Harmony Biosciences Third Quarter 2026 Financial Results - HARMONY BIOSCIENCES HOLDINGS INC

Good morning. My name is Nikki, and I will be your conference operator today. At this time, I would like to welcome everyone to Harmony Bioscience's third quarter 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. If you would like to ask a question at that time, please press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. Lastly, if you should require operator assistance, please press star 0. 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 Bioscience's third quarter 2026 financial results and provide a business update. Before we start, I encourage everyone to go to the investor section of our website to find the materials that accompany today's discussion. Our speakers on today's call are Dr. Jeffrey Jano, President and CEO, Peter Anastasiou, Senior Executive Vice President, Chief Operating Officer and incoming President and CEOs, Adam Zesky, Chief Commercial Officer, Dr. Kumar Bhadur, Chief Medical and Scientific Officer, Steve Malichella, Interim Principal Financial 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 risk 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 I would now like to turn the call over to our CEO, Dr. Jeffrey Dano. Jeff. Thank you, Brennan. Good morning, everyone, and thank you for joining our call today. Before I get into the quarter, I first want to say a few words about the CEO transition we announced last month. I will be stepping down at the end of the year, and Peter Anastasiou, our Senior Executive Vice President and Chief Operating Officer, will succeed me as as President and Chief Executive Officer, effective January 1, 2027. I am confident that Harmony is in very good hands with Peter, and you will hear from him next. The main themes regarding the CEO transition are continuity, strength, and growth. This leadership transition does not signal any change in our overall business or our strategic priorities. We are doing this from a position of strength and executing a well-coordinated plan. Harmony continues to be a growth story, and during Q3, we move that story forward in each of our four priorities of value creation. Continue to grow WCAGS in an evolving market, advancing a novel and robust clinical stage pipeline transact on Street strategic business development deals and protect that the Tolson franchise I will provide some more color on our first two strategic priorities of value creation and then turn it over to Peter to expand when our other two strategic priorities the key highlights that I want you to take away from today's call are sustained patient demand driven growth for WACICS in its seventh year on the market, keeping us firmly on track to exceed $1 billion in net revenue this year, and preliminary multiple ascending dose data for our erection 2 agonist, BP205, that further strengthened its emerging best-in-class profile. First, growing the WACIX franchise. In the third quarter, WACICS delivered $269 million in net revenue with 400 net patient ads, resulting in approximately 9,350 average patients on WACикс in the quarter. For the first time in company history, we expect to exceed $1 billion in revenue per WACix this year. We want to recognize our commercial team for their executional excellence, and Adam will take you through our commercial performance in more detail later in the call. Our second strategic priority is advancing our novel clinical stage pipeline. The strength and durability of the Pitocin franchise gives us the flexibility to fund our pipeline, creating new growth drivers for the company. The centerpiece of our pipeline is BP205, and we continue to have firm conviction in its best-in-class potential. Today, we announced preliminary results from the multiple ascending dose portion of our Phase 1 study for BP204. After 14 days of once-daily dosing, the safety, tolerability, and PK profile was consistent with what we saw in the single ascending dose study, giving us confidence in the emerging best-in-class profile of BP205. We initiated a study in sleep-deprived healthy volunteers in the third quarter, with data expected in the first quarter of 2027. And Phase II studies across multiple CNS indications are planned to initiate in mid-2027. There is a clear line of sight to the multiple data catalysts for BP205, and they are right around the corner. Kumar will provide more color on BP206 and the rest of our pipeline programs during his R&D update. Peter will now walk you through our two other value creation priorities related to business development and protecting the Patelton franchise. Peter? Peter Goulden Thank you, Jeff, and good morning, everyone. First, I want to thank Jeff for his leadership and for everything he has done for Harmony over the last nine years. WakeX is on track to exceed a billion in net revenues this year. We have a novel pipeline led by BP 205, and we have a strong balance sheet to fund our business development efforts. That is the foundation I get to build on, and I am honored to become Harmony's next CEO. Our ambition is to build Harmony into an enduring, leading