Q3 2023 Harmony Biosciences Holdings Inc Earnings Call

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Good morning, My name is Ashley and I'll be your conference operator today at this time I would like to welcome everyone to Harmony Biosciences third quarter 2023 financial results Conference call.

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 would like to ask a question at that time. Please press star one on your telephone keypad. Please be advised that today's conference call may be recorded lastly, if you should require operator assistance. Please press star Zero I will now turn the call over to Louis and a head of Investor Relations. Please go ahead.

Thank you operator, and good morning, everyone and thank you for joining US today as we review Army Biosciences third quarter 2023 financial results and provide a business update.

Before we start I encourage everyone to go to the investors section of our website to find the materials that accompany our discussion today, including a reconciliation of our GAAP to non-GAAP financial measures.

At this stage of our lifecycle, we believe non-GAAP financial results better represent the underlying business performance.

Our speakers on today's call are Dr. Jeffrey day, now President and CEO.

Jeffrey <unk> Chief commercial officer.

Doctor Kumar, but door, Chief Medical Officer, and Sandeep, <unk>, Chief Financial Officer, and Chief administrative officer.

As a reminder, we will be making forward looking statements today, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties. Our actual results may differ materially and we undertake no obligation to update these statements even if circumstances change.

We encourage you to consult the risk factors referenced in our SEC filings for additional details.

Now I'd like to turn the call over to Dr. Jeffrey Dana Jeff.

Thank you Louis and thanks, everyone for joining our conference call today.

Q3, 2023 was the strongest revenue quarter in harmonies history.

The pace of growth in net revenue and average number of patients on wake X is rarely seen in your for a commercialization of an orphan rare disease product.

What is driving the strong continued growth of wake kicks in narcolepsy is a meaningfully differentiated product profile the strong underlying patient demand.

This sizable market of 80000 patients diagnosed with narcolepsy in the U S and the consistent execution excellence of our commercial organization.

I am proud of this accomplishment and even more important I am pleased that our efforts continue to help even more people living with narcolepsy.

I also know that there are many more people living with narcolepsy, who could potentially benefit from wake effects and that is what we are focused on.

For the third quarter of 2023 reported wake X net revenue of $163 million, an increase of 37% year over year.

We believe that the vast market opportunity, which remains in narcolepsy, along with a differentiated product profile of wake X provides us the ability to grow the franchise for years to come and we remain confident that wakes represents a 1 billion dollar plus opportunity in adult narcolepsy alone and we are well on our way.

Yeah.

In addition to our very strong commercial performance in Q3. We also continued to advance our current <unk> lifecycle management programs as well as expand our pipeline and diversify our portfolio beyond sleep wake.

<unk> Kumar will provide additional details on our clinical development programs later in the call.

Okay.

Earlier this month, we reported top line results from the Phase III <unk> study a tall sit in patients with idiopathic hypersomnia or I H.

While the primary endpoint did not reach statistical significance during the randomized withdrawal phase a robust clinical effect was demonstrated in the open label phase of this study and almost 90% of the patients who completed the trial elected to continue into the long term extension study which is ongoing.

I want to reiterate our commitment to the IH patient community as we are actively pursuing an indication for pitocin NIH and are optimistic in our ability to bring in nonscheduled treatment option to patients living with IH and the health care professionals, who treat them.

We believe that based on the totality of the evidence that we have seen thus far along with the Tulsa, receiving orphan drug designation for IH. There was an opportunity for us to work with the FDA on a path forward.

Once we have completed our review of all the data we will engage with the agency with this goal in mind.

Our current lifecycle management programs for propulsion represent about 100000 diagnosed patients in the U S. So if successful these could contribute up to an additional $1 billion of revenue to the wake X franchise.

Yeah.

Moving to the ongoing work with our partner bio per se on new formulations of the tolleson with the goal to potentially extend the <unk> franchise with new IP out beyond 2040.

We are advancing these programs into the clinic and Kumar will provide more detail on them later in the call.

Another key component of our growth strategy is acquiring new assets through business development to expand our pipeline beyond <unk> and diversify our portfolio beyond sleep wake.

On that front I'm excited to report that we recently closed the acquisition of Zee Norbert Pharmaceuticals, and have added the investigational product XI gel to our pipeline.

This acquisition represents an excellent strategic fit for harmony with development programs focused on orphan rare neuropsychiatric disorders with significant unmet medical needs.

With XI gel, we added a novel product candidate and to late stage development programs that could potentially launch during the waking lifecycle.

XI jealous currently in a pivotal phase III trial for patients with fragile X syndrome with another opportunity based on positive phase two data in patients with 20 <unk> deletion syndrome.

Both of these indications if successful represent a significant market opportunity with the potential to serve 80000 U S patients living with fragile X syndrome.

And another 80000 with 20 <unk> deletion syndrome.

We have welcomed formers I never members to the harmony team and are excited to work with them to advance the XI gel development programs and bring a potential new treatment option to patients living with orphan rare and neuropsychiatric disorders with high unmet medical needs.

As for business development, we are not stopping with this <unk> acquisition, but remained very active with a dedicated business development team, which is continually assessing the BD landscape.

We remain focused on orphan rare neurology assets and our assets and other neurological diseases, where we can leverage our existing expertise and infrastructure.

We're looking for assets across a range of development stages, including both early and late stage with the potential to launch both during and after the wake its lifecycle.

And finally, given our continued confidence in the underlying strength of the business and our conviction in the growth potential for the company. This morning, we announced a new share repurchase program of $200 million.

Given our financial flexibility, we are committed to deploying capital to maximize shareholder value.

In conclusion, Q3, 2023 was the strongest revenue quarter and harmonies history and our business is strong.

We are committed to bringing a nonscheduled treatment option to patients with IH and are advancing every aspect of our business, including our pipeline programs and business development efforts.

I am very proud of the dedication and commitment across our organization as we remain focused on developing and commercializing innovative treatments for patients living with rare neurological diseases, who have unmet medical needs.

I will now turn the call over to Jeffrey <unk>, our chief commercial officer to provide more details on our strong third quarter commercial performance Jeff.

Okay.

Thanks, Jeff.

Q3 was another strong quarter for <unk>.

Had the strongest revenue quarter in our history with continued growth and momentum in our underlying business fundamentals and topline performance metrics.

Net sales for the third quarter were.

$63 million, which represents a 37% growth from the same quarter prior year and the first quarter of over $150 million in net sales.

We continue to see strong double digit growth in net sales for wake X in year four of our commercialization, which reflects the high interest of wave kicks in the narcolepsy market.

The consistent growth in the business reinforces our long term belief that <unk> represents a $1 billion plus opportunity in adult narcolepsy alone.

I'd like to share a few key highlights from our performance in the third quarter on slide five.

The average number of patients on <unk> in the third quarter increased to approximately 5800, an increase of approximately 350 average patients sequentially from what we reported last quarter.

This is impressive growth in average patients in the third quarter was driven by strong topline demand and new patient starts that offset typical summer seasonality, yielding quarterly results consistent with the results we saw in Q2.

The growth in average patients on wake speaks to continued product adoption and most importantly, the large remaining diagnosed patient opportunity that we continue to tap into each quarter as the market allows.

Strong patient interest and prescriber adoption and continue to be key drivers of the growth in average number of patients on <unk>.

We saw continued strengthening of the weakest prescriber base in Q3, both in depth and breadth of prescribing.

The number of unique prescribers on wages increased again in the third quarter and importantly, we continue to see growth in the wake of prescriber base expand beyond health care professionals enrolled in the oxalate Rems program.

In addition, we saw growth in the depth of prescribing within the ox abate enrolled healthcare professionals, even with the availability of new and generic oxalate options.

As we continue to share the meaningfully differentiated product profile of <unk> and the unique feature of being the only FDA approved treatment for eds, and cataplexy that is not scheduled as a controlled substance offers broad clinical utility and appeal to a broader narcolepsy health care professional audience and patient base, which is a driver of our continued growth.

We continue to see meaningful penetration and growth across the approximately 9000 narcolepsy treating health care professional prescriber base and.

In a recent market research conducted in October of this year supports our view of continued future growth in wafers prescribing.

Research conducted with approximately 70 health care professionals with or without experience with the Lakers prescribing showed the following.

100% of the health care professionals surveyed with whiggish clinical experience stated they would prescribe the same or increased prescribing of wakes in the next six months.

More than 40% of those health care professionals surveyed who had not prescribed wakes to date indicated the intent to prescribe <unk> in the next six months.

Nearly 60% of those health care professionals, who had prescribed wakes to date stated they were likely to recommend wakes to peers and colleagues.

And consistent with previous waves of research one of the highest performing drivers and Differentiators for <unk> with a unique feature is the only non scheduled treatment option.

The availability of new and generic oxalate options hasnt impacted the continued growth or existing strong payer coverage for <unk>, given the meaningfully differentiated product profile.

Our ability to reach and educate the broad narcolepsy trading health care professional universe of tap into the full diagnosed adult narcolepsy patient opportunity gives us confidence and continued growth in the long term growth potential for wake X.

In summary I.

Im excited by the strong commercial performance in the third quarter.

Fact, the strongest revenue quarter for harmony to date.

We saw strong growth of 37% of net sales versus the same quarter prior year we.

We saw strong growth in the average number of patients on <unk> to approximately 5800, an increase of approximately 350 sequentially from what we reported last quarter.

We saw continued expansion and strengthening of the weakest prescriber base within and beyond ox debate Rems enrolled health care professionals and payer coverage remained strong even with the availability of new and generic oxalate options.

I appreciate the dedication and impact of the entire commercial team and the passion that they have for our business and the narcolepsy patient community. This strong performance gives us confidence in the long term growth potential for wages and reinforces our belief that <unk> represents a $1 billion plus opportunity in adult narcolepsy alone.

I would like to now turn the presentation over to Kumar <unk>, Our Chief Medical officer to provide an update on our clinical development pipeline Kumar.

Thank you Jeff.

Good day everyone.

Thank you for joining the call this.

Moving on to our clinical development pipeline as shown on slide number seven.

Starting with our development program in idiopathic hypersomnia.

We saw robust clinical effect in the phase III <unk> study with almost 83% of the patients are responding.

Eight week open label treatment period.

