Full Press Release Details
Conference Call Transcript
Earnings Conference Call Second Quarter 2021
August 10, 2021 // 8:30 am (ET)
Good day, and thank you for standing by. Welcome to the Second Quarter 2021 Financial and Business Update Conference Call. At this time, all participant lines
are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that
today s conference is being recorded. [Operator Instructions].
I would now like to hand the conference over to your speaker, Lisa Caperelli, Head of
operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences second quarter 2021 financial performance, and provide business updates.
Before we start, I encourage everyone to go to the Investors section of the Harmony Biosciences website to find the press release and Slides that accompany
our discussion today, including a reconciliation of our GAAP to non-GAAP financial measures. At this stage of our life cycle, we believe non-GAAP financial results
better represent the underlying economics of our business.
Our presenters on today s call are John Jacobs, President and CEO; Dr. Jeff Dayno,
Chief Medical Officer; Jeff Dierks, Chief Commercial Officer; and Sandip Kapadia, CFO.
Moving on to Slide 2, 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, and our actual results may differ materially. I encourage you to consult the risk factors
referenced in our SEC filings for additional details.
At this time, I would like to turn the call over to our CEO, John Jacobs. John?
Thank you, Lisa. And I would also like to
extend my sincere thanks to all of the participants for joining our second quarter 2021 conference call today. We are halfway through the year, and I m extremely pleased with the progress our team has made to date. Please allow me to elaborate
on our achievements in the context of our three pillars growth strategy, which is shown on Slide 3. Pillar One, optimize the commercial performance of WAKIX. Q2 represented a strong quarter for Harmony, as we delivered nearly $74 million in net
sales for WAKIX, and achieved our second profitable quarter in company history. This significant growth, nearly 24% versus the prior quarter Q1, was driven by a continued increase in the average number of patients on WAKIX, and in the number of
healthcare professionals prescribing our product, both of which further underscore the significant unmet medical need in this market for a truly novel mechanism of action, and differentiated product profile, which WAKIX provides.
Moving on to Pillar Two. Pillar Two is expand the clinical utility of WAKIX beyond narcolepsy. And we are
excited to now be evaluating pitolisant in two additional rare disease patient populations beyond narcolepsy, both with significant unmet medical need, and where there are no or limited approved therapies. In addition to our Phase 2 clinical trial
in patients with Prader-Willi syndrome that we initiated at the end of last year, in Q2 we initiated a Phase 2 trial in patients with myotonic dystrophy. We re also considering additional indications for WAKIX in other rare neurological
diseases. And we intend to broaden our lifecycle management efforts for this unique product, consistent with our strategy for long-term growth.
finally, Pillar Three, acquire new assets to expand our portfolio beyond WAKIX. Through the efforts of our dedicated business development team, I am excited that we acquired our first additional asset beyond WAKIX,
HBS-102, which is a potential first-in-class molecule with a novel mechanism of action.
HBS-102 gives us the opportunity to, once again, lead with the science in narcolepsy and other rare neurological diseases. As you will hear from Dr. Jeff Dayno, we believe that HBS-102, with its unique mechanism of action, potentially represents the next-generation of targeted therapy for narcolepsy beyond those working through histamine and other neurotransmitter systems in the brain,
We view this acquisition as another important step on our journey to becoming a leading rare neurological disease company. Our business
development strategy is intended to transform Harmony into a multi-product company, with a robust catalyst-rich pipeline of innovative therapies at various stages of development, with the potential for launch both during and after WAKIX life cycle.
An important aspect of this strategy is that we re focusing on assets in the rare neurological arena, where we can leverage our existing expertise and infrastructure, enabling us to optimize development and launch, while managing costs, which
in turn is intended to create long-term value for our stakeholders. To further support this initiative and the long-term growth of Harmony, we have entered into a strategic collaboration with Blackstone that gives us access to additional capital,
while reducing our current cost of capital, and enhances our flexibility so we can continue to invest in our growth strategy. Sandip will speak more about this later in the call.
On that note, I would like to turn the call over to Jeff Dierks, our Chief Commercial Officer. Jeff?
Thanks, John. We saw another strong quarter
performance for WAKIX in Q2, as measured by key performance metrics noted on Slide 4. Net revenue for the second quarter was $73.8 million, representing almost a 24% increase from the first quarter 2021. This solid double-digit growth in net
revenue was aided by strong prescription demand at the end of the first quarter that helped to drive additional growth in the quarterly average number of patients for Q2, growth in new prescribers of WAKIX, and improvement to gross nets from Q1 that
is normal given the impact of seasonal payer dynamics in the first quarter each year.
