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Good morning. My name is Todd, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Biosciences' Second Quarter 2024 Financial Results Conference Call. All participant lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I will now turn the call over to Brennan Doyle, 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' second quarter 2024 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 life cycle, we believe non-GAAP financial results better represent the underlying business performance. Our speakers on today's call are Dr. Jeff Dayno, President and CEO; Jeffrey Dierks, Chief Commercial Officer; Dr. Kumar Budur, Chief Medical Officer; and Scientific Officer; and Sandip Kapadia, Chief Financial Officer and Chief Administrative Officer. As a reminder, we will be making forward-looking statements today, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties. Our actual results may differ materially and we undertake no obligation to update these statements even if circumstances change. We encourage you to consult the risk factors referenced in our SEC filings for additional details. I would now like to turn the call over to Dr. Jeffrey Dayno. Jeff?

Thank you, Brian, and thanks everyone for joining our conference call today. Q2 was another very productive quarter for the team in Harmony, delivering another quarter of strong revenue growth for WAKIX and continued advancement in our late-stage clinical development programs, highlighted by the significant progress made on our next-generation pitolisant high dose were Pitolisant HD development program, formerly referred to as NG2. During our Q1 earnings call, we shared the initial pilot PK data for the pitolisant gastro-resistant or pitolisant GR program, formerly referred to as NG1 along with the development plan as the first part of our pitolisant life cycle management activities. This quarter, we are excited to provide an update on our pitolisant HD program with a targeted PDUFA date in 2028 and a provisional patent filed out to 2044 and providing us the opportunity to extend the pitolisant franchise to the mid-2040s with durable long-term revenue generation. First, let me provide some color regarding the reasons why we are excited about advancing this program because of the unmet medical need in the narcolepsy community that Pitolisant HD is designed to address. Later in the call, Kumar will share some of the initial pilot PK data and a few other details from the pitolisant HD development program. WAKIX offers a strong overall benefit risk profile for patients living with narcolepsy has brought a meaningful enhancement to the market as the first and only non-scheduled treatment indicated for both excessive daytime sleepiness or EDS and cataplexy and has been extremely successful in the market. But given the nature of narcolepsy as a chronic neurological disorder with difficult-to-treat symptoms, there still remain unmet needs and opportunities for continued innovation. For Pitolisant GR and HD, the innovation is more focused on the continued unmet needs in the narcolepsy market and what we can do to address those needs. First, we know that greater than 75% of narcolepsy patients experienced residual symptoms while on treatment and could benefit from a treatment with greater efficacy. This is why we are pursuing a high-dose pitolisant formulation that also has an optimized PK profile to drive greater efficacy to address this need in the market. Second, about 60% of patients living with narcolepsy experience fatigue, which is a different symptom than EDS and a common symptom in chronic neurological diseases. With a higher dose of pitolisant and based on the positive signals that we saw in both EDS and fatigue pitolisant in our Phase 2 proof-of-concept study in Type 1 myotonic dystrophy, or DM1, we plan to pursue a fatigue indication for Pitolisan HD in patients with narcolepsy as well as other neurological diseases, such as DM1. Next, as we explained for our Pitolisant GR program, a driving force behind the Gastro-Resistant coding is the fact that about 90% of patients with narcolepsy experienced GI symptoms such as nausea, dyspepsia and abdominal discomfort. There is a mechanistic rationale for this, especially in patients with NT1 or type 1 narcolepsy related to the orexin deficiency since orexin has effects on the vagus nerve in the brain, which is the central controller of gut motility. In addition to the underlying disease mechanism, one out of five patients on narcolepsy medications experienced GI side effects related to the common narcolepsy treatments that are used. WAKIX is well tolerated with a low incidence of nausea but the Gastro-Resistant coding feature is designed to address the predisposition to GI symptoms in patients with narcolepsy as well as the GI tolerability issues patients have experienced with other narcolepsy treatments. Taken together, the higher dose, optimized PK profile, gastro-resistant feature and our plan to pursue additional indications would address significant unmet needs in patients with narcolepsy and position Pitolisant HD as a meaningfully differentiated product and result in a differentiated label compared to WAKIX, with a provisional patent filed and a potential IP out to 2044 and a target to do to date in 2028. This gives us an opportunity to introduce the differentiated product prior to WAKIX LOE [ph] in 2030 to extend the Pitolisant franchise to the mid-2040s and drive durable long-term revenue generation. Our commercial team conducted preliminary market research based on the target product profile for Pitolisant HD. And initial results suggest that the features I described to you would be of real interest to patients be viewed as offering meaningful benefits by health care professionals and perceived as clinically superior compared to WAKIX by payers. To round out our Sleep/Wake franchise, we were very pleased with the FDA approval of WAKIX for EDS in pediatric narcolepsy patients ages six years and older and we're excited to launch this new indication into the market on July 1. As a reminder, the pediatric narcolepsy data, along with data from the ongoing Phase 3 TEMPO study in PRADER-WILLI syndrome keeps us on track toward obtaining pediatric exclusivity and an additional six months of regulatory protection on the back end of our longest patent, which would take us to September 2030. We are on track to submit an sNDA for idiopathic hypersomnia later this year and are very excited about our potential best-in-class Orexin-2 agonist program for TPM1116. We are working with our partner, Bioprojet, and are on track towards filing an IND mid-2025 and then initiating first-in-human studies second half of 2025. Beyond our strong Sleep/Wake franchise, we are also advancing late-stage programs in our other two franchises, neurobehavioral and rare epilepsy. Harmony has expanded its pipeline and diversified its portfolio that now includes three orphan rare CNS franchises, each one of which has peak sales opportunities of $1 billion to $2 billion. I want to highlight that our pipeline now has eight assets advancing across 13 development programs and three of them are in Phase 3 with a fourth Phase 3 trial to begin later this year. Importantly, this pipeline is poised to deliver at least one new product or indication launch each year over the next five years. This, along with Pitolisant -HD PDUFA date targeted for 2028 translates into the potential for significant durable long-term value creation out beyond 2040. Kumar will be providing you updates on our development programs later in the call. While we advance our pipeline programs, we remain focused on execution across the company and delivered another solid quarter with WAKIX net revenue of $172.8 million, representing 29% growth year-over-year. With these strong results, we are once again reiterating our 2024 net revenue guidance of $700 million to $720 million and remain confident that WAKIX represents a $1 billion-plus market opportunity in narcolepsy alone, and we are well on our way. What reinforces our confidence in the durability of the WAKIX franchise is the news we shared earlier this morning regarding the WAKIX polymorph patent being upheld once again after the second and final attempt to challenge the patent. Late last week, the US Patent and Trademark Office, or USPTO, issued its final denial of the petition for reexamination of the WAKIX patent, which was filed by a short seller. We have always stood by WAKIX and our intellectual property. This reexamination request represented the second attempt to challenge the WAKIX patent. And in its decision, the USPTO stated, and I quote “this decision is final and non-appealable”. We remain very confident in the strength of our patents, the validity of the patent portfolio and our ability to rigorously enforce the intellectual property rights protecting WAKIX. This bolsters our confidence in the durability of the pitolisant franchise with the PDUFA date for Pitolisant GR in 2026, the target PDUFA date for Pitolisant HD in 2028, the IP for WAKIX out to 2030, and provisional patents filed for Pitolisant GR and HD out to 2044. This puts us in a solid position to extend the Pitolisant franchise out to the mid-2040s. We also remain active in business development with the goal of building out our pipeline even further. With approximately $434 million in cash, cash equivalents and investments as of June 30th, we are in a solid financial position to execute on additional BD opportunities that are consistent with our growth strategy and offer the potential to drive further value in our overall business. Lastly, we look forward to hosting our inaugural Investor Day on October 1st in New York City, where we will have an opportunity to highlight our robust late-stage pipeline and share some new data with you. With that, I will turn the call over to Jeffrey Dierks, our Chief Commercial Officer, for an update on our commercial performance. Jeff?