With an average of nine four points improvement in airport the steepness Tim schools.

And Edison almost 90% of patients elected to participate in the long term extension study.

Well no statistically significant differences between <unk> and placebo groups on the primary endpoint of PFS and a four week double blind randomized withdrawal period, obviously with times Saturday Olafsson was observed across all prespecified endpoints, including the idiopathic hypersomnia C reactive skin.

Which approached statistical significance P value of zero point zero fixed as well as on the other end points, including promise if fireeye fast Ben and Sleepiness. Your question is.

The safety profile of <unk> in patients with Egfr epic Hypersomnia is consistent with the established safety profile of people listening and no new absurd.

Absolutely.

Almost 90% of the patients who complete the double blind randomized withdrawal period electric to participate in the ongoing long term extension study and we continue to collect safety and effectiveness data from this study.

Unknown Executive: So if they don't hold, we appreciate your patience and ask that you please continue to say bye.

We remain committed to the idiopathic hypersomnia community and are focused on pursuing an indication for <unk> in patients with idiopathic hypersomnia.

We are in the process of conducting a thorough review of the full data set which will inform next steps for the program.

We believe that based on the totality of the evidence that we have seen the floor along with picked all effect receiving orphan drug designation part of idiopathic hypersomnia.

Look forward to engaging with the FDA.

And Patrick really simple.

We received FDA alignment on the protocol for the Phase III <unk> study in patients with dws.

It will satisfy that requirement for both but it's Jason on cloud and now pediatric exclusivity Oswald.

We expect study initiation in the first quarter of 2024.

In my opinion dystrophy type one <unk>.

In one word.

On track for top line data from this phase two proof of concept signal detection study in the fourth quarter.

Unknown Executive: Please stand by, your program is about to begin.

Asphalt pediatric narcolepsy, we are on track to submit a supplemental new drug application to the FDA for an indication in pediatric narcolepsy and the fourth quarters.

Ashley: Good morning, my name is Ashley, and I'll be your conference operator today.

Luis Sanay: At this time, I would like to welcome everyone to Harmony Biosciences' third conference call, 2023 Financial Results Conference call. All participant lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question in the intercession. If you would like to ask a question at the time, please press star one on your telephone keypad. Please be advised that today's conference call may be recorded. Lastly, if you should require operator assistance, please press star zero.

And I just didn't go according to lifecycle management program for the total thing.

Continue to make progress on new with olefin based formulations with our partner <unk> with our GOR to genetic new IP and extent epic olefin franchise beyond 2040.

Let me take a moment and take you through this type of thing.

This new pit olefin based formulations and provide an update on the status of the program as shown on slide number eight.

Luis Sanay: I will now turn the call over to Luis Sanay, head of investor relations, please go ahead. Thank you operator, good morning everyone, and thank you for joining us today as we review Harmony Biosciences' third quarter 2023 Financial Results and provide a business update. Before we start, I encourage everyone to go to the investor's section of our website to find the materials that accompany our discussion today, including a reconciliation of our gap to non-gap financial measures.

We have advanced the first formulation into the clinic this quarters.

The first formulation.

Enhanced pit olefin based formulation.

I think the Delaware and optimized PK profile and higher dosage strength.

The opportunity here is to extend the Petronas and franchise beyond 2040, with a potential for new IP and explore additional indications.

Luis Sanay: At this stage of our life cycle, we believe non-gap financial results better represent the underlying business performance. Our speakers on today's call are Dr. Jeffrey Dana, President and CEO, Jeffrey Dirk's Chief Commercial Officer, Dr. Kumar Badur, Chief Medical Officer, and Sandy Kapati, Chief Financial Officer and Chief Administrative Officer. As a reminder, we will be making forward-looking statements today, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, our actual results may differ materially, and we undertake no obligation to update these statements even if circumstances change. We encourage you to consult the risk factors referenced in our SEC filings for additional details.

This formulation, we will have a full development program.

The second formulation is on track for advancement into the clinic later this quarter.

The second formulation is the Portola St based modified formulation with a potential for clinical differentiation.

The opportunity here is a fast to market strategy for patients with narcolepsy within the basics lifecycle.

This formulation will have an abbreviated development program.

We're also pleased to expand and diversify our pipeline with the recent acquisition of 'em sign up.

We closed the acquisition just about three weeks ago, and we look forward to providing a more detailed update on the <unk> programs at our next earnings call.

Dr. Jeffrey Dana: I would now like to turn the call over to Dr. Jeffrey Dana, Jeff. Thank you, Lewis, and thanks everyone for joining our conference call today. Q3 2023 was the strongest revenue quarter in Harmony's history. The pace of growth in net revenue and average number of patients on WAKIX is rarely seen in year four of commercialization of an orphaned rare disease product. What is driving this strong continued growth of WAKIX in narcolepsy is the meaningfully differentiated product profile, the strong underlying patient demand, the sizeable market of 80,000 patients diagnosed with narcolepsy in the US, and the consistent execution excellence of our commercial organization.

<unk> seen a seamless transition of activities and continued engagement with the clinical trial sites and investigators.

Designer Buck with Duchenne as under in a radio product candidate besides though.

As I said is the first and only pharmaceutical manufactured synthetic kind of every deal the wide of D C and formulated as a patent protected pardon me Houston and Seattle for pasta month delivery through the skin into the effectiveness of the system.

Thanks that is manufactured through a synthetic process in a GMP facility before it is do you want the PSP and has the potential to be a non scheduled product if approved.

Cumulative to basics as I said represents a portfolio in a product opportunity and is currently in our pivotal phase three clinical trials for patients with <unk> syndrome called the reconnect clock.

Dr. Jeffrey Dana: I am proud of this accomplishment and even more important, I am pleased that our efforts continue to help even more people living with narcolepsy. I also know that there are many more people living with narcolepsy who could potentially benefit from WAKIX and that is what we are focused on. For the third quarter of 2023, we reported WAKIX net revenue of $160.3 million and increase of 37% year over year. We believe that the vast market opportunity which remains in narcolepsy, along with the differentiated product profile of WAKIX, provides us the ability to grow the franchise for years to come and we remain confident that WAKIX represents a $1 billion plus opportunity in adult narcolepsy alone and we are well on our way.

Additionally, <unk> was studied in an open label Phase II proof of concept study in patients with <unk> syndrome known aspect inspired pod.

Both of these indications.

First one represents a significant market opportunity with the potential to sell 80000 U S individuals with seismic syndrome, and another 80000 individuals with <unk> syndrome.

To conclude we have.

Great progress not only in advancing our pipeline, but also expanding and diversifying gig with the additional insights though.

Dr. Jeffrey Dana: In addition to our very strong commercial performance in Q3, we also continue to advance our current patullicent life cycle management programs as well as expand our pipeline and diversify our portfolio beyond sleep WAK.

I look forward to sharing additional updates as we continue to make progress on our clinical development programs.

On behalf of harmony I would like to thank all patients and their families who are participating in our clinical trials often of clinical investigators and site personnel for their effort and commitment in helping us to add grandfathered development programs.

Dr. Kumar Badur: Kumar will provide additional details on our clinical development programs later in the call.

Dr. Jeffrey Dana: Earlier this month, we reported top-line results from the Phase III Intune study of patullicent impatience with idiopathic hypersomnia or IH. While the primary endpoint did not reach statistical significance during the randomized withdrawal phase, a robust clinical effect was demonstrated in the open label phase of the study and almost 90% of the patients who completed the trial elected to continue into the long-term extension study which is ongoing. I want to reiterate our commitment to the IH patient community as we are actively pursuing an indication for patullicent in IH and are optimistic in our ability to bring a non-scheduled treatment option to patients living with IH and the healthcare professionals who treat them.

I'll now turn the call over to CFO Sandeep <unk> for an update on our financial performance Sandeep.

Thank you Tamara and good morning, everyone. This morning, we issued our third quarter press release and filed our 10-Q, where you'll find the details of our financial and operating results are.

Our financial performance is also shown on slide 910 and 11.

We're pleased to report another quarter of strong revenue growth improved profitability and continued cash generation.

We also made continued progress across many of our business priority.

Including completing the Napa acquisition refinancing our debt at a lower cost of capital as well as executing on our share repurchase program.

Dr. Jeffrey Dana: We believe that based on the totality of the evidence that we have seen thus far along with patullicent receiving orphan drug designation for IH. There is an opportunity for us to work with the FDA on a path forward. Once we have completed our review of all the data, we will engage with the agency with this goal in mind. Our current life cycle management programs for patullicent represent about 100,000 diagnosed patients in the U.S. So it's successful. These could contribute up to an additional $1 billion of revenue to the WAKIS franchise.

Overall, we remain confident in the continued growth in the business.

So let me take the moment to take you through the details of our financial results.

For the third quarter of 2023, we reported our strongest revenue quarter in company history, with net revenues of $163 million compared to $117 2 million in the prior year quarter.

Representing a growth of 37%.

Performance in the quarter reflects the continued strong underlying demand for <unk>.

Dr. Jeffrey Dana: Moving to the ongoing work with our partner bioproject on new formulations of patullicent with the goal to potentially extend the patullicent franchise with new YP out beyond 2040. C.

In the third quarter, we did see a partial recovery in trade inventory levels of a couple of days compared to the second quarter, which we noted on our previous Q2 earnings call.

In the third quarter 2023, operating expenses were $63 5 million compared to $82 3 million in the prior year quarter.

Dr. Kumar Badur: We are advancing these programs into the clinic and Kumar will provide more detail on them later in the call.

Dr. Jeffrey Dana: Another key component of our growth strategy is acquiring new assets through business development to expand our pipeline beyond WAKIX and diversify our portfolio beyond sleep wake.

The lower operating expenses were primarily driven by the $30 million licensing fee incurred last year as part of the 2022 LCA with Bayou project, partially offset by expenses related to the commercialization of <unk>.

Dr. Jeffrey Dana: On that front, I am excited to report that we recently closed the acquisition as a nerve-affirmaceuticals and have added the investigational product, Zygel, to our pipeline. This acquisition represents an excellent strategic fit for Harmony with development programs focused on orphan rare neuropsychiatric disorders with significant unmet medical needs. With Zygel, we added a novel product candidate and two late-stage development programs that could potentially launch during the WAKIX life cycle. Zygel is currently in a pivotal phase 3 trial for patients with fragile X syndrome, with another opportunity based on positive phase 2 data in patients with 22Q deletion syndrome.

