to, you know, contracting. We don't.
question from Danielle Brill with Raymond James.
Hi guys. Thank you for squeezing me in and Jeff, congrats. Much deserved on the promotion. So I just wanted to clarify a follow up to a prior question on the expected run rate moving forward. It sounds like moving forward we should be anticipating around 200.
in that patient ads recorder, is that fair? And then I wanted to ask, so
Obviously, there was unfortunately a citizen's petition filed recently. I'm curious if this is something that is even on the radar of KOLs and the narcolepsy community, and if so, if this has had any impact or if there's been any feedback from prescribers.
Yeah, off's out there. Thank you. Good morning, Danielle. Thanks for the question. Happy week we could squeeze you in. So let me respond to the question about the citizens petition first. And then Jack and...
provide the follow-up question that you had. So while we take the allegations stated in the citizen's petition seriously, it is our position that the citizen's petition is full of unfounded allegations. And we're confident that a careful review of the unfounded allegations.
in light of the data and information available to FDA from a broad range of sources, will ultimately lead the agency to deny the petition on the merits.
And with regards to Wacix, you know, and it received regulatory approvals around the world based on a strong body of scientific evidence, which demonstrated to be safe and effective in patients with narcolepsy. So I think that, you know, with that we remain confident in the overall risk-benefit profile of Wacix based on the robust clinical development program, post-marketing safety data that we submit on a regular basis and the FDA reviews on a regular basis.
headwinds Q2 and Q4 tend to provide some tailwinds. So you're thinking about the business correctly moving forward, but I think we've got really strong momentum going into Q2. We expect the patient ads are going to really probably mirror those dynamics that we see. We know that there's a significant growth opportunity ahead of us. Obviously looking at at Oxabate is a great analog.
Operator? Thank you.
I'm showing no further questions. I would now like to join the call back to management for any closing remarks. Yeah, thank you, operator. And thanks to everyone for joining our call today and for your interest in harmony. As you heard from the team this morning, our business remains strong, and our growth potential is significant.
We will continue to focus our efforts on addressing the unmet medical needs of patients living with rare neurological diseases. I am proud of the team. I am excited to lead Harmony forward in our next phase of growth. Thank you and have a great day. This does conclude today's Harmony Biosciences.
1st Quarter 2023 Financial Results Conference Call. You may disconnect your line and have a wonderful day.
And that.