Thanks, Jeff. We saw another solid quarter of continued commercial progress for WAKIX in the second quarter, highlighted by continued product adoption and growth in our underlying business fundamentals. Net sales for the quarter were $172.8 million, representing 29% growth from the same quarter prior year. The solid net sales performance in Q2 reaffirms our confidence and our net sales guidance of $700 to $720 million for the full year 2024. We saw continued growth in the average number of patients on WAKIX and in the WAKIX prescriber base, both facilitated by favorable market access, as seen on slide four and five. The average number of patients on WAKIX increased to approximately 6,550 in the second quarter. We are extremely pleased with the sequential increase of approximately 250 patients from what we reported last quarter and the durable growth in year five of our rare orphan commercialization. The growth in average patients in Q2 was in line with our expectations and reaffirms our confidence and our guidance of approximately 7,000 average patients by the end of the year. We also saw the WAKIX prescriber base increase again in the second quarter. We are seeing continued growth in the WAKIX prescriber base beyond the OxyBate REMS enrolled healthcare professionals. We are approaching 40% penetration in this segment of approximately 5,000 healthcare professionals at the end of the second quarter. This segment of healthcare professionals represents an insulated group of prescribers and patients from the OxyBates that we continue to tap into each quarter to drive performance. The growth in this segment demonstrates WAKIX is broadening the branded writer segment beyond the OxyBates by providing a meaningfully differentiated product profile and one that offers broad clinical utility across the entire narcolepsy treating healthcare professional universe. Coupled with the growth we are seeing beyond the OxyBate REMS enrolled healthcare professionals, we continue to see utilization of WAKIX among the approximately 4,000 OxyBate REMS enrolled healthcare professionals, even with the availability of new and generic OxyBates. We are highly penetrated within this prescriber audience and see WAKIX being prescribed to additional narcolepsy patients each quarter in this segment. As we shared during previous earnings calls, our ability to call on the broad approximately 9,000 narcolepsy treating healthcare professional audience allows us to tap into the full diagnosed narcolepsy patient opportunity, giving us confidence and a billion dollar plus opportunity for WAKIX and narcolepsy. Supporting the growth in patients and prescribers is our favorable market access and formulary coverage for WAKIX. We've seen no changes to the overall broad payer coverage for WAKIX over the past year with the introduction of new branded and generic options, and we believe we are well positioned to support future growth. And as we are closing out another solid quarter of performance, we are excited to receive the news of the approval of WAKIX for the treatment of excessive daytime sleepiness in pediatric narcolepsy patients six years and older on June 21. WAKIX now represents the first and only non-scheduled treatment option for pediatric narcolepsy patients. And importantly, all narcolepsy patients have EDS. So with this approval, we have the opportunity to access the full diagnosed pediatric narcolepsy patient opportunity. The pediatric narcolepsy opportunity is a small, but meaningful opportunity. It represents approximately 5% of the diagnosed narcolepsy opportunity or approximately 4,000 patients. And this approval was contemplated in our full year 2024 net sales guidance. Our commercial team was prepared for this approval and started our now approved outreach, the week following the approval. Our field sales team was trained later that week and without educating health care professionals about the new indication starting July 1. Although it's still early, we are seeing positive indicators from the launch. We're getting very positive feedback and interest from the patient and health care professional community and payers have begun to add WAKIX for pediatric narcolepsy to their formularies within the first 30 days from approval. In summary, we had another strong quarter of durable growth and performance in net sales, patient adds and growth in prescribers of WAKIX reaffirming our full year net sales guidance and average patient guidance that we issued earlier this year. With the addition of the pediatric narcolepsy approval for the treatment of EDS, coupled with the strong fundamental business in our adult narcolepsy, we're seeing good leading indicators in our underlying business fundamentals. Heading into the third quarter, we anticipate the typical summer seasonality of fewer patient visits, lower foot traffic in offices, consistent with previous years and other chronically managed conditions, and we remain confident in continued growth in average patients and prescribers of WAKIX moving forward. I'm excited about our performance and confidence in WAKIX representing a potential $1 billion plus opportunity in narcolepsy alone, and we're well on our way. I would like to now turn the call over to our Chief Medical and Scientific Officer, Kumar Budur, to discuss the advancements in our clinical development programs. Kumar?