And to the advancement of our clinical development programs.

Operating income improved for the third quarter 2023, operating income of $64 5 million compared to $11 9 million in the prior year quarter.

Dr. Jeffrey Dana: Both of these indications, if successful, represent a significant market opportunity with the potential to serve 80,000 US patients living with fragile X syndrome, and another 80,000 with 22Q deletion syndrome. We have welcomed former Zynerba members to the Harmony team and are excited to work with them to advance the Zygel development programs and bring a potential new treatment option to patients living with orphan rare neuropsychiatric disorders with high unmet medical needs. As for business development, we are not stopping with the Zynerba acquisition but remain very active with a dedicated business development team which is continually assessing the BD landscape.

non-GAAP adjusted net income for the third quarter of 2023 was $58 8 million or 97 cents per diluted share compared to $58 1 million or <unk> 95 per diluted share in the prior year quarter.

The prior year quarter included a $74 5 million benefit related to a valuation allowance and a $30 million of licensing fee related to the 2022 LCA with five per share.

We believe non-GAAP adjusted net income better reflects the underlying business performance.

Please see our press release for a reconciliation of GAAP to non-GAAP financial results.

For the third quarter of 2023, we ended the quarter with $438 4 million of cash cash equivalents and investment securities on the balance sheet.

The balance reflects continued cash generation with $63 million in cash from operations, partially offset by share repurchase activities.

During the third quarter, we executed on our share repurchase program.

And repurchased approximately one 4 million shares of common stock for $50 million.

Dr. Jeffrey Dana: We remain focused on orphan rare neurology assets and or assets in other neurological diseases where we can leverage our existing expertise and infrastructure. We are looking for assets across a range of development stages including both early and late stage, with the potential to launch both during and after the WAKIS life cycle.

As you heard from Jeff. This morning, we announced a new share repurchase program of $200 million.

The new program demonstrates our continued confidence in the underlying strength of our business and our conviction in the growth potential for the company.

Our strong balance sheet allows us not only to execute on our return of capital, but maintain flexibility to also execute on business development.

Dr. Jeffrey Dana: And finally, given our continued confidence in the underlying strengths of the business and our conviction in the growth potential for the company, this morning we announced a new share repurchase program of $200 million. Given our financial flexibility, we are committed to deploying capital to maximize shareholder value.

For us, it's not an either or scenario and we're in a fortunate position given our profitability and growing cash balance.

Looking ahead, we expect quarter over quarter growth for <unk> in Q4.

We also expect to continue to invest in R&D and SG&A as we advance our clinical development program, which now includes Zalviso and supports the continued commercialization of <unk>.

Dr. Jeffrey Dana: In conclusion, Q3 2023 was the strongest revenue quarter in Harmony's history and our business is strong. We are committed to bringing a non-scheduled treatment option to patients with IH and our advancing every aspect of our business including our pipeline programs and business development efforts. I am very proud of the dedication and commitment across our organization as we remain focused on developing and commercializing innovative treatments for patients living with rare neurological diseases who have unmet medical needs.

As a reminder, we paid approximately $60 million in Q4 for the acquisition of <unk> by using.

Using cash from our balance sheet.

Pending final determination, we expect to account for the transaction as an asset acquisition, which would result in a significant onetime charge in the fourth quarter, along with the related restructuring cost.

Overall, we remain confident and wasting as being a 1 billion plus opportunity in adult narcolepsy alone.

Jeffrey Dierks: I will now turn the call over to Jeffrey Dirk, our chief commercial officer, to provide more details on our strong third quarter commercial performance. Jeff? Thanks Jeff. Q3 was another strong quarter for WAKIX. We had the strongest revenue quarter in our history, with continued growth of momentum in our underlying business fundamentals and top line performance metrics. Net sales for the third quarter were 60.3 million dollars, which represents the 37% growth from the same quarter prior year, and the first quarter of over 150 million dollars in net sales. We continue to see strong double digit growth in net sales for WAKIX in year four of our commercialization, which reflects the high interest of WAKIX in the narcolepsy market.

And we're well on our way given the strong results this quarter.

With the potential to contribute up to an additional $1 billion if approved and other current lifecycle <unk> programs.

In conclusion, we're very pleased with our strong financial performance year to date.

<unk> remains well positioned for continued growth.

And with that I'd like to turn the call back over to Jeff for his closing remarks, Jeff.

Thank you Sandeep.

In summary, Q3, 2023 was the strongest revenue quarter in harmonies history, and we continue to execute on our growth strategy across the business.

We remain focused on growing our core business and helping even more adult patients living with narcolepsy with wake X.

Jeffrey Dierks: The consistent growth in the business reinforces our long-term beliefs that WAKIX represents a billion-dollar-plus opportunity in adult narcolepsy alone. I'd like to share a few key highlights from our performance in the third quarter on slide five. The average number of patients on WAKIX in the third quarter increased to approximately 5,800. An increase of approximately 350 average patients sequentially from what we reported last quarter. This impressive growth in average patients in the third quarter was driven by strong top line demand and new patient starts that offset typical summer seasonality.

Advancing our pipeline across both our <unk> and <unk> clinical development programs.

Working with our partner buyer appreciate on new formulations to extend the Tulsa and franchise to help even more patients living with rare neurological diseases.

Building out our pipeline further through business development efforts in order to create a robust portfolio of orphan rare disease assets covering all stages of development.

And deploying capital to maximize shareholder value through our share repurchase program and business development activities.

Jeffrey Dierks: You'll then quarterly results consistent with the results we saw in Q2. The growth in average patients on WAKIX speaks to continued product adoption, and most importantly, the large remaining diagnosed patient opportunity that we continue to tap into each quarter as the market allows. Strong patient interest and prescriber adoption continue to be key drivers of the growth in average number of patients on WAKIX. We saw continued strengthening of the WAKIX prescriber base in Q3, both in depth and breadth of prescribing.

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 he would 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 to where.

Jeffrey Dierks: The number of unique prescribers on WAKIX increased again in the third quarter, and importantly, we continue to see growth in the WAKIX prescriber base expand beyond healthcare professionals enrolled in the Oxidate Rems program. In addition, we saw growth in the depth of prescribing within the Oxidate enrolled healthcare professionals, even with the availability of new and generic Oxidate options. As we continue to share the meaningfully differentiated product profile of WAKIX, and the unique feature of being the only FDA-proved treatment for EDS and cataplexi that is not scheduled as a controlled substance offers broad clinical utility, and appeals to a broader narcolepsy healthcare professional audience and patient base, which is a driver of our continued growth.

Remind you to please pickup your handset please limit yourself to one question and one follow up question. We will take our first question from Francois Principal always. Please go ahead. Your line is open with Oppenheimer.

Hi, Thanks for taking my questions. Congrats on the quarter here. So just a couple of things Sandeep mentioned.

You mentioned it and so in terms of the trade inventory.

Small issues are.

In the second quarter I was just wondering how much did that.

Create kind of a boost maybe in this quarter.

In terms of obviously not the patient adds but maybe in terms of because if you look at it that way and just maybe the impact there going forward you mentioned, you're expecting growth in the fourth quarter quarter over quarter is that growth in terms of patient adds or in terms of revenues. Thank you.

Jeffrey Dierks: We continue to see meaningful penetration and growth across the approximately 9,000 narcolepsy treating healthcare professional prescriber base. And recent market research conducted in October of this year supports our view of continued future growth in WAKIX prescribing. Research conducted with approximately 70 healthcare professionals with and without experience with WAKIX prescribing showed the following. 100% of the healthcare professional surveyed with WAKIX clinical experience stated they would prescribe the same or increased prescribing of WAKIX in the next six months.

Yeah. Good morning, Frank Thanks for the question I'll have Sunday provide some more explanation on that for you.

Jeffrey Dierks: More than 40% of those healthcare professionals surveyed who had not prescribed WAKIX to date indicated the intent to prescribe WAKIX in the next six months. Nearly 60% of those healthcare professionals who had prescribed WAKIX to date stated they were likely to recommend WAKIX to peers and colleagues. And consistent with previous ways of research, one of the highest performing drivers and differentiators for WAKIX was the unique feature is the only non-scheduled treatment option.

Yeah Frank.

As we mentioned last quarter I mean, we did see a partial normalization of inventory that we saw a bit of a drawdown.

Last quarter, we mentioned last quarter. It was about a week that was in Q2 and we saw we saw roughly about half of it would recover in this quarter. So again, it's a small impact overall, we feel that it's important to keep investors updated on the impact generally because you know these fluctuations quarterly are completely.

Part of part of our business depends on where the quarter ends and so forth.

With respect to Q4, we continue to expect top line growth.

From revenues as well as we continue to expect.

Patient adds I mean, maybe Jeff do you want to comment anything on the on the expectations on Q4.

Jeffrey Dierks: Action. The availability of new and generic ox debate options hasn't impacted the continued growth or existing strong payer coverage for WAKIX, given the meaningfully differentiated product profile. Our ability to reach and educate the broad and narcolepsy trading healthcare professional universe and tap into the full diagnosed adult narcolepsy patient opportunity gives us confidence in continued growth and the long-term growth potential for WAKIX. In summary, I'm excited by the strong commercial performance in the third quarter.

Sure. So Frank I would reiterate we did see a benefit of a couple of days of inventory, but you couple that with the strong top line performance in new patient starts that really drove that highest quarter of net revenue that we've seen since our launch and as sandeep.

Explain you typically see a little bit of an incremental build in inventory at the at the end of the year, which is traditional across the inventory, but we're anticipating growth across all of our key fundamental metrics average number of patients unique prescribers as well as net sales.

Jeffrey Dierks: In fact, the strongest revenue quarter for Harmony to date. We saw strong growth of 37% in net sales versus the same quarter prior year. We saw strong growth in the average number of patients on WAKIX to approximately 5,800, an increase of approximately 350 sequentially from what we reported last quarter. We saw continued expansion and strengthening of the WAKIX prescriber base within and beyond ox debate rems enrolled healthcare professionals and payer coverage remains strong even with the availability of new and generic ox debate options.