And moving on to Slide 5, the average number of patients on WAKIX increased 15% from what we reported in Q1,
to approximately 3,200 patients. More than two thirds of these patients are refilling WAKIX prescriptions at the highest dose. We anticipate that percentage to increase over time, as more healthcare professionals gain valuable clinical experience
with their patients, and see the benefits of the product in treating the debilitating and life-impacting symptoms of excessive daytime sleepiness, or cataplexy. The growth in the average number of patients on WAKIX, demonstrates continued strong
demand, despite competitive products entering the market, and also speaks to how the meaningfully differentiated product profile, aligns the unmet needs of the narcolepsy market.
Our strong commercial performance continues to be driven by the following key factors. First, we continue to see broad and meaningful clinical adoption of
WAKIX. We saw continued growth in the prescriber base of WAKIX in Q2. Of the more than 8,000 healthcare professionals who treat the majority of the diagnosed narcolepsy patient population, over 38% have prescribed WAKIX since launch through the end
of the second quarter. We also continue to see the vast majority of those prescribers becoming repeat writers, with two or more of their narcolepsy patients receiving a prescription for WAKIX since launch. Patient feedback from the community
continues to demonstrate positive experience and a strong interest in the product.
Second, the already strong market access for WAKIX, was further
strengthened with an increased number of plans making additional positive formulary decision for narcolepsy patients with cataplexy. Over 80% of all US-covered lives have favorable access to WAKIX, and saw
recent positive formulary decisions for Type 1 patients within these plans, which helped to take some of the friction out of the managed care workflow approval process. Patient s ability to access to WAKIX, has been accelerated in the second
Third, we saw improved access to healthcare professionals for our field sales team. ZS Access Monitor data showed that by the end of the second
quarter, nearly two thirds of all field sales engagements with healthcare professionals, were in-person, providing more of a meaningful education exchange for branded products and newer products still in
launch phase. We saw a corresponding increase in WAKIX topline prescription demand that aligned with the opening of the country, as more healthcare professionals are seeing patients in-person, and more face-to-face interactions are occurring between healthcare professionals and our field sales team.
And lastly, WAKIX offers a meaningfully differentiated product profile. The broad and strong adoption of WAKIX, speaks to the significant unmet need in the
narcolepsy market, and how the overall benefit-risk profile of WAKIX aligns to the unmet needs. Despite the growing competitive landscape of products, WAKIX offers a truly unique option for healthcare professionals and patients, as seen on Slide 6.
WAKIX offers a first-in-class molecule with a novel MOA, the only product that works through histamine WAKIX is the only
non-scheduled treatment option indicated for both excessive daytime sleepiness, or cataplexy, in narcolepsy.
WAKIX use is not a stimulant, with no evidence of drug tolerance or withdrawal symptoms in clinical studies
WAKIX can be used as monotherapy or administered concomitantly with other narcolepsy treatments, with no clinically relevant pharmacokinetic interaction with either Modafinil or sodium oxybate, as demonstrated in clinical trials. And WAKIX offers
convenient, patient-friendly, once-daily oral tablet administration in the morning upon waking. I am extremely encouraged by our continued strong performance of WAKIX in the narcolepsy market, further reinforcing our perspective that WAKIX offers a
unique and meaningful option to treat both excessive daytime sleepiness or cataplexy in adult patients with narcolepsy.
presentation over to Dr. Jeff Dayno, for an update on our clinical development program. Jeff?
Thanks, Jeff, and good morning, everyone. I d like to start by speaking to our updated pipeline chart on Slide no. 7. As John mentioned, we have made
significant progress on all three pillars of our company growth strategy, specifically with regard to pillar number 2, and our lifecycle management programs for pitolisant. At the end of June, we initiated our Phase 2 clinical trial to evaluate
pitolisant in patients with Type 1 myotonic dystrophy, known as DM1. In addition, our Phase 2 trial in patients with Prader-Willi syndrome, or PWS, continues to advance, with patients completing the randomized controlled phase and rolling into the
open label extension phase of the trial. Both trials are on track for topline data readout next year.
But the real exciting news for us today is the
acquisition of our first product beyond WAKIX, HBS-102, which represents an innovative drug development opportunity that could enable us to potentially bring another new first-in-class therapy to patients living with narcolepsy, and possibly other rare neurological diseases. HBS-102 is a potential first-in-class molecule with a novel mechanism of action that targets melanin-concentrating hormone, known as MCH, neurons in the brain. Scientific evidence suggests that MCH neurons function as the control
center and driver of REM sleep and its related behaviors.