Thank you, Jeff. Good morning, everyone, and thank you for joining us today. We continue to make great progress in advancing our pipeline programs, several of which are in late-stage development. As just mentioned, we now have 13 different development programs ranging from preclinical to registrational studies across eight different assets and under three distinct franchisors focused on raise neuro indications with high unmet medical need. Our full clinical development pipeline is shown on Slide number 6. It is important to note that we currently have three ongoing Phase III registrational studies that are actively recruiting patients for three distinct indications and plan to start a fourth safety registration study in patients with LGS during this half of 2024. Starting with our Sleep/Wake franchise, the pitolisant high dose or pitolisant HD program, it is an enhanced formulation of pitolisant begun to deliver an optimized PK profile, along with the higher dose GR coated and target unique symptoms. We conducted a pilot PK study with four different prototype formulations in a five-way crossover study comparing the four prototype formulation with WAKIX [indiscernible] formulation at a dose strength of 35.6 milligram, the highest labeled dose for WAKIX. Based on the pilot PK data, we are pleased to advance this program forward. The preliminary data from the prototype formulations showed a meaningful differentiation with at least approximately 20% increase in relative bioavailability and a decrease in the variability compared to WAKIX. Alongside further work on formulation optimization, we will progress this program and study up to two times the current highest and labeled dose of WAKIX, where we expect to demonstrate a further increase in relative bioavailability and decrease in variability in the PK profile. In addition, the GR coating is designed to add the predisposition to see a tolerability issue in patients with Narcolepsy and enable to start at the beginning of the therapeutic dose frames. Therefore, an optimized PK profile, along with a higher dose, GR Coating and targeting unique symptoms such as fatigue in narcolepsy is expected to provide a differentiated label and product profile. We will pursue an abbreviated clinical development program based on the leading at work, including establishing safety margins per pitolisant up to 180 milligrams in a repeat dose study and qualitative research study and fatigue in narcolepsy that were completed over the past couple of years to support Pitolisant HP program. We are targeting a PDUFA date in 2028. Pros and patents have been submitted with the potential for patent protection until 2024. Moving on to Pitolisant [indiscernible] resistant on GR program. We are on track to initiate the dosing optimization study in the fourth quarter of this year and a pivotal bioequivalent study in the first quarter of 2025 with PADUFA 2026. For the Idiopathic Hypersomnia or IH program, we are on track to submit an sNDA in the fourth quarter of this year. The submission will be based on the totality of the data generated from the EPI [ph] study, including data from the ongoing long-term extension study, which strongly support pitolisant efficacy in patients with IH. We have [indiscernible] defined other supporting information that will be included in the sNDA, including real-world evidence from pitolisant use in Idiopathic Hypersomnia in Europe to further strengthen our submission. We are optimistic and remain committed in bringing the new treatment option to patients living with IH In our neuro behavioral franchise, we remain on track to report top-line data from the Phase 3 reconnect registrational trial of