Yeah.

Okay. Thank you and.

Just in terms of the new formulations can you just maybe level set remind us of the IP situation and the progress on I know.

Could you touch on it but maybe the progress on the new formulations and what they could potentially do.

Just a little more color on that 2040 mentioned thank you.

Yeah, Frank just to clarify in terms of the IP situation with wake ex sort of the new formulations.

Sorry, I mean, just the IP with wages and what new formulations can do do it.

Jeffrey Dierks: I appreciate the dedication and impact of the entire commercial team and the passion that they have for our business and the narcolepsy patient community. This strong performance gives us confidence in the long-term growth potential for WAKIX and reinforces our belief that WAKIX represents a billion-dollar-plus opportunity in adult narcolepsy alone.

Sure. Okay. So in terms of the IP situation with wake. So we believe in the strength of our IP and that goes out based on the the polymorph patent with patent term extension to March of 2030, and then I <unk>.

As Youre aware were pursuing pediatric exclusivity, which provided an additional six months protection out to September of 2030. So that that is our base case on our IP situation for wake effects.

Dr. Kumar Badur: I would like to now turn the presentation over to Kumar Bedouard, our chief medical officer, to provide an update on our clinical development pipeline. Kumar? Thank you, Jess. Good day, everyone, and thank you for joining the call. Moving on to our clinical development pipeline, I've shown on slide number 7. Starting with our development program in idiopathic hypersomnia. We saw a robust clinical effect in the phase three in tune study with almost 83% of the patients responding in the initial eight-week open-level treatment period with an average of 9.4 points improvement in the effort of sequence scale scores.

Turning to the new formulations I'll have kumar sort of comment on those efforts by by design.

The intent there and what we're working on generating new IP with regards to enhanced and novel formulations of <unk>.

Based on <unk> and Kumar can provide a little more color on those programs sure. Thank you, Jeff Hey, good morning, Frank Thanks for the question.

We are working on two formulation with our partner <unk> I'm pleased to share the update on this we have made substantial progress over the past few months.

Dr. Kumar Badur: In addition, almost 90% of patients elected to participate in the long-term extension study. While no statistically significant difference was observed between the pitola scent and placebo groups on the primary endpoint of ESS at the end of four-week double-blind randomized withdrawal period, positive trends favoring pitola scent were observed across all three specified endpoints, including the idiopathic hypersomnia severity scale, which approached statistical significance at a p-value of 0.06, as well as on other endpoints, including from SRI, Swask N, and sleepiness share questionnaire.

First formulation.

Uh huh.

<unk> based formulation that is designed to believers and optimized PK profile, a higher dosage strength.

The opportunity here really.

<unk>, new IP and extend the pit olefin franchise beyond 2040.

We are looking for new indications with this particular formulation and this formulation will have a full clinical development program that's formulation one.

In terms of formulation do we are on track.

Advancing this formulation into the clinic towards the later half of.

Dr. Kumar Badur: The safety profile of pitola scent in patients with idiopathic hypersomnia is consistent with the established safety profile of pitola scent and no new AEs were observed. Almost 90% of the patients who completed double-blind randomized withdrawal period, elected to participate in the ongoing long-term extension study, and we continue to collect the safety and effectiveness data from this study. We remain committed to the idiopathic hypersomnia community and are focused on pursuing an indication for pitola scent in patients with idiopathic hypersomnia.

This is a <unk> based articulate formulation with a potential for clinical differentiation.

And the opportunity here is.

A fast to market strategy for patients with narcolepsy.

Lifecycle. This formulation, we will have an abbreviated development program.

Two formulation, making steady progress.

Okay.

Thank you.

Thanks Frank.

Thank you we'll take our next question from David insulin with Piper Sandler. Please go ahead.

Dr. Kumar Badur: We are in the process of conducting a thorough review of the full data set which will inform next steps for the program. We believe that based on the totality of the evidence that we have seen thus far, along with Petrolocent, receiving orphanage designation for idiopathic hypersomnia, we look forward to engaging with the FDA. In part of Willy Sintro, we received the FDA alignment on the protocol for the phase 3 and 4 study in patients with PWRs, which will satisfy the requirements for both the registration trial and now pediatric exclusivity as well.

Hey, Thanks, So got a couple first in terms of prescriber dynamics can you talk to your penetration.

<unk> of wake effects among providers, who are not enrolled in the Oxidate rems.

Just wanted to get a sense for.

How are you doing in that piece of the prescriber audience. So that's number one and then number two just back to the formulations just given the setback and IH would it be intuitive to think that you.

You would pursue I H to the extent you are gonna go forward NIH would you pursue it.

Dr. Kumar Badur: We expect study initiation in the first quarter of 2024. In myatonic dystrophy type 1, RDN1, we are on track for top-line data from this phase 2 proof of concept signal detection study in the fourth quarters. As for pediatric narcolepsy, we are on track to submit a supplemental new drug application to the FDA for an indication in pediatric narcolepsy in the fourth quarters. In addition to our current life cycle management programs for Petrolocent, we continue to make progress on new Petrolocent-based formulation with our partner Bioprache with the goal to generate new IP and extend the Petrolocent franchise beyond 2040.

With one of these new formulations, how should we think about that thank you.

Yes, Thanks, David.

I'll ask <unk> to respond to the first question about the prescriber dynamics the prescribers outside the Oxidate Rems sure. Yeah. So David we're extremely pleased with the growth in the new prescriber base of wakes and obviously as we continue to add new prescribers. The vast majority of them are those health care professionals that are not enrolled in the oxalate Rems program.

As we've disclosed there's about approximately 5000 of those health care professionals that are not enrolled in the oxalate Rems program and we continue to see meaningful penetration of that group I think at the last earnings call, David we talked about being about 20% penetrated within that audience.

Dr. Kumar Badur: Let me take a moment and take you through the strategy for this new Petrolocent-based formulation and provide an update on the status of the program as shown on slide number 8. We have advanced the first formulation into the clinic discorders. The first formulation is an enhanced Petrolocent-based formulation designed to deliver an optimized PK profile and higher dose strength. The opportunity here is to extend the Petrolocent franchise beyond 2040 with a potential for new IP and explore additional indications.

It's closer to about 25%, but we continue to see very steady growth in adoption within that audience.

Dr. Kumar Badur: This formulation will have a full development program. The second formulation is on track for advancement into the clinic later discorders. The second formulation is the Petrolocent-based modified formulation with a potential for clinical differentiation. The opportunity here is a fast-to-market strategy for patients with narcolepsy within the WAKIC slide cycle. This formulation will have an abbreviated development program.

And it really gives us and affords us the opportunity based on the overall benefit risk profile the broad clinical utility of the of the product for wake effects that we can tap into that broad at 9000 approximate health care professional prescriber universe, and we can tap into the full diagnosed narcolepsy patient opportunity and that gives us a ton.

On a confidence as we look at waitkus, representing a $1 billion plus opportunity in adult narcolepsy alone.

Yeah, So David let me, let me address the second question with regards to new formulations NIH. So the new formulation of Vitol Cynthia.

Thinking there is obviously, we have an innovative product with a novel mechanism of action and the opportunity through formulation work and new IP to extend the Tulsa and franchise.

Just beyond 2030 by 2040 with regards to idiopathic hypersomnia, let me be clear in terms of where we are.

Coming off the in tune study, we saw a robust clinical effect.

Dr. Kumar Badur: We are also pleased to expand and diversify our pipeline with a recent acquisition of Zyner-Bah. We closed the acquisition just about three weeks ago and we look forward to providing a more detailed update on the Zyzel programs at our next earnings call. We have seen a seamless transition of activities and continued engagement with the clinical trial sites and investigators. The Zyner-Bah acquisition has another innovative product candidate Zyzel. Zyzel is the first and only formacitically manufactured synthetic cannabidiol, devoid of THC, and formulated as a patent protected permission in Zyzel for transdermal delivery through the skin into the factory system.

In the trial and the open label Phase and we are going through the full dataset and reviewing that which will inform our strategy in terms of approaching the FDA as we continue to pursue the indication for IH based on on the <unk> study in those data.

At this point, we expect to complete the review of the data by the end of November and then we are going to prepare a briefing document meeting requests soon after that and approach the agency.

We remain committed to the IH patient community. We are actively pursuing an indication you know as.

As in Nonscheduled.

The product and the opportunity given the current treatment options for patients with IH. So.

Dr. Kumar Badur: Zyzel is manufactured through a synthetic process in a GNP facility. Therefore, it is devoid of P.H.D, and has the potential to be a non-skiddled product if approved. Similar to Vekix, Zyzel represents a portfolio and a product opportunity and is currently in a pivotal space pre-clinical trial for patients with phasorlex syndrome called the Reconnect trial. Additionally, Zyzel was studied in an open-level phase to proof-of-concept study in patients with 22Q deletion syndrome known as the Inspire trial. Both of these indications is successful, represent a significant market opportunity with a potential to serve 80,000 US individuals with phasorlex syndrome and another 80,000 individuals with 22Q deletion syndrome.

We are not looking to new formulations, but we will pursue the IH indication based on the work that we've done thus far.

Okay. Thank you.

Okay.

Thank you we will take our next question from Amit <unk> with Needham <unk> co. Please go ahead.

Hi, Good morning. This is decently on for Ami Congrats on the weakest growth in the quarter and thanks for taking our questions.

Two if I can.

Historically, it looks like kind of the sequential ads an average patient's on wake effects from Q2 to Q3 turned out similar to that from Q3 to Q4.

These factors.

This quarter you'd highlight such that we would not expect a similar dynamic to occur this year.

And then maybe my second question is you know as we're nearing the end of the year would love to know your latest thinking on potentially providing 2024, when we take sales guidance at the next earnings update or otherwise. Thank you.

Dr. Kumar Badur: To conclude, we have made great progress, not only in advancing or pipeline but also expanding and diversifying it with the addition of Zyzel.

Just curious and thanks for the question Jeff starts on the first one sure so even with respect to thinking about.

Sandip Kapadia: I look forward to sharing additional updates as we continue to make progress on our clinical development programs. On behalf of Harmony, I would like to thank all patients and their families who are participating in our clinical trials as well as clinical investigators and site personnel for their efforts and commitment in helping us to advance our development programs. I will now turn the call over to our CFO, Sandit Kapadia, for an update on our financial performance.