Let me start with Slide no. 8, which explains the control center for sleep and wakefulness that
are centered in the hypothalamus. The main mediators of wakefulness and sleep/wake state stability, are orexin and hypocretin, produced in the lateral hypothalamus, as well as histamine produced nearby in the tuberomammillary nucleus, or TMN. The
main driver of non-rapid eye movement sleep or non REM sleep is GABA, which is produced in the ventral lateral preoptic nucleus or VLPO. And the main generator of REM sleep is melanin-concentrating hormone
known as MCH, which is produced in a diffused network of neurons in the lateral hypothalamus interspersed amongst the orexin neurons. Similar to how orexin and histamine neurons drive the wakefulness component of sleep/wake state stability, MCH
neurons drive REM sleep and its associated behaviors.
Moving to Slide no. 9, which shows the opposing roles of orexin and MCH related to sleep/wake state
function. The panel on the top left depicts how one of the original models of narcolepsy was explained. In an orexin-deficient state that occurs in patients with Type 1 narcolepsy, there is an imbalance between orexin and GABA, such that GABA goes
unchecked, which results in sleep intruding into wakefulness that patients experience as excessive daytime sleepiness or EDS. The panel on the top right, depicts a similar kind of imbalance in an orexin-deficient state related to the REM control
center, where an imbalance in MCH, causes REM intrusion into wakefulness that patients experience as the symptoms of cataplexy, hallucinations, and sleep paralysis. The figure at the bottom depicts the therapeutic hypothesis for HBS-102. Based on its mechanism of action, working as an MCHR-1 antagonist, HBS-102 will block the activity of the MCH neurons to
restore balance between MCH and orexin signaling, decrease REM overdrive, decrease REM intrusions into wakefulness, which will then potentially result in decreased symptoms of cataplexy, hallucinations, and sleep paralysis.
Moving on to Slide no. 10. Preclinical proof of concept of the MCHR-1 mechanism of action, has been established in an
orexin knockout mouse model of narcolepsy. This model has good clinical predictability in patients with narcolepsy. This experiment was conducted by Dr. Tom Scammell and his team at Harvard. The graph on the left shows the number of cataplexy
attacks, and the one on the right shows the number of short latency transitions into REM sleep, labeled SLREM, which is an electrophysiologic correlate of asleep/wake state instability, and REM intruding into wakefulness. In orexin knockout mice at
baseline, those treated with vehicle, had significantly more attacks of cataplexy, and bouts of SLREM, compared to those treated with an MCHR-1 probe molecule, which in this experiment, was SNAP 94847. When
the mice were fed chocolate, which excites them and provides a positive emotional stimulus, the number of cataplexy attacks increased, as did the bouts of SLREM, but the MCHR-1 antagonist blocked these events
to a similar degree as was seen during the baseline condition.
This preclinical proof of concept data is impressive, and is part of our next steps, which
are included on Slide no. 11. We will look to replicate this data with HBS-102 in the erecting knockout mouse model of narcolepsy. In addition, we will work to prepare and submit an investigational new drug
application, with the plan to initiate a Phase 2 clinical trial once the I&D is open. We will provide additional updates on the development plan for HBS-102 on future calls. As John stated, this
acquisition is an important step in our ongoing mission to become a leading rare neurological disease company, with an innovative product portfolio. Having gained FDA approval for one
first-in-class product with a novel mechanism of action, we now have the opportunity to once again, lead with the science, and develop a second first-in-class molecule with a novel MOA for patients living with narcolepsy. This is consistent with our commitment to advancing breakthrough science and addressing true
unmet medical needs in patients living with rare neurological diseases. My team and I are excited to go to work on the HBS-102 development program.
With that, I will now turn the presentation over to Sandip Kapadia to review our financials. Sandip?
Thank you, Jeff, and good morning,
everyone. This morning, we announced our strategic financing collaboration with Blackstone, and issued our second quarter 2021 press release, and filed our 10-Q, where you can find the details of our financial
and operating results. So, let s start with the strategic financing collaboration with Blackstone, which includes $330 million of capital, as seen on Slide no 12. As you may know, Blackstone is a premier global investment firm with strong
transactional experience in providing capital to life science companies, to help further develop, expand commercialize their portfolio.
is meaningful to Harmony, as it provides up to $200 million of debt capital to pay off our existing loan at a considerably lower interest rate, which will result in an annual interest savings of approximately $10 million. In addition,
Blackstone will also provide up to $100 million in capital as we look to expand our pipeline by acquiring and licensing products beyond WAKIX and HBS-102. And finally, this financing also includes a
$30 million equity investment in Harmony common stock. We re thrilled that such a fund as Blackstone has chosen to collaborate with us to support our future growth.
So, moving on to our second quarter performance on Slides 13 and 14. In the second quarter, we again posted our highest quarterly net revenues to date, with