Thank you, Kumar, and good morning, everyone. This morning, we issued our second quarter earnings release and filed our 10-Q, where you'll find the details of our second quarter 2024 financial and operating results. Our financial performance is also shown on slides 10 through 13. We delivered another quarter of solid financial performance with continued double-digit top line growth, profitability and strong cash generation. Our financial performance and profile positions us well to continue advancing our growth strategy for the remainder of the year and beyond. We reported net revenues of $172.8 million, compared to $134.2 million in the prior year quarter, representing a growth of 29%. Performance in the second quarter reflects the continued strong underlying demand for WAKIX. We also reported growth in income and margin. Non-GAAP adjusted net income for the second quarter of 2024 was $60.6 million or $1.05 per diluted share compared to $45.9 million or $0.76 per diluted share in the prior year quarter. We believe non-GAAP adjusted net income better reflects the underlying business performance. Please see our press release for a reconciliation of GAAP to non-GAAP results. With respect to expenses during the second quarter of 2024, we incurred two one-time charges related to business development transactions in the quarter, which impacted the R&D expense line. We incurred a $25.5 million charge related to the upfront licensing fee paid as part of the 2024 Bioprojet sublicensing agreement for TPM-1116 and a $17.1 million IP, R&D charge related to the acquisition of Epygenix. The IP, R&D charge related to Epygenix reflects the upfront payment of $35 million, offset by assets acquired into transactions, primarily composed of a deferred tax of approximately $18 million. We structured both transactions with low upfront and success driven milestones. This allows us to efficiently use shareholder capital and focus future investments on advancing the development program and reaching value inflection points. We ended the second quarter with $434.1 million of cash, cash equivalents and investments on the balance sheet. The balance reflects continued strong cash generation, which provide financial flexibility to execute on business development and to opportunistically return capital to shareholders via our share repurchase program. Looking ahead, we continue to expect quarter-over-quarter growth for the balance of the year. We do expect an impact of summer seasonality we complete experienced in the third quarter. We are once again reiterating our net revenue guidance for 2024 of $700 million to $720 million, highlighting our progress towards the $1 billion plus opportunity in narcolepsy alone. And with that, I'd like to turn the call back to Jeff for his closing remarks. Jeff?

Thank you, Sandip. In closing, I am very proud of the accomplishments that were made by the Harmony team during Q2, including significant progress and continued advancement of the Pitolisant-HD development program toward an expected PDUFA date in 2028. This, along with the USPTO's final decision upholding the validity of the WAKIX patent after two failed attempts to challenge the patent with IP out to 2030, puts us in a solid position to extend the Pitolisant franchise out to the mid-2040s. Continued strong revenue generation for WAKIX with 29% growth year-on-year, the approval and launch of the pediatric narcolepsy indication for WAKIX, advancement of our Phase 3 clinical trials for

[Operator Instructions] We'll take our first question from Francois Brisebois with Oppenheimer. Please go ahead.

Hey, guys. Thanks for the questions, and congrats on the quarter. In terms of seasonality, you talked about the summer or the third quarter months to be kind of similar to what we've seen in the past. I think last year, the patient add average is actually very solid and strong and kind of kept going in the third quarter. In the past, we have seen some drop. So is it something that could be downward from the second quarter? Or just help us understand a little bit more what you mean by saying that it's normal seasonality that you've kind of seen in terms of patient ads in the past years?

Good morning, Frank, and thanks for the question. I'll turn it over to Jeff Dirk to respond.

Sure. Yes. So Frank, when we talk about typical summer seasonality, it really relates to fewer patient visits in the lower foot traffic, and that's more of a reflection on new patients versus existing patients. So we do anticipate, typically, a little bit lower in terms of the new patient starts. It happens with most chronically managed medications. Most patients don't schedule their medication visits during the summer when they're on vacation and holiday. But we do anticipate continued growth, as you've seen in the last four or five years of our commercialization. We are obviously reiterating our guidance at approximately 7,000 average patients by the end of the year. And obviously, with the addition of the pediatric narcolepsy indication, that's going to help us support future growth as we continue to tap into this opportunity as the market allows around the typical seasonal dynamics.

That's helpful. And then on that note, you talked about -- it's about 4,000 patients on the pediatric side. Do you expect penetration in that in the pediatric population to be better or more difficult than the adult centers?

So, Franc, what I would say is that what we're seeing within the pediatric market is I would expect the pediatric patients to be added over a couple of years versus a bolus of patients, right? This is a brand-new audience for us, although there are WAKIX prescribers with knowledge of the product and its profile. We have to go out and look at educating not only patients but more importantly, the parents and the caregivers about the profile. So, a little bit different than the adult population when we launch where there was sort of a bolus of patients looking for a new option. We're going to look to tap into this opportunity. I would anticipate probably a very similar patient penetration over time. But we're going to be looking to add these patients every single quarter as opposed to a large bolus that you anticipate in the third quarter or fourth quarter this year.

Yes. And Franc, I would just add, as the first and only non-scheduled product approved for patients with narcolepsy, I think vaginas a strong type offering for pediatric ovals patients.