CNS company with multiple products across multiple franchises, and our strategic priorities will enable us to achieve this ambition. You heard Jeff speak to our first two strategic priorities regarding our strength in the WakeX business and the advancement of our pipeline. Our third strategic priority is transacting on business development. With over 1 billion on our balance sheet, we have both the capacity and the conviction to execute on meaningful transactions. We are pursuing assets that can add near-term revenues to support our self-funded model and assets that can continue to drive long-term value creation. Our fourth strategic priority is protecting the Pitollas franchise. We have settled with six of the seven antifilers and our multi-layered IP strategy across active legal proceedings reinforces our confidence in WCAG exclusivity to March 2030, inclusive of six months of pediatric exclusivity. In summary, Harmony is a growth story and we are executing on all four strategic priorities. To tell you more about our first strategic priority of growing the WAKIX franchise, I'll turn it over to our Chief Commercial Officer, Adam Zeske. Adam? Thank you, Peter, and good morning, everyone. We continue to see extremely strong demand-driven growth for WAKix this quarter. WAKX achieved estimated average patients of 9,350, an increase of 400 patients in the quarter. Wacix has now demonstrated a meaningful acceleration in growth in year seven on the market, with 400 net patient additions in five of the last six quarters. Prior to 2025, Wacrix had achieved 400 netpatient additions only twice in the history of the brand. As a result, WACrix delivered $269 million in net product revenue, which was right in line with our internal expectation. and we remain on track to achieve our full-year guidance of $1 to $1.04 billion. The drivers of this growth in performance are clear. WAKICS holds a unique position as the only non-scheduled treatment option for excessive daytime sleepiness and cataplexy in adults and pediatric patients with narcolepsy. With more than seven years of clinical experience, healthcare providers are highly aware of WAKIX and believe in its unique combination of efficacy, safety, and tolerability with low drug-drug interactions as well as its broad payer coverage with more than 80% of lives covered. This makes WAKIX a familiar go-to option for any adult and pediatric patients with narcolepsy type 1 and type 2 and in any combination with other therapies in a highly polypharmacy market. And this will continue to remain true as the market continues to evolve including with the introduction of orexil. We executed the expansion of our field sales, remote sales, field reimbursement, and patient outreach teams in the second quarter and are seeing higher levels of HCP engagement, fueling a strengthening of top-line demand. We also implemented changes to our reimbursement and patient support programs which are decreasing the time required and increasing the success rate of patients filling prescriptions. In addition significant growth opportunity remains approximately 170 000 people in the u.s are living with narcolepsy fewer than 50 percent are diagnosed and brand penetration is approximately 20 percent looking ahead we're excited about our two life cycle programs to extend and expand the franchise Pitocin-GR is on track to launch in the first half of 2027 with a PDUFA date of April 1st, 2027, and builds on the WAKIX safety and tolerability profile while enabling patients to start at a therapeutic dose. Pitoccin-HD offers an opportunity to extend the Pitoczin franchise with differentiated labeling for fatigue and narcolepsy and sleep inertia NIH, with up to two times the highest labeled dose of WAKIX and all the benefits of the GR formulation. Finally, our orexin program gives us the opportunity to deliver on the promise of efficacy with a favorable safety and tolerability profile, once-a-day dosing, and potential use across NT1, NT2, and IH, in addition to a broad range of CNS indications. To summarize, WAKix performance has never been stronger. We are on track to achieve more than $1 billion in net sales this year, and our pipeline is positioned to extend our leadership in sleep-wake for at least the next decade. I'll now turn the call over to our Chief Medical and Scientific Officer, Dr. Kumar Badur, to discuss the advancements in our clinical development programs. Kumar? Thank you, Adam. Good morning, everyone, and thank you for joining us today. We continue to make good progress across our robust clinical state pipeline, including five phase III registrational studies in five distinct rare neurological disorders and BP205, our potential best-in-class RxN2 receptor agonist. The headline for R&D this quarter is again BP204, so let me start there. BP-205 is discovered by Kaysen Pharma and developed in partnership with Bioproject. It is designed to deliver a differentiated profile with high potency, excellent selectivity, emerging strong PK, and favorable safety tolerability, all supportive of a best-in-class profile. BP-505 is built on a unique chemical