Q4, with respect to average number of patient growth.

Ads per quarter. So again, we continue to be extremely pleased with the continued growth in the average number of patients and are obviously underlying strong business fundamentals.

We saw sequential out of approximately 350 average patients from what we reported in Q2 and I think the impressive growth that we're seeing in the average patients in the third quarter was driven by strong topline demand and new patient starts that offset the typical summer seasonality that we had usually see every year.

Sandip Kapadia: Sandit. Thank you, Kumar. Good morning, everyone. This morning, we issued our third quarter press release and Father 10Q, where you'll find the details for our financial and operating results. Our financial performance is also shown on slide 9, 10, and 11. We're pleased to report another quarter of strong revenue growth, improved profitability, and continued cash generation. We also made continued progress across many of our business priorities, including completing Zynarva acquisition, refinancing our deaths at a lower cost of capital, as well as executing on our share repurchase program. Overall, we remain confident in the continued growth in the business.

And it speaks to really not only continued product adoption, but most importantly, the large remaining diagnosed patient opportunity that we continue to tap into as the market allows.

Yeah, while we're not providing forward looking guidance. We are pleased with the momentum heading into Q4, and we do anticipate and fully expect continued growth for <unk> for the remainder of 'twenty three.

Okay, Sandeep Kevin than I.

I thought something on guidance listen I'm going to point to as you mentioned, we could consider guidance severely next year, but even given as you think back and look back at our performance over the last year and where analysts' estimates are generally we've been pretty consistent overall absent, obviously inventory impact fluctuations quarter over quarter.

We remain confident the way its being a 1 billion plus in narcolepsy alone adult narcolepsy.

Sandip Kapadia: So let me take the moment to take you through the details of our financial results. For the third quarter of 2023, we reported our strongest revenue quarter in company history, with net revenues of 160.3 million compared to 117.2 million in the prior year of quarter, representing a growth of 37%. Performance in the quarter reflects the continued strong underlying demand for wages. In the third quarter, we did see a partial recovery in trade and military levels of a couple of days, compared to the second quarter, which we noticed on our previous Q2 earnings call.

We're continuing that.

<unk> is our mid to long term guidance, if you want to call. It and then also see the opportunity to contribute an additional $1 billion.

If approved in other LTM LTM.

Program. So we're confident in the long term growth potential for <unk> and with respect to probably short term guidance and things like that.

We've considered early next year would be the natural client.

Okay, great. Thank you.

Yeah.

Thank you we'll take our next question from Charles Duncan with Cantor Fitzgerald. Please go ahead.

Yeah, Good morning, Chad and team first of all congratulations on nice commercial.

Sandip Kapadia: In the third quarter 2023, operating expenses were 63.5 million compared to 82.3 million in the prior year of quarter. The lower operating expenses were primarily driven by the $30 million licensing fee incurred last year as part of the 2022 LCA with Bioproject. Partially offset by expenses related to the commercialization of Wattix and the advancement of our clinical development program.

Quarter.

And thanks for taking our question I did have a commercial questions that I wanted to ask so I'll just ask two on the pipeline and that is primarily relative to the into the study. We recently conducted a K O L call and they were that Kols was quite enthusiastic about the results.

You saw and so a question that I have for you is when do you go to the agency.

Sandip Kapadia: Conference. Operating income improved for the third quarter 2023 operating income of 64.5 million compared to 11.9 million in the prior year quarter. Non-gap adjusted net income for the third quarter of 2023 was 58.8 million or 97 cents per diluted share compared to 58.1 million or 95 cents per diluted share in the prior year quarter. The prior year quarter included 74.5 million benefit related to evaluation allowance and a 30 million dollar licensing fee related to the 2022 LCA with buyer project.

What will be the question will it be around possibly conducting a new study or will it be around evaluating the data and the intrigue study alone and its open label extension.

Yes. Good morning, Charles Thank you for your question and sort of the feedback that you received on the <unk> study.

I mean, I think that the approach with the agency and is really first as I mentioned, an alternative Kumar looking at all the data looking at all the data.

And understanding obviously the robust clinical effect that we saw upfront in the eight week open label phase.

Sandip Kapadia: We believe non-gap adjusted net income better reflects the underlying business performance. Please see our press release for reconciliation of gap to non-gap financial results. For the third quarter of 2023, we ended the quarter with 438.4 million of cash, cash equivalent and investment securities on the balance sheet. The balance reflects continued cash generation with $63 million in cash from operations, partially offset by share repurchased activities. During the third quarter, we executed on our share repurchased program and repurchased approximately 1.4 million shares of common stock for $50 million.

And almost 90% of patients are electing to go into the long term extension that continues on and we also to continue continue to collect long term safety and effectiveness data.

That we could use to go to the agency in addition.

To the data from the <unk> study.

The approach is to build a strong case with regards to.

The totality of the evidence coming out of the trial.

Along with.

<unk> received orphan drug designation for IH at the FDA granted and then you look at the current treatment options you look at overall benefit risk do you look at the need and we build the case and discuss that with the agency.

Sandip Kapadia: As you heard from Jeff this morning, we announced a new share repurchased program of $200 million. The new programs demonstrate our continued confidence in the underlying strength of our business and our conviction in the growth potential for the company. Our strong balance sheet allows us not only to execute on a return of capital but maintain flexibility to also execute on business development. For us, it's not an either or scenario and we're in a fortunate position given our profitability and growing cash balance.

Where it could fit into treatment options.

So that is the overall approach and tomorrow I ask if you have any additional thoughts on strategy no I think a few correlated.

Thank you.

Okay, and then as it.

A follow up.

Yes.

Probably can't provide any information on the persistence within that IAA to open label extension, but I guess I'm wondering if you think about the mechanism and utility in I H. How would you think that compares to say narcolepsy and the potential for persistence.

Sandip Kapadia: Looking ahead, we expect quarter over quarter growth for WAKIX in Q4. We also expect to continue to invest in R&D and SGNA as we advance our clinical development programs, which now includes Zyzo and supports the continued commercialization of WAKIX. As a reminder, we paid approximately $60 million in Q4 for the acquisition of the NARBRA using cash from our balance sheet. Pending final determination, we expect to account for the transaction as an asset acquisition which would result in a significant one-time charge in the fourth quarter along with related restructuring costs. Overall, we remain confident in WAKIX being a billion-plus opportunity in adult NARBRA. And we're well on our way given the strong results this quarter.

Sandip Kapadia: With the potential to contribute up to an additional $1 billion if approved in other current life-like old Patelison programs. In conclusion, we're very pleased with our strong financial performance year-to-date and remain well positioned for continued growth.

The greater NIH than even it is in.

In narcolepsy.

Okay.

Good morning, Charles Thanks for the question, but.

With narcolepsy and beauty hepatic hypothermia, both of them are central disorder Hyperform alone alright.

Alright.

Data strong data to cut this maintenance of effect in patients with narcolepsy based them on the clinical pause, but we have done thus far.

Specifically with the study.

Open label part of this study we saw robust clearly coming back I mean, 8%.

Nine patients who completed the eight week open label treatment period.

Based on <unk>.

Greater than or equal to three criteria, which is much more stringent than the criteria from the American Academy of sleep Medicine.

Also we.

We saw a huge magnitude of that 194 points drop from baseline to be end of gateway.

Dr. Jeffrey Dana: And with that, I'd like to turn the call back over to Jeff for his closing remarks. Jeff? Thank you, Sundee.

The eight week open label treatment period.

Your question about the long term extension study I alluded to earlier.

Dr. Jeffrey Dana: In summary, Q3 2023 was the strongest revenue quarter in Harmony's history, and we continue to execute on our growth strategy across the business. We remain focused on growing our core business and helping even more adult patients living with narcolepsy with wakix, advancing our pipeline across both our patrols and Xigel clinical development programs. Working with our partner, Biopregé, on new formulations to extend the Patelcent franchise to help even more patients living with rare neurological diseases.

Almost 90% of the basin elected to participate in the study and we continue to collect the data on the safety and efficacy.

We don't how do not yet.

And we are planning to have got a good sometime towards the end of November we will start seeing your safety and efficacy data from the long term extension study as well.

Okay and can we assume that meeting happens in say, possibly the first quarter, obviously it depends not only on your schedule, but is that kind of a target.

Dr. Jeffrey Dana: Building out our pipeline further through business development efforts in order to create a robust portfolio of orphan rare disease assets covering all stages of development and deploying capital to maximize shareholder value through our share repurchase program and business development activities.

Good question Charles right now we're focused on parallel review of the data, which will inform the strategy. When we meet the FDA right. Now we are planning to complete all the main trend analysis by the end of November and immediately after that we will start working on the meeting request and briefing document.

Unknown Executive: This concludes our plan remarks for today.

I.

I request, a meeting with the FDA in early first quarter of.

Unknown Executive: 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 one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two.

Great. Thank you for that.

Yes, Charles I would say that yes.

Yes, Thanks, Charles I would just add yes. So we're moving expeditiously. This obviously a high priority for us So we're moving quickly to.

Review all the data put in the meeting request and get in front of the agency to have this discussion.

Unknown Executive: We remind you to please pick up your handset and please put yourself to one question and one follow-up question.

As we actively pursue the indication for Tulsa and NIH.

Francois Brisebois: We'll pick our first question from Francois Brisbois. Please go ahead. Your line is open without the timer. Hi, thanks for taking the questions and congrats on the corridor here. Just a couple of things Sandy mentioned it, and so in terms of the trade inventory, small issues or things in the second quarter, I was just wondering how much did that create kind of a boost maybe in this quarter in terms of obviously not the patient ads, but maybe in terms of the cost, if you look at it that way, and maybe the impact there going forward, you mentioned you're expecting growth in the fourth quarter, quarter to quarter, is that growth in terms of patient ads or in terms of revenues?

Thanks for the agriculture.

Mhm.

Thank you we'll take our next question from Danielle Brill with Raymond James. Please go ahead.

Hi, This is daniel filling in for Danielle.

Congrats on the strong quarter, we have a question.

There is new updates on the citizen petition.