Thank you.

Thanks Franc.

Thank you. Our next question will come from Charles Duncan with Cantor Fitzgerald. Please go ahead.

Morning Jeff and team, congrats on a great quarter and I appreciate taking the question. I actually had a follow-up to that last question regarding pediatric patient population. I'm wondering when you consider the prescriber base of the 4,000 oxybate patient prescribers versus the 5,000 non-oxybate registered prescribers, where do you think the pediatric patient population exists more? And then secondarily, in addition to penetration, what do you think about persistence? It would seem to me that persistence could be even greater in the pediatric patient population?

Good morning Charles, thank you for your question. Jeff, thoughts on where these patients are coming from?

Sure. So, Charles, we know there are about 1,100 health care professionals that manage that approximately 4,000 diagnosed pediatric narcolepsy patients. It probably skews a little more heavily to the oxybate REMS enrolled healthcare professionals because as you know, this is a very difficult lifelong neurologic disorder to treat. And ultimately, these patients end up in some of those larger sleep centers. But the great news is, of those 1,100 doctors, a good amount of those were already in our existing call plan. They already have familiarity with WAKIX a lot of that is simply just getting in touch with the parents, caregivers and patients and bringing them in the office. And I think, again, it's very early, but I would probably assume that we've seen very good persistency rates with WAKIX in adults. So, I would assume that the pediatric population may have the potential for equivalent or better persistence. As you know, WAKIX, as Jeff shared, is a very ideally-suited product profile for pediatric patients. It's a once-daily oral tablet you take in the morning upon awakening. So, you don't have to worry about patients having to maybe go to the nurse during the day at school or have to schedule med visits for parents to drop off medicine and being a non-scheduled treatment option, certainly, that profile really appeals to the doctors, but also the parents of these individuals.

Excellent. Can I ask one quick pipeline question to Kumar and that is regarding the IH sNDA filing this year. Are you waiting for any additional, call it, clinical data or experimental results to enable that filing? And perhaps, can you describe a little more the real-world use that you're thinking about including it? And finally, would you anticipate that to be a relatively quick turnaround, so maybe enabling an approval and launch by second half of next year.

Hey good morning. Thanks for the question. First of all, we are on track to submit the sNDA by the end of this year. In terms of the evidence, as we have discussed in the past, the totality of the data from the infield study, the open-label part, randomized to period and also the long-term extension study, now it's almost close to a year since the study was completed. We still have about two-thirds of the page who entered into the long-term extension study still participating study. Almost all of them have completed 12 months, about one-third of them have completed 18 months, and some of them are approaching 3 years. So this speaks to the persistence of efficacy and persistence on treatment and also the benign safety profile. In terms of the additional data, we are leveraging some real-world evidence data from neuro [indiscernible] described in patients with Idiopathic Hypersomnia and we'll be leveraging this data to make a stronger submission. But at the end of the day, Charles, we strongly believe in the unique benefit risk proposition, pitolisant offers in patients with Idiopathic Hypersomnia with the currently available treatment option is a scheduled 3 control substance or off-label of controlled substance was pitolisant, which has a profile of nonscheduled drug with a very simple dosing regimen of taking once a day into more bank.

Persistence information, very helpful. Thanks for taking the question.

Thank you. Our next question will come from Ami Fadia with Needham. Please go ahead.

Hi. Good morning. Congratulations on all the progress across the pipeline. My first question is for Kumar regarding the pitolisant high-dose formulation. Can you help us better understand how the increased exposure rate for translate into higher efficacy and maybe more from a mechanistic rationale and maybe the occupancy and sort of how much -- what is sort of the unmet need there? And how do you see a patient benefit during the course of the day with a higher dose formulation?

Good morning, Ami. Thank you for the question. Yes, first of all, Ami, we are really excited with the data that we saw with pitolisant high dose formulation. We saw both an increase in relative fire availability and also decrease in interintuition variables. And also, as we have discussed earlier in the press release, we will be studying up to two times the highest [indiscernible]. We have a body of the evidence Ami to show a dose response with increasing pitolisant results increased FX size both player and also some of the symptoms that we plan to target with pitolisant HD program, a fatigue in narcolepsy is higher [indiscernible]. So the combination of an optimal [indiscernible] the highest dose, the gastro-resistant formulation, which is designed, which is widely prevalent to GI symptoms patients with narcolepsy, the ability to start up the therapeutic dose range and finally, targeting the symptom for which there are no approved treatment offers a very unique product profile for our patients, and this product profile was very well received when Jeff Dierks and his team did market research. Jeff, do you want to add anything?