scaffold and has the highest potency among known RxN agonist in clinical development and has demonstrated excellent selectivity for orexin-2 receptors over orexine-1 receptors and over 150 other receptors of interest. As a reminder, we reported top-line data from the single-ascending dose, a sad portion of the study, in August. Today, we announced preliminary results from the multiple ascending dose, or MAG portion of the Phase 1 study. The multiple ascending dose study was a 14-day randomized double-blind placebo-controlled study evaluating one daily doses of 0.1, 0.6, 1, and 3 milligrams across six cohorts, four male and two female, of healthy volunteers. A total of 94 healthy volunteers participated. The preliminary data shows that the PK profile is consistent with what was expected based on the preclinical and the SAD data. The mean Tmax was approximately 60 minutes with a range of 30 to 90 minutes, pointing to the potential for rapid onset of efficacy. The mean effective half-life was approximately 29 hours, not meaningfully different from the SAD study, and it supports one daily dosing and the potential for durable efficacy throughout the day, and potentially with no troublesome insomnia as evidenced by the tolerability profile of BP205 from the SAC and the MAD data. Exposure was dose-related, and we saw target engagement adverse events, which further highlights its potential to deliver meaningful efficacy at low clinical doses. The most common adverse event was headache, observed in approximately 25% of participants. On target adverse events of insomnia were reported in less than 20% for participants at all doses evaluated. These events were mild in severity and did not lead in any discontinuation. On target, adverse events have urinary frequency and urgency were reported in less than 20% of participants and only at the 1mg and 3mg doses. These events were also mild in severity and did not lead to any discontinuations. BP205 was generally well tolerated with no serious or severe treatment emergent adverse events. In addition, no liver or visual adverse events were reported and no clinically significant cardiovascular events or EKG abnormalities were recorded. These data strengthen our conviction of PP205's emerging best-in-class profile and will inform our dosing strategy as we accelerate the development program. The complete MAAT datasets will be presented at an upcoming medical meeting. We initiated the Phase 1B study in sleep-deprived healthy volunteers in the U.S. in the third quarter, with top-end data expected in the first quarter of 2027. That study is the one to watch because it will provide the first signals of efficacy for BP205. Reflecting our commitment to investing in the robust development program for BP 205, we expect to initiate phase two studies across multiple CNS indications by mid-2027. Before I move on to the rest of the portfolio, we have highlighted the potential synergistic effects of orexin and histaminidic mechanisms of action based on the neurocircuitry and orexid neurons resulting in downstream effects on various neurotransmitters including histamine. At the recently concluded SLEEP-EU 2026 meeting, Biopassay presented a poster showing an in vivo synergistic effect of orexa and histamine on wakefulness in an narcoleptic mouse model. Specifically, Pitolacent added to BP205 drove maximum histamine release versus BP204 or Pitol alone, and this translated into increased duration of wakefulness in this model. The relevance of this data is that they suggest combining an orexin-2 agonist with a treatment that works through histamine would be a new therapeutic approach for patients with narcolepsy and other central disorders of hyposomaline. Of note, VAKIX, along with Pitolacine-GR and HD, are the only agents that work through histamine that is either approved or in late stage clinical development. Speaking of Pitolazine, starting with Pitilacine GR, we are on track to launch in the first half of 2027. The NDA was accepted by the FDA with a PUDUFA date of April 1st, 2020, Salen. Pitolafent-GR has enteric coating, enables patients to initiate treatment at a therapeutic dose of 17.8 milligrams without titration and important clinical differentiation. Pitolaxent-HP is our key value driver to extend the pitolaxant franchise with differentiated labeling. It's an enhanced formulation of pitolafant with an optimized PK profile entering coding, and a higher dose to drive greater efficacy. Our Phase III registration of clinical trials, OnStreet1 in narcolepsy and OnSteet2 in idiopathic hypersomnia, are ongoing, with top-line data expected in 2027 and anticipated to do for date in 2028. Utility patents are filed for both Pitocin-GF and Pitoccin-HD to extend the Pitoczin franchise into the 2040s. For VATICS, the Phase III TEMPO study in Prader-Willi syndrome is actively recruiting, with top-line data expected in mid-2027 and an anticipated PUDUFA date in 2028. We remain on track for pediatric exclusivity. Completion of the TEMPOR study fulfills the second and last requirement agreed with the FDA for vague X pediatric exclusivity, which would