And second question on that but we see that there is no reporting of patients on <unk> extra thing this quarter.

There is only average patients reporting and is this the new convention for the future, earning as well. Thank you very much.

Sure. Thanks for your question.

Jeff in terms of.

Exiting number of patients you want to just address that first and then I'll speak to the citizens petition sure. So I mean, the exiting number of patients for this quarter was approximately 5900 patients we disclose exiting patients in the previous two quarters to really hate help to frame the dynamics in those quarters, you tend to see the typical payer seasonality in Q.

Francois Brisebois: Thank you. Yeah. Good morning, Frank. Thanks for the question. I'll have Sandy provide some more explanation on that for you. Yeah, Frank. You know, as we mentioned last quarter, I mean, we did see a partial normalization of inventory that we saw a bit of a draw down that last quarter, as we mentioned, last quarter was about a week that was in queue two, and we saw roughly about half of it recover in this quarter.

And obviously, we had an inventory dynamic in Q2.

Francois Brisebois: So again, it's a small impact overall, we feel that it's important to keep investors updated on the impact generally, because you know, these fluctuations quarterly are completely, you know, part of our business depends on where the quarter ends and so forth. With respect to queue four, we continue to expect, you know, top line growth from revenues as well as we continue to expect, you know, patient ads, maybe Jeff Durch, do you want to comment anything on the expectations on queue four?

But we've always historically reported average number of patients because we believe that average number of patients on <unk> is the best metric to assess the continued growth and uptake of the brand given that it takes into account new patient starts continuing patients and all the patient medication behavior compliance persistency discontinuation rate and I think that what we're seeing in that.

Strong growth in average number of patients demonstrates not only the strong interest in the narcolepsy community really highlights that large remaining diagnosed patient opportunity that we continue to tap into as the market allows.

Francois Brisebois: Sure. So, Frank, I would reiterate, we did see as benefit of a couple days of inventory, but you couple that with the strong top line performance in new patient starts. That really drove, you know, that highest quarter of net revenue that we've seen since our launch, and as Sandy explained, you typically see a little bit of an incremental build in inventory at the end of the year, which is, you know, traditional across the inventory, but we're anticipating growth across all of our key fundamental metrics, average number of patients, unique prescribers as well as net sales.

Thanks, Jeff and as far as let me come back to your question on the Citizen's petition and just an update on that so as you may recall, the FDA issued a response to the citizens petition in September to.

To meet its statutory requirement of 180 day response and at that time. It said it needed more time to review the CP. So this is a standard response at the FDA uses in more than 50% of the cases and it's what we anticipated.

Francois Brisebois: House. Okay, thank you. And just in terms of the new formulations, can you just maybe level set reminders of the IP situation and the progress on, I know we do a touch on it but maybe the progress on the new formulations and what they could especially do is just a little more color on the 2040 mentioned. Thank you. Yeah. Frank, just to clarify in terms of the IP situation with WAKIX or the new formulations.

So while we first wanted to wait to give the agency a chance to conduct its review.

Now that there is no defined timeline for the FDA to respond.

Taking action to try and get the FDA to issue a final response in a timely manner.

<unk> those options in regard to how the best sort of assist and work with the agency and issuing a final response.

It's our position that <unk> is the only nonscheduled treatment option approved for adult patients with narcolepsy.

Francois Brisebois: Sorry, I mean the just the IP with WAKIX and what new formulations could do to it. Sure. Okay, so in terms of the IP situation with WAKIX, so you know we believe in the strengths of our IP and you know that goes out you know based on the the polymorph patent with patent term extension to March of 2030. And then I think as you're aware we're pursuing pediatric exclusivity which provided an additional six months protection out to September of 2030.

That it would be a disservice for patients and health care professionals to continue to be sort of impacted by the unfounded allegations in the citizen's petition regarding the safety and efficacy efficacy of wake X, which could possibly impact the treatment decisions.

Francois Brisebois: So that that is our base case on our IP situation for WAKIX. Turning to the new formulations, I'll have Kumar sort of comment on those efforts but by design the intent there and we're working on generating new IP to enhance and novel formulations based on the tollicent and Kumar can provide a little more color on those programs. Sure. Thank you, Jeff. Hey, good morning, Frank. Thanks for the question. Yeah, we are working on two formulations without partner bipartisan and please do share the update on this.

So we affirm the regulatory validity of the wake acts NDA, we remain confident in the overall risk benefit profile of <unk>.

And based on the robust clinical development program and the post marketing safety data that we submit to the FDA on a regular basis and the FDA reviews. So to date. The agency has not contacted us regarding the citizen's petition.

But as we go forward, we will work with the agency.

And welcome their close attention and review, Chris We're confident that once they review the unfounded allegations in light of all the information available to them.

It's our position that they will ultimately do.

Deny the petition based on its lack of Merck and that that is.

Francois Brisebois: We have made substantial progress over the past few months. The first formulation is an enhanced pedolousent based formulation that is designed to deliver an optimized WAK profile at a higher dose strength. But the opportunity here really is to generate new IP and extend the pedolous and franchise beyond 2040. We are looking for new indications with this particular formulation and this formulation will have a full clinical development program that's formulation one. In terms of formulation two, we are on track to advancing this formulation into the clinic towards the later half of this order.

Sort of the update on the citizens petition.

Very helpful. Thank you very much.

Thank you.

Thank you we'll take our next question from Jason <unk> with Bank of America. Please go ahead.

Hey, guys. Good morning, Thanks for taking my questions.

First one from me just on your and your I guess your net sales capture per patient Youre average patient number.

It looks like the revenue capture.

Stepping up offered you a nice tailwind on a year over year basis, and has kind of continually been grinding upwards. I was wondering if you could talk about the extent to which that's a trend or just seasonality because because when we look at the gap between first half sort of net sales captured per patient for a second half.

Francois Brisebois: This is the pedolousent based modified formulation with a potential for clinical differentiation. And the opportunity here is a fast-to-market strategy for patients with narcolepsy within WAK flight cycle. This formulation will have an abbreviated development program. So overall two formulations making steady progress. Thank you. Thanks, Frank.

Unknown Executive: Thank you.

That gap continues to widen and I'm wondering how we think about that going into 2024, and then just second one on the share buyback.

Just wondering how youre thinking about priority of the buyback versus M&A.

I would think that the buybacks, mainly where you see opportunistic opportunities to defend the stock went if it's weak.

David Hoang: We'll take our next question from David and Selen with a Piper Sandler. Please go ahead. Hey, thanks. So got a couple. First, in terms of prescriber dynamics, can you talk to your penetration of WAKIX among providers who are not enrolled in the accubate grems? Just wanted to get a sense for how you're doing in that piece of the prescriber audience. So that's number one.

And that M&A may be a priority over buybacks, but I wonder if you can clarify that thanks.

Yeah. Thanks, Jason for your question Sandeep do you want to speak to revenue per patient first yes, sure I mean look I think you'll see the general usual usually every year first half.

Especially in the first quarter that tends to go down as you have higher gross to net deductions.

Impact of that and then it improves as we go throughout the year in terms of gross to net deductions typically levels off by.

By the third and fourth quarter.

David Hoang: And then number two, just back to the formulations, just given the setback in IH, would it be intuitive to think that you would pursue IH to the extent you are going to go forward in IH? Would you pursue it with one of these new formulations? How should we think about that?

Each year.

And generally the key change versus prior year, we're up about 8% on that on that metric and we took a price increase of about 7% early this year. So it can take plus or minus.

The impact of the price increase as well as.

Yes, some inventory fluctuations essentially gets you to that 8%.

David Hoang: Thank you.

We saw year over year, and the way to think about it going forward.

Dr. Jeffrey Dana: [inaudible] David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang,[inaudible] David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang, David Hoang,[inaudible] Jeffrey, thanks for the question. Jeff Stark from the first one. Sure, so Ethan with respect to thinking about Q4 with respect to average number of patient growth as per quarter.

Like I said gross to net is relatively flat for Q3 Q4 or second half of the year and then of course as we go into Q1 of next year, you'll see the same dynamic again, where we will have higher gross to net deductions as we go.

And so forth.

Following the natural seasonal elevation in pattern that we observed over the last couple of years for this product, which again is not product specific it's really industry specific I would say overall I don't know.

Was there anything else wanted to comment on that.

Share buybacks, yes, so Jason I think the only other factor.

To consider when Youre looking at average revenue per patient is the patient assistance program engagement that we've seen has been relatively consistent and so as the number of patients on average patients continues to grow and the participation in the free goods program is relatively flat you'd see a slight incremental benefit as we're adding more revenue generating pay.

<unk> its nominal but I think the Sandy was point when you couple that with the gross to net and the price increase that's really what's kind of driving so you should anticipate a slight increase in the average revenue per patient moving forward based upon traditional price increases that we would take as well as just a relatively flat participation in our free goods program as we continue to grow the app.

Average number of patients on <unk>.

And with regards to the share buyback I'll, just start and hand, it over to Sandeep, Jason I think as Sandeep.

<unk> mentioned in his comments, it's not sort of either or I think that obviously, we're in a strong position with regards to deploying capital either towards share repurchase or business development efforts and some deep further thoughts on that yes, no I think.

Alright, it's really not a question of either or I think we are in a well positioned given our profile of the company as I mentioned in the prepared remarks, we generated $63 million of cash from operations last quarter strong cash generation profitability, we have a very different profile of the company and we think we can also.

Well positioned to execute on share buyback as well as.

As well as business development and are first of all it is.

Going to fluctuate quarterly.

We'll provide an update to investors.

Great progress on both of these areas.

We remain committed in terms of our business development efforts understanding the importance of <unk>.

Growing the pipeline and diversifying our portfolio to drive long term growth.

Thank you we'll take our next question from Greg <unk> with Mizuho Securities. Please go ahead.

Hey, good morning, Thanks for taking the question congrats on the progress.

Two quick quick questions if I could.

Hum.

First just going back to the new share repurchase and comments around.

Potential flexibility around BD.

Should we assume or or any comments you want to provide on kind of the size of the deals going forward. Certainly <unk> was I think as you mentioned about a $60 million transaction given that you've got a new $200 million share repurchase.

Is that $60 million kind of the the.

Happy place for you guys in terms of the types of deals and the size of deals you want to do so that's my first question and then second.