Sure. So just from a commercial perspective, we did do some preliminary market research across about 100 narcolepsy patients, 25 sleep specialists and healthcare professionals and seven pharmacy directors of payers just to get some feedback with the initial target product profile. And I think as Kumar stated, looking across those three audiences, what was coming out of the research was that this is a very meaningfully differentiated product profile and one that looks to be clinically superior than WAKIX, simply because the biggest unmet need that's in the marketplace is enhanced efficacy. About 75% of patients that are on treatment still report residual symptoms that impact their daily life. And so we know in a polypharmacy market, physicians and patients are looking for enhanced efficacy. Then the other -- second unmet need was really the untreated fatigue, which no product currently is approved for right now and data suggest that up to 60% of narcolepsy patients also have untreated fatigue, which is very distinct and different from excessive daytime sleepiness. And then lastly, what we've seen in the literature as well as in research is more than 90% of people living with narcolepsy have GI disturbances, mostly attributed to their pathophysiology of their disease, but up to 20% of them also experienced GI issues such as nausea on their medication. So the combination of this profile addressing enhanced efficacy, untreated fatigue in the GI symptom with the gastro-resistant coating really seems to present a very clinically superior product, one that payers are going to be broadly covering and one that physicians really see as a very attractive treatment option for the vast majority of their patients.

Great. Thank you. My second question is for Sandip. With all of these different programs underway, there is obviously going to be a fair amount of investment from the R&D front as these assets progress. Where is business development in terms of the company's priorities? And what type of assets do you think would make sense to bring on? Would it be later-stage assets as opposed to in-market assets -- sorry, early-stage assets as opposed to in-market assets? If you could give us some color there. Thank you.

Sure. Ami, thanks for the question. I mean, business development continues, as Jeff mentioned, the priority for the company. We've done several transactions that we saw from the last year or so. We've done three transactions. And see, we've done them in a financial disciplined manner. We've looked at them at all at low upfront, success-driven milestones, overall. And the filters for us continue to be rare, since CNS looking at things that can help leverage a lot of the capabilities that we've already built as a company. And we think we have more programs in-house, we're building better and better capabilities that we can elaborate both on the clinical side as well as commercial. I don't know if you have any thoughts further?

Yes, no. Good morning, Ami. I would just add that I think that -- the strategy that we've taken thus far in regards to business development with the strategic focus in orphan/rare neuro, how we build out sort of the three franchises that we have now with our main franchise in Sleep/Wake the neurobehavioral franchise and the Rare Epilepsy franchise we bought in. I mean we see that strategy and opportunities in a similar vein going forward. And where we are now with regard to the three CNS franchises and doing it in a thoughtful and a prudent manner has set us up each of those with potential peak sales opportunities of $1 billion to $2 billion. We can potentially add to each of those franchises or if we see an opportunity sort of in an adjacent area in Neuro or Neuropsych Disorders, then we would contemplate that as well. We like our profile. We like the way we've approached it thus far. And we continue to take a similar approach going forward.

Got it. Thank you so much.

Thanks, Ami.

Thank you. Our next question will come from David Amsellem with Piper Sandler. Please go ahead.

Thanks. Just a couple, so first, on the high-dose formulation, can you talk through the dosing in contrast to both the legacy formulation and GR. And what I'm wondering, in particular, is with the greater potency, is there any risk at all that it could cross into controlled substance territory in terms of scheduling and what kind of -- are you going to do the full suite of human abuse liability work there? So that's number one. And then number two, I might have missed this earlier, but you talked more about the doctors who are not enrolled in the oxybate REMS, can you talk about your penetration there? And what your expectation is overtime in terms of penetration into that portion of the physician audience? Thank you.

Yeah. Good morning, David. Thanks for your questions. Let me address part of the first one, and then I'll turn it over to Kumar for the next one. With regards to the potential for changing the abuse potential Pitolisant HD, David, this is to Pitolisant. So in terms of mechanistically, I mean the short answer is no. The higher dose does not change the mechanism with regards to the lack of abuse potential or abuse liability so the program will not require further abuse liability studies. And then in terms of the dosing and with regards to Pitolisant GR, that is based on the demonstration of bioequivalence at equivalent doses to WAKIX within the current labeled range of 17.8% to 35.6%. I'll turn it over to Kumar to comment on the plan with regards to the opportunity in the Pitolisant HD program and what the thinking is there.

Sure. Thank you, Jeff. Hey. Good morning, Dave. Thanks for the question. Yeah, there were like several parts to your questions. So let me address one after the other. Starting with the dosing regimen, I say the dosing regimens here will be different compared to the legacy regimens program, and we will provide those details at a later point in time in terms of the total strength that we'll be posting. But as we said earlier, we will be studying up to two times, the highest rate of liability. And the second question was around safety and the height. The safety profile, we have studied already as part of the leading edge work that we did in preparation for the pitolisant HD program. We did a multiple ascending dose study up to 180 milligrams of pitolisant high-dose study and we established safety policy. The safety profile is very similar to the safety profile of WAKIX, including the impact on cardiovascular system. So there was no QDC impact even at 180 milligram repeat dose. And in terms of abuse that as Jeff mentioned, that's not a concern because multiple studies in the preclinical arena have not shown any release of dopamine in nucleus action bands. That is the one that usually results in abuse potential, and we haven't seen that. And human abuse potential studies were done up to 6x times of the development, and we did not see anything. In fact, the development were very similar to placebo. Another...

Yes. And the second part of the question to Jeff.