provide an additional six months of regulatory exclusivity for vague eggs. We are also exploring the amorphous form of pitulafent to pursue broader CNS indication. This opportunity is based on our exclusive license to the medium issued amorphos form of pitolafent patent with protection until 2042. efforts are focused on formation optimization and new modes of delivery. Finally, our epilepsy franchise. EPX100 is actively enrolling patients in two global phase 3 registrational trials in rare epilepsy, the Lighthouse Study in Lenox-Distalt Syndrome and the Orgas Study in Drawe Syndrome. The top-line data are expected in mid-2027 and anticipated to do for dates in 2028. In December, we will present updated 18-month data from the open-label extension of the ORCIS study at the American Epilepsy Society Annual Meeting. In summary, the MAD data further strengthen the emerging profile of BP205 as a potential best-in-class Oryxin-2 agonist, and our next data readout from the Sleep-Deprived Healthy Volunteer Study comes in the first quarter of 2027. We also continue to make progress on the five phase three registration of clinical trials across our other pipeline programs, which will continue to additional data catalyst in 2027 and target BDUFA dates in 2028. On behalf of Harmony, I want to thank the patient and the families for participating in our clinical trials, along with the investigators and the site personnel for their dedication in advancing our clinical trial. I'll now turn the call back over to Peter. Peter? Thank you, Kumar. I'll not provide further color on our final two strategic priorities of value creation, transacting on business development and protecting the Patolasin franchise. Let me start with business development. We are pursuing two types of opportunities. The first is assets that can add near-term revenue in the 2028 to 2032 timeframe to support our self-funded model. For this category, we are prioritizing assets in phase three in registration or on the market. The second category is innovative pipeline assets that drive long-term value creation the way we believe BP 205 can. Our therapeutic areas of interest include sleep disorders, epilepsy, rare orphan CNS, and broader CNS syndication. We see the opportunity to broaden our reach beyond orphan rare into larger CNS patient populations through both our erection strategy and business development efforts. We are directing our search and evaluation efforts accordingly, and we are considering a variety of deal types, including M&A and licensing. We have a strong balance sheet with over a billion dollars. We will be good stewards of capital, seeking value-creating opportunities. You should not expect that we will allocate all of that capital on one transaction. Instead, we will likely engage in multiple transactions. Together, they can be transformative for Harmony and drive long-term value creation. With regard to our fourth strategic priority of protecting the Pitollasen franchise, our IP estate is multilayered across formulations, methods of use, and next-generation applications. It supports WCAG exclusivity to March 2030, inclusive of six months of pediatric exclusivity. There is potential protection of the franchise through other formulations into the 2040s via additional patents and applications. We have settled with six of the seven ANDA filers. Harmony is asserting its Pitocin IP in active legal proceedings. First, the Polymorph 197 and Method of Use 947 patents. The bench trial in the AET ANDA litigation has concluded and closing arguments were held on October 22nd. Harmony believes AET's proposed product infringes the 197 Polymorp patent and that the 947 patent is valid. We expect a ruling from the judge around the time of the 30-month stay expiring in February 2027. Second, the amorphous form 920 patent. Harmony and Novidium filed a lawsuit alleging patent infringement in April against AET Pharma U.S. and its marketing partner, Sandoz. The licensed Novidian patent provides protection to 2042. A scheduling conference was held on October 21st. The amorphous 920 patent trial has not yet been scheduled, but would be expected to be scheduled for some time in 2029. Yesterday, November 3rd, the judge scheduled a preliminary injunction hearing on January 26, 2027, with an expected decision by February 14, 2027, when the 30-month stay expires. This schedule is identical to the preliminary injunction schedule Harmony proposed to the judge on October 26. In Q1 this year, we obtained the exclusive rights to a patent covering methods of making amorphous pitolisin hydrochloride from our licensee MSN labs. That patent was issued by the PTO in Q3. The patent strengthens our patent portfolio and protects our development efforts for a new amorphous pitolisin hydrochroride product. Together with our settlements with the six other antifilers, these actions reinforce our confidence in WACIC's exclusivity to March 2030. I will now turn the call over to our Interim Principal Financial Officer, Steve Molichella, to walk through our financial results for the quarter. Steve? Thank you, Peter, and good