Just on patent litigation with the P fours that have been filed.

Filed I just wanted to ask if you could confirm whether you have initiated Pat.

Patent litigation, our patent infringement lawsuit yet.

Any thoughts around timelines.

With respect to that thanks, so much.

Alright, great. Thanks for your questions Sandeep.

Dr. Jeffrey Dana: So again, we continue to be extremely pleased with the continued growth in the average number of patients and are obviously underlying strong business fundamentals. We saw a sequential ad of approximately 350 average patients from what we reported in Q2. And I think the impressive growth that we're seeing in the average patients in the third quarter was driven by strong top line demand and new patient starts that, also at the typical summer seasonality that we had usually see every year.

First one I think I wouldn't necessarily read into the transaction.

Is the same as what we would do potentially in the future I mean look we have $438 million.

End of last quarter, we continue to generate positive cash flow, we have access to the public markets that need it I mean, we would be and we are in a position to do sizable transactions beyond what we have and I think it will really be the types of opportunities that we see that will determine not necessarily.

Dr. Jeffrey Dana: And it speaks to really not only continued product adoption, but most importantly, the large remaining diagnosed patient opportunity that we continue to tap into as the market allows. While we're not providing for looking guidance, we are pleased with the momentum heading into Q4 and we do anticipate and fully expect continued growth for weakest for the remainder of 23. Okay, it's on deep on comments. I think on guidance, let's an apple point that as you mentioned, we could consider guidance severely next year.

We have good flexibility in terms of the question.

Okay, and Gregg with regards to your question on patent litigation in paragraph four filings I think as we previously have communicated you know based on the commercial success with wake hits, we fully expected to see paragraph four filings.

And we've received additional filings beyond the first two that we initially received and have shared and disclosed.

Dr. Jeffrey Dana: But, you know, even even as you think back and look back at our performance over the last year, and we're analysts estimates, or generally, you know, we've been pretty consistent overall, you know, absent upstate inventory impact, you know, fluctuations quarter quarter, you know, we remain confident in weight kicks being a billion plus in narcolepsy alone, adult narcolepsy. And, you know, we're continuing, you know, that sort of is our mid to long-term guidance, if you want to call it.

So I think that we will provide updates on the process doesn't move forward. This this is a long process I think as you're aware.

We prepared for the generic filers and this is really the start of the process.

We have 45 days from the date of each of the paragraph four notification to filed the lawsuits, which invokes the 30 month stay.

Dr. Jeffrey Dana: And then with the opportunity to distribute additional billion if approved in other LPM programs. So we're confident in the long-term growth potential for weak kicks. And, you know, and with respect to public short-term guidance, things like that, like I said, we'll consider it early next year would be the natural point. Thanks, Wendy.

Which obviously prevents the FDA from approval that generic filers dori.

During that timeframe.

We've engaged expert IP counsel to represent both harmony and <unk> in the patent litigation and.

Dr. Jeffrey Dana: Thank you.

We are confident in the strength of our IP prepared to vigorously defend it.

We'll provide updates as that process moves forward.

Charles Duncan: We'll take our next question from Charles Duncan with Canter Fitzgerald.

Charles Duncan: Please go ahead. Good morning, Chaffin team. First of all, congratulations on ice commercial quarter. And thanks for taking our question. I didn't have any commercial questions that I wanted to ask.

Thank you we'll take our next question from Mcmoran Jenkins with Goldman Sachs. Please go ahead.

Good morning, everyone could you just maybe clarify thank for formulation to you highlighted an abbreviated development programs, but what does that actually mean in terms of the.

Dr. Jeffrey Dana: So I'll just ask two on the pipeline. And that is primarily relative to the Intune study we recently conducted a KOL call. And they were, that KOL was quite enthusiastic about the results that you saw. And so a question that I have for you is when you go to the agency, what will be the question? Will it be around possibly conducting a new study or will it be around evaluating the data in the Intune study alone and its open label extension?

Foreign size of phase, one phase two and phase III studies and how quickly do you think you can kind of like get a program like that.

Two market.

And then I guess as a follow on to that question do you primarily see this is.

This launch will be a switch campaign ahead of generic and our launches and what lessons can you guys and other such campaigns that you would apply there.

Yes, good morning <unk>. Thanks for your question I'll have Kumar sort of comment on the approach to the second formulation quick to market strategy from a commercial perspective, I'll ask Jeff <unk> to.

Dr. Jeffrey Dana: Thanks. Thank you. Good morning, Charles. Thank you for your question. And sort of the, you know, the feedback that you received on the Intune study. I mean, I think that the approach, you know, with the agency and is really first, as I mentioned, and I'll turn it to Kumar, looking at all the data, looking at all the data, and understanding obviously the robust clinical effect that we saw up front in the eight week open label phase.

Sure thoughts on what that could offer to the market.

Yes.

Good morning, Kevin the formulation to.

They told us based modified formulation.

And we.

At Orange Park to get into the clinic.

The second half of this quarter.

In terms of the attributes and the potential clinical differentiation.

Dr. Jeffrey Dana: And almost 90% of patients electing to go into the long term extension that continues on. And we also to continue to collect long term safety and effectiveness data that we could use to go to the agency in addition to the data from the Intune study. The approach is to, you know, build the strong case with regards to the totality of the evidence coming out of the trial, you know, along with the tollicent received orphan drug designation for IH at the FDA granted.

Do believe that this particular formulation, we will have different attributes and.

Out of different clinical differentiation, but we are not in a position to comment on back on it because the exact nature of the formulation of the differentiation because of the IP and competitive reason.

But this will be a faster market strategy and we anticipate to launch within the lifecycle.

Yes.

Hey, Jeff and current from a commercialization strategy with the new formulation to it will not be a switch strategy. This is Bruce.

Dr. Jeffrey Dana: And then you look at the, you know, current treatment options, you look at overall benefit risk, you look at the need, and we build the case and discuss, you know, that with the agency where it could fit into, you know, treatment options. So, you know, that is the overall approach. And Kumar, I ask, if you have any additional thoughts on, you know, on strategy.

A brand new product and given the level of dissatisfaction that we see in the marketplace. The significant unmet need people living with narcolepsy need new treatment options and so we see this as a unique option that will be differentiated from <unk> and provide a new therapeutic option for patients. So we see <unk> and this new formulation being able to coexist and provide.

Two unique options to people looking for a therapeutic treatment for eds or cataplexy in adult narcolepsy.

Dr. Kumar Badur: No, I think that's you, Okay, thank you.

Dr. Kumar Badur: Okay, and then as a follow-up, I guess you probably can't provide any information on the persistence within that IH Open Label extension, but I guess I'm wondering, if you think about the mechanism and utility in IH, how would you think that compares to, say, narcolepsy and the potential for persistence being greater in IH than even it is in narcolepsy? Thanks. Good morning, Charles. Thanks for that. But narcolepsy and idiopathic hyposomnia, both of them are central disorders of hyposonal and there is a data, strong data to suggest maintenance of effect in patients with narcolepsy based on all the clinical trials that we had done thus far.

And just to clarify when you say within the Lincoln life cycle I assume you mean in your base case.

I meant 2013.

That's correct, yes, that's correct Chris.

Okay. Thanks.

Yes.

Thank you and I'm showing no further questions at this time I would like to turn the call back to management for closing remarks.

Thank you operator, and thanks, everyone for joining our call today and for your interest in harmony as.

As you heard from US this morning, our business remains strong and we have confidence in the long term growth potential of our company.

We look forward to providing updates as our business advances. Thank you and have a great day.

Thank you. This does conclude today's harmony Biosciences third quarter 2023 financial results Conference call. You May now disconnect your lines and have a wonderful day.

Dr. Kumar Badur: Specifically with the Intune study, in the Open Label part of this study, we saw robust clinical effect. I mean, eight to nine patients who completed the eight-week Open Label treatment period were responded based on ESS of greater than or equal to three criteria, which is much more also we saw a huge magnitude of response, 9.4 points drop from baseline to the end of far eight-week Open Label treatment period. And to your question about the long-term extension study as Jeff alluded to earlier, almost 90% of the patients elected to participate in that study and we continue to collect the data on the safety and the efficacy parameters.

Okay.

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Hum.

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Dr. Kumar Badur: We don't have those data yet and we are planning to have a data cut sometimes towards the end of November where we will start seeing the safety and efficacy data from the long-term extension study as well. Can we assume that meeting happens in say possibly the first quarter, obviously it depends not only on your schedule but is that kind of a target? Good question, Charles. Right now we are focused on a thorough review of the data which will inform the strategy when we meet the FDA.

Okay.

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Hum.

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Dr. Kumar Badur: Right now, we are applying to complete all the assessment and analysis by the end of November. And immediately after that, we'll start working on the meeting request briefing document and request a meeting with the FDA in early first quarter of 2024. Yes, Charles, I would just say yeah, we're moving, sort of expeditiously, this obviously a high priority for us so we're moving quickly to review all the data put in the meeting request and get in front of the agency to have this discussion as we actively pursue the indication for Patolson and IH.

Hum.

Yes.

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Okay.

Okay.

Mhm.

Hum.

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Dr. Kumar Badur: Thanks for the anecdotalogen. Thank you.

Sure.

Hum.

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Daniel Nees: We'll take our next question from Daniel Brue with Raymond James. Please go ahead. Hi, this is Daniel Nees going in for Daniel. Congrats on the strong quarter.

Mhm.

Hum.

Sandip Kapadia: We have a question on if there's new updates on the citizen petition and a second question on that we see that there's no reporting of patients on WAKIS accessing this quarter and there's only average patients reporting and if there's the new convention for the future earning as well, thank you very much, sandwich. Sure, thanks, your question. Jeff, why in terms of exiting number of patients, you want to just address that first and then I'll speak to the citizens division.

Hello.

Oh.

Hum.

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Sandip Kapadia: Sure, so I mean, the exiting number of patients for this quarter was approximately 5,900 patients. We just close exiting patients in the previous two quarters to really help to frame the dynamics in those quarters. You tend to see the typical pair seasonality in Q1 and obviously we had an inventory dynamic in Q2 but we have always historically reported average number of patients because we believe that average number of patients on wake is the best metric to assess the continued growth and uptake of the brand.

Sandip Kapadia: Given that it takes into account new patient starts, continuing patients and all the patient medication, behavior, compliance, persistency, discontinuation rate. And I think that what we're seeing in that strong growth in average number of patients demonstrates not only the strong interest in the NARC, epilepsy community but really highlights that large remaining diagnosed patient opportunity that we continue to tap into as the market allows.

Sandip Kapadia: Okay, thanks, Jeff. And as far as let me come back to your question on the citizens petition and just an update on that. So as you may recall, you know, the FDA issued a response to the citizens petition in September to meet its statutory requirement of 180-day response and at that time it said it needed more time to review the CP. So, you know, this is a standard response that the FDA uses in more than 50% of the cases and it's what we anticipated.

Sandip Kapadia: So while we first wanted to wait to give the agency a chance to conduct its review, now that there's no defined timeline for the FDA to respond, we're taking action to try and get the FDA to issue a final response in a timely manner. We're evaluating those options in regards to how the best sort of assist and work with the agency in issuing a final response. You know, it's our position that, you know, WAKIX is the only non-scheduled treatment option to prove for adult patients with NARC, epilepsy, you know, that it would be at the service for patients and healthcare professionals to continue to be sort of impacted by the unfailed in allegations in the citizens petition regarding the safety and efficacy of WAKIX, which could possibly kind of impact the treatment decisions.

Sandip Kapadia: So, you know, we affirm the regulatory validity of the WAKIX NDA. We remain confident in the overall risk benefit profile WAKIX and based on the robust clinical development program and the post-marketing safety data that we submit to the FDA on a regular basis and the FDA reviews. So, you know, to date, the agency has not contacted us regarding the citizens petition, but as we go forward, you know, we will work with the agency and welcome their close attention and review, which were confident that when, once they review the unfailed in allegations in light of all the information available to them, it's our position that they will ultimately deny the petition based on its lack of MIRR.

Unknown Executive: And that, you know, that is sort of very helpful. Thank you very much.

Unknown Executive: Thank you.

Jason Gerberry: We'll take our next question from Jason Gerberi with Think of America.

Jason Gerberry: Please go ahead. Hey guys, good morning, thanks for taking my questions. First one for me, just on your annual, I guess your net sales capture per patient, your average patient number. It looks like the revenue capture, you know, is stepping up, offered you a nice tailwind on a year over your basis and has kind of continually been grinding upwards.

Jason Gerberry: I was wondering if you could talk about the extent to which that's a trend or just seasonality because when we look at the gap between first half sort of net sales capture per patient for a second half, that gap continues to widen and I'm wondering how we think about that going into 2024. And then just second one on the share buyback, just wondering how you're thinking about priority of the buyback versus M&A, I would think that, you know, the buybacks mainly where you see opportunistic opportunities to defend the stock went if it's weak, and that M&A may be of a priority over buyback, but I wonder if you can clarify that.

Jason Gerberry: Thanks. Yeah, thanks Jason for your question. So deep, do you want to speak to revenue per patient first? Yeah, sure. I mean, look, I think you see the general usually, usually every year, you know, first half, especially in the first quarter, that tends to go down as you have higher growth in that deductions impact of that. And then it improves as we go throughout the year in terms of growth in that deductions typically levels off by the third and fourth quarter of each year.

Jason Gerberry: And generally the key change versus prior year, you know, we're up about 8% on that on that metric. And we took a price increase about 10% early this year. So take plus or minus the impact of the price increase as well as, you know, some inventory fluctuations essentially gets you to that 8% that we saw year over year. And the way to think about it going forward, I mean, generally, like I said, growth in that is relatively flat for Q3, Q4 second half of the year.

Jason Gerberry: And then of course, as we go into Q1 of next year, you'll see the same dynamic again where we'll have higher growth in that deductions as we have in so far. So it's been it's following the natural seasonalization and pattern that we observed over the last couple of years for this product, which again, it's not product specific. It's really industry specific. I would say overall, I know Jeff. Was there anything else wanted to comment on that?

Jason Gerberry: Yeah, so I mean, Jason, I think the only other factor just to consider when you're looking at average revenue for patient is the patient assistance program engagement that we've seen has been relatively consistent. And so as the number of patients on average patients continues to grow and the participation in the, you know, the free goods program is relatively flat. You'd see a slight incremental benefit as we're adding more revenue generating patients.

Jason Gerberry: It's nominal, but I think the sanding point when you couple that with the growth in net and the price increase, that's really what's kind of driving. So you should anticipate a slight increase in the average revenue for patient moving forward based upon traditional price increases that we would take as well as just a relatively flat participation in our free goods program as we continue to grow the average number of patients on week.

Jason Gerberry: Yeah, and with regard to the share buyback, I'll just start and hand over some of the Jason. I think as Andy mentioned in his comments, you know, it's not sort of either or I think that obviously we're in a strong position with regards to deploying capital either towards share repurchase or business development efforts and some deep further thoughts on that. Yeah, no, I think I think that's right. It's really not a question of either or I think we're in a well position given our profile of the company is the dimension compared to March, we generated $63 million cash from just operation less water, you know, strong cash generation profitability.

Jason Gerberry: We have a very different profile of the company and we can we can also, you know, well position to execute on share buyback as well as as well as business development. And of course, it's going to fluctuate quarterly and will provide an update to investors that remain progress on both these areas.

Sandip Kapadia: Yeah, and I think we remain committed in terms of our business development efforts and you know, understanding the importance of growing the pipeline and diversifying our portfolio to drive long term growth. Thank you.

Graig Suvannavejh: We'll take our next question from Graig Suvannavejh with Mizuho Securities. Please go ahead.

Graig Suvannavejh: Good morning. Thanks for taking the question and congrats on the progress. Two quick questions if I could. First, just going back to the new share of purchase and comment around potential flexibility around BED. Should we assume or any comment you want to provide on kind of the size of the deals going forward? Certainly Zainerba was, I think, as you mentioned, about a $60 million transaction, given that you've got a new $200 million share of purchase, is that $60 million kind of the happy place for you guys in terms of the types of deals and the size of deals you want to do. That's my first question.

Graig Suvannavejh: And then second, just on patent litigation with the P4s that have been filed.

Sandip Kapadia: I just wanted to ask if you could confirm whether you have initiated patent litigation or patent infringement lawsuit yet in any thoughts around timelines with respect to that. Thanks so much. Graig, thanks for your questions. So I'm deep on comments. I think I wouldn't necessarily read into the transaction as the same as what we would do potentially in the future. I mean, look, we have $438 million at the end of last quarter.

Sandip Kapadia: You know, we continue to generate positive cash flow. We have access to the public markets that need it. I mean, we would be in we're in a position to do, you know, size full transactions beyond what we have. And I think it'll really be the types of opportunities that we think that will determine not necessarily, you know, we have good flexibility in terms of capital.

Dr. Jeffrey Dana: Okay. And Graig, with regards to your question on patent litigation and paragraph four filings, I think, you know, as we previously have communicated, you know, based on the commercial success with WAKIX, you know, we fully expected to see paragraph four filings. And we received additional filings, you know, beyond the first two that we initially received and have shared and disclosed. So I think that, you know, we'll provide updates on the process as it moves forward.

Dr. Jeffrey Dana: You know, this is a long process, I think, as you're aware. We prepared for the generic filers, and this is really the start of the process. You know, we have 45 days from the date of each of the paragraph for notification to file the lawsuits, which invokes the 30 months day, which obviously prevents the FDA from approval. The generic file is, you know, during that time frame. So we've engaged expert IP council to represent both Harmony and BiopraJay in the patent litigation. And, you know, we are confident in the strength of our IP prepared to vigorously defend it.

Dr. Jeffrey Dana: And we'll provide updates as that process moves forward. Thank you.

Corinne Jenkins: We'll take our next question from a Corinne Jenkins with Goldman Sachs. Please go ahead.

Corinne Jenkins: Good morning, everyone. Could you just maybe clarify, I think, for formulation two, you highlighted an abbreviated development program. So what does that actually mean in terms of the need for insights of phase one phase two and phase three studies? And how quickly do you think you can kind of like get a program like that? To market? And then I guess as a follow-in to that question, do you primarily see this is like this launch would be a switch campaign ahead of generic and launches and then what lessons can you learn from other switch campaigns that you would apply there?

Corinne Jenkins: Yeah, good morning, Kranne. Thanks for your question. I'll have Kumar sort of comment on the approach to the second formulation quick to market strategy. From a commercial perspective, I'll ask Jeff Dorf to share thoughts on what that could offer to the market. Yeah, good morning, Karin. The formulation tool is a pitonous and based modified formulation. And we are on track to get into the clinic. In the second half of this quarter, in terms of the attributes and the potential clinical differentiation, we do believe that this particular formulation will have different attributes and several different clinical differentiation, but we are not in a position to comment on that on the because the exact nature of the formulation or the differentiation because of the IP and competitive reasons.

Corinne Jenkins: But this will be a fast market strategy and we anticipate to launch within the way it's life cycle. Yeah. And Karin from a commercialization strategy with the new formulation to it will not be a switch strategy. This is a brand new product and given the level of dissatisfaction that we see in the marketplace. The significant unmet need people living with narcolepsy need new treatment options. And so we see this as a unique option that will be differentiated from WAKIX and providing new therapeutic option for patients.

Corinne Jenkins: So we see WAKIX and this new formulation being able to co-exist and provide two unique options to people looking for therapeutic treatment for EDS or cataplexino adult narcolepsy. And just to clarify, when you stay within the WAKIX life cycle, I assume you mean your base case, which is 20, like mid-2030s. That's correct. Yes, that's correct, Karin. Okay, thanks. Thank you. I'm showing no further questions. At this time, I would like to turn the call back to management for closing remarks.

Corinne Jenkins: Thank you, operator. And thanks everyone for joining our call today and for your interest in harmony. As you heard from us this morning, our business remains strong and we have confidence in the long-term growth potential of our company. We look forward to providing updates as our business advances. Thank you and have a great day. Thank you.

Unknown Executive: This is concludes today's Harmony Bio-Scientists' third quarter, 2023 Financial Results Conference call. You may now disconnect your line and have a wonderful day. Thank you. .