Sure. So, David, I believe you were inquiring about the penetration within the non-oxybate REMs and old healthcare professionals. And so within that audience, there's about 5,000 of those healthcare professionals. And what we saw in the second quarter, that we're approaching about 40% penetration within that audience. It's been a regular rhythm that we've been able to tap in and see growth within the segment. With respect to a goal for penetration, I don't necessarily have a goal per se in mind, but I do believe there is still ample room to grow in this area. We know that all 5,000 of these healthcare professionals have at least a couple of narcolepsy patients under their care, and our representatives are out educating the entire 5,000 network. So I would say we continue to tap in. We've seen growth from 30% to 33% to north of 35%. We're now approaching 40%. So I think there's a regular rhythm of continuing to add to this base, and we're anticipating continued growth in this segment. And I do believe that there's ample room to grow for unique prescribers. And then the second phase of that, David, is they start their first patient on WAKIX. The next phase of growth in this audience is growing the depth of their prescribing. And we are starting to see that as well. So it's a very unique audience, insulated from the oxybate both branded and generic, certainly is a catalyst for future growth moving forward.

Thank you.

Thanks, David.

Thank you. Our next question will come from Graig Suvannavejh with Mizuho Securities. Please go ahead.

Hi. Good morning. Thanks for taking my questions and congratulations also from me on the progress in the quarter. My first question is on the commercial business in WAKIX and I might have missed this detail before. But as we think about the second half in terms of net patient adds, I think that historically, we've seen over the past several years that patient adds for the second half around 600 to even 700. And I think based on what I had heard earlier from Jeff Dierks that you had planned to end at 7,000, I just wanted to revisit what the second half implies if you ended at 6,550, I think, by my math. And, again, if I have my math correct, that only implies 450 in additional net patient adds for the balance of the second half. So, if you could just provide some commentary around what our expectations should be for the second half on net patient adds and appreciating that the revenue guidance has remained the same? And then my second question just on the HD formulation. Knowing that you're going to be testing higher doses to improve on efficacy, I'm just wondering what the expectation on safety should be. I realize you've got a GR formulation, but are you anticipating that with higher doses that you're going to be evaluating versus the legacy WAKIX product that the side effect profile relatively will be the same or perhaps even less than legacy WAKIX? Any comments around what you're anticipating to see on safety relative to WAKIX with HD formulation would be appreciated. Thanks so much.

Yeah. Thanks, Greg, for your questions. First one over to Jeffrey Dierks on the commercial side.

Sure. So, Greg, with respect to thinking about full year 2024 and patient ads, yes, we did add about 250 average patients sequentially from the first quarter in the second quarter and reported approximately 6,550 average patients. We are reiterating our guidance of approximately 7,000 at the end of the year, so your math is correct. And I think it's important that, yes, historically, when you're looking at year two, year three, and even year four, we're now in year five of a rare orphan commercialization, and we feel extremely confident and good about the growth we're seeing. We expect continued growth for the balance of the year. As we shared a little bit earlier, we do expect the typical summer seasonality that impacts new patient starts. You tend to have some patients who are chronically managed scheduling their appointments in the fourth quarter for med management. So we do anticipate strong refill behavior in the fourth quarter. Typically, patients like to fill their new and refill medicines before the end of the year. Insurance resets, insurance changes next year. We're seeing good underlying business fundamentals, right? We recently added the pediatric narcolepsy indication approval that ultimately helps support future growth, and we'll continue to tap into that diagnosed patient opportunity as those seasonal market dynamics allow each year. But we're continuing, as Sandy alluded earlier, we're confident in continued growth for the balance of the year and quarter-over-quarter growth. I think if you're looking at where we anticipate ending the year, our guidance of about 7,000 should kind of help you think about the third and fourth quarter moving forward.

Yeah. And, Greg, I would say in terms of the overall benefit-risk profile, with regards to Pitolisant HD and our expectation, based on what we've previously seen on dose response and other data in the pivotal program, we expect that same profile to be maintained with regards to the opportunity for improved efficacy with no change in overall safety tolerability. And, Kumar, any added color on that?

I think you covered everything. Hey, good morning, Greg. The only other thing that I would like to add is, Greg, as I mentioned earlier, we plan to accelerate this program with a different date in 2028, and we did some leading-edge work where we looked at higher doses of Pitolisant. About 18 months ago, we started this study, looked at multiple doses of Pitolisant, and studied up to 118 milligrams in the repeat dose study, and the safety and tolerability profile was very similar to the highest label dose of vagate, which is 35.6 milligrams. So we did not see any change in the safety and tolerability profile, and you mentioned about the gastro-resistant coating. Gastro-resistant coating, if anything, should actually result in a more positive patient experience.

Thank you. Our next question will come from David Wong with Citigroup. Please go ahead.

Hi there. Good morning, and thanks for taking my question. So for the first one, I just wanted to ask about your level of confidence here in meeting the projected PADUPA date of 2026 and 2028 for the GR and HD formulations, respectively, and what are the key gating factors to get to in terms of data packages for filing with the agency? And then second question, in terms of the PCM1116 molecule, which you're taking forward to IND filing, are there any features there, which you believe could differentiate from other restages currently in development? And how do you think about developing for various indications such as narcolepsy versus IH? Thank you.