morning, everyone. This morning, we issued our third quarter 2026 earnings release and filed our 10-Q, where you can find details of our financial and operating results. We continue to deliver financial results that reflect strong underlying demand for WACICs as well as our disciplined approach to managing expenses across the business. For the third quarter of 2026, we reported net revenue of $269 million compared to $239 million in the prior year quarter. Our performance this quarter reflects continued strong demand for WACICs within the large narcolepsy market, coupled with typical quarter-to-quarter buying patterns that the industry as a whole experiences. Cost of products sold was 30% of net revenue compared to 25% one year ago. This year-over-year increase was primarily driven by a new royalty related to the Novidium License Agreement, which we signed in Q1 of this year. We reported total operating expenses of $134 million for the third quarter compared to $114 million in the prior year quarter. The increase in expenses was primarily driven by a $25 million charge related to a milestone achieved by MSN Labs, continued investments in R&D, and the expansion of our field-based team, which we completed earlier this year. These increases were partially offset by a 15 million dollar charge related to a clinical milestone for ZYN002 in the prior year quarter. Net income for the third quarter was $48 million or $0.81 per diluted share compared to $51 million or 0.87 cents per dilute share for the prior year period. The year-over-year decline in net income was primarily due to the NVIDIA royalty and the MSN milestone charge I mentioned earlier. We ended the third-quarter with over $1 billion of cash, cash equivalents and investments and $150 million in debt. Looking forward, we continue to expect our operations to generate cash, maintaining our strong balance sheet. Our capital allocation priorities include investment in R&D, driven by our BP 205 development plans, along with potential business development opportunities and contractual milestones, which may be triggered by continued success in our pipeline. Finally, we are reiterating our four-year guidance of $1 billion to $1.04 billion for WCAG's net revenue. And with that, I will turn the call back to Jeff for his closing remarks. Jeff? Thanks, Steve. In closing, this was another productive quarter for Harmony, centered around two key accomplishments, sustained patient demand-driven growth for WCACs that keeps us firmly on track to exceed $1 billion in net revenue this year, and preliminary MAD data that further strengthened the emerging best-in-class profile of our rexin-2 agonist, BP205. We have been leaders in the sleep disorder space for almost a decade now and are leveraging our expertise to accelerate our BP204 development program toward multiple CNS indications to become a leader in the erection space. We believe that when we execute on our four strategic priorities of value creation, Harmony is well-positioned to become an enduring, leading CNS company with multiple products across multiple franchises, bringing innovative treatments to patients living with CNS diseases while driving sustained long-term value for our shareholders. i would like to end this call today on a personal note before i step down as ceo at the end of the year it has been my honor and privilege to have been a part of building harmony biosciences from the beginning over the past nine years and leading the organization as the ceo these past four years i am grateful to our board of directors for the confidence they had in me and the opportunity to have served in the CEO role, as well as staying on it as an advisor to the company throughout 2027. I want to thank the analysts I have worked with and members of the investment community for your interest in what we have been building at Harmony and recognizing the value of the enterprise that we are advancing. Lastly, I wantto thank the entire Harmony organization for their dedication, commitment, and their passion for why we do what we do. That is what I am most proud of, because when empathy and innovation meet, a better life can begin for patients with unmet medical needs. I wish Peter all the best of success in the role of CEO, and I am confident in his leadership and the entire organization in driving Harmony's next chapter of growth. thanks everyone and I will now turn the call back over to the operator for Q&A operator thank you at this time if you would like to ask a question please press star 1 on your telephone keypad if you wish to remove yourself from the queue you may do so by pressing star 2 we remind you to please pick up your handset and please limit yourself to one question and one follow-up we'll take our first question from Amir Fadia. We can meet him. Please go ahead. Your line is open. Amir-Fadia Fadia- Hi, good morning. Thanks for taking my question. Firstly, Jeff, congrats on a fantastic career, and it's been great working with you. Jeff Chang So my first question is – thank you. With regards to the NAD data, while this was a safety study, Can you give your preliminary thoughts on the therapeutic index across the doses studied based on target engagement? And what are your thoughts around being able to explore a dose even higher than the range that you studied in the MAD study because you went up to six milligrams in the SAD study? And then I have one more question. Good morning, Ami. Thank you for the question. In terms of the therapeutic index, we do have a wide range of therapeutic index with the BP205. Regarding your question about limiting the dose to three milligrams in the multiple ascending dose study, and in the SAD study, we went all the way up to six milligrams. The repeated dose of three milligrams at steady days equals to something like around 6 milligram single ascending dose anyway. So in terms of could we have gone higher on the dose? Absolutely yes, we could have. We limited the MAD at 3 milligrams starting at 0.1 milligram because based on our preclinical PK3D modeling and the modeling that we have from the single ascending to study at 3 milligram multiple ascending dosage, we will get more than enough exposure that we need based on what we find the preclinical PK PD relationship so we are actually quite happy with the range that we have studied and more importantly as we disclose this morning in terms of target engagement we saw target engagement at a very low dose of 0.1 milligram where we saw insomnia which is a class related AE and we saw other target engagement AEs like urinary frequency and urgency at one and three milligram so what it says is in the dose range that we have evaluated the drug crosses the blood brain barriers interacts with the orexin 2 receptor agonist and is doing what is expected to do so with this this data support the potency of the P205 which is highest compared to other orexine 2 receptor adjuvant in clinical development and gives us an opportunity to explore doses, low doses, to treat all three central disorders of hypersomnolence. Got it. Thank you. One other quick question. You know, the half-life obviously supports one steady dosing. However, based on what we've seen from the other erection programs, what are your thoughts around exploring a split dosing when you initiate the phase two planned middle of next week thanks yeah a great question on me in terms of what we have seen with the half-life and the target engagement is that we are seeing we remain confident that once a day dosing is what's going to work with BP 205 yeah I would add to that I think that the the data from the sleep surprise healthy volunteer study on me will inform that in terms the ability to demonstrate sustained wakefulness you know throughout the day and until late day early evening so that you know that data set will also inform the potential what we believe you know could be once daily dosing yeah and there are also other factors a lot of them half-life like the ability to cross blood-brain barrier the potency this activity the features that we have talked about especially that are very unique for bp205 got it thank you thank you amen thank you we will move next with greg silvanovich with misuho please go ahead good morning thanks uh for taking my questions uh jeff congrats on a great career look forward to connecting with you on whatever might be next for you. But that being said, I have two questions if I could. One, just on the existing business, WCAG seems to be in a good place, but I think we're within the month that Takeda's or Zafel may be launching, and maybe this is a question for Adam, but how should we think about that launch and what the impact might be to WCAGs both in the very near term or perhaps in the midterm, just thinking about you're getting good traction on new patient ads, but just if you could give some other higher level comments because we are pretty much here and we've been talking about it for a while now. And then second, if I could just revisit the patent litigation, it is very complex. I know you had mentioned that the amorphous patent litigation, the timing there would be perhaps a trial start in 2029. But if we get to a final decision in the original ANDA-based litigation, which could come, I guess, in February, if you end up losing on that, could you just remind us around the risks around really a potential launch at risk. I know you've got the PI hearing, but just trying to think about, you know, how we all should be thinking, giving them the many moving parts of this multilayered IP strategy that you have. Thanks. Yeah, sure. Great. Good morning, Greg. Thanks for your kind words. Over to Adam first for thoughts on potential impact of the RZA for launch. Adam? Yeah. Hi, Greg, we're thrilled with the results that we saw this quarter. Another, We're now five out of the last six quarters at 400-plus patient ads. Really, really excited and enthusiastic about that continued growth. We expect Orzapil launch probably this month. It's looking like DEA scheduling will be wrapped up potentially this week. We expect orzapril to be scheduled before. So what that means for WAKIX, you know, and orzrapril will be indicated only in NT1. So for WACICS, we expect everything that's driven