Yes, David. Good morning. Thanks for your question. With regards to our confidence in the projected PDUFA dates for the pitolisant GR and HD programs, I think we're confident in terms of the development plan that's laid out and our ability to hit those things. I can ask Kumar provide further color on that and what some of the key major milestones are towards that. Kumar?

Hey, good morning, David. Thanks for the question. Regarding the gastro resistant formulation, as we disclosed earlier during the call, we are on track to start growing option study in the fourth quarter of this, and we will start the total bioequivalent study in the first quarter. And we are on track for PDUFA in 2026, we are confident about it. In terms of the HD formation, we just disclosed the initial PK data from the price study. And I also mentioned earlier on some of the leading edge work that we have already done to accelerate this program, like establishing safety margin, we conducted a quality due the study in patients with narcolepsy who have fatigue, identify the right instrument to study fatigue in this patient population. We anticipate this to be in the next stage of the clinical development in 2025, and we will provide more color to -- solidify some of our plans. Regarding your last question about TPM1116 our Orexin-2 agonist, some of the differentiating features David, are, first of all, this belongs to a novel chemical period. It has a different chemical scaffold find it different than any other positions that we know. And what we have seen in our preclinical experiments is the more potent or in etagebased on the information that is available in the public domain on various products and deceptive actives. The fastest this is most important potent Orexin-2 agonist does view of cost. They are on toe for NT1, NT2. Based on the information on other compounds, you may have noticed that typically NT2 required higher dose than NT1 the higher -- the higher does than NT2. So from that in terms of avoiding the off-target side of that, that gives us some -- and also the preclinical safety data that we have seen is actually very interesting and definitely to believe that TPM1116 would be the potential best-in-class compound when it comes to our Orexin inceptor agonist,.

Thank you. Our next question will come from Corinne Jenkins with Goldman Sachs. Please go ahead.

Hey, good morning. Maybe from suggest, you've talked about the $1 billion target for sales. I guess maybe you can just talk a little bit more about the path from here where we are today to there, particularly with respect to the patient growth you need to see to get to that target? And then on maybe like a little bit more disclarification, can you just provide some color around growth to that through the first half of this year. I think sales are relatively flat versus second half 2023. But obviously, you took price and patients have continued to grow. So curious what you're seeing there and how we should think about growth for the rest of balance of the year. Thanks.

Yes, sure, Corinne, good morning. Jeff.

Yes. So great question, Corinne. So path to $1 billion, I mean, based obviously on our net average price per patient, achieving $1 billion basically is looking -- getting north of about 9,000 average patients on product. We just finished the quarter and reported approximately 6,550. So our goal to achieve $1 billion is simply looking at adding another 2,500 average patients between now, mid-2024 and mid-2030. So over the next six years. And I think, obviously, based upon our four years of history and what we believe in continued growth, the path to $1 billion is very clear. We obviously have a very good analog in the oxybate, which was able to achieve $1 billion on its path with a much smaller ability to tap into only about 4,000 health care professionals. They didn't have, obviously, the access to the full diagnosed patient opportunity. So we believe accessing 9,000 health care professionals with a goal of having to achieve another 2,500 average patients in the next six years, I think is absolutely achievable. And that's why we look at this as a $1 billion-plus opportunity. And I think we're very excited about the ability to enhance the Pitolisant franchise by adding both GR and HD along that time period and really building out this franchise and being able to help thousands of patients living with narcolepsy. Sandeep, comments on [indiscernible].

Sure. Yes. Thanks, Corinne for the question. Generally, I would say, have in line with what we've seen in the past, typically is lower in the first quarter for the year. And then as you go into the second quarter touched the roof and that's what we've seen roughly our average per patient about 5% a quarter of this quarter. We took a price increase earlier this year. So I think generally, it's in line with our expectations on how the evolution and then it stabilizes and improves in the second half of the year.

Thank you.

Thanks, Corinne.

Sure. Thanks for the question. I think Kumar can address. I think it's -- the Pitolisant GR, the design is it's really the predisposition. So it's not relating to the tolerability profile and the WAKIX, and the incidence of nausea. But as we said, patients with narcolepsy, the vast majority have GI symptoms related to underlying mechanism of disease. So a lot of them experience the potential for nausea, vomiting and bowel discomfort. And they see that also with other narcolepsy treatment. So the predisposition to what is likely to co-morbid symptomatology, the GR feature can potentially reduce that potential. And then especially in the HD program as we go up on the dose, that GR feature could be beneficial in that regard. Kumar, additional thoughts?

Thank you. At this time, I show no further questions. I would like to turn the call back to Jeff Dayno for any closing remarks.

Thank you, Todd, and thanks to everyone for joining our call today and for your interest in Harmony. We look forward to our Investor Day on October 1 in New York City when we'll have the opportunity to showcase and highlight the value of our late-stage pipeline as well as providing you updates later this year as we execute on our long-term growth strategy. Thank you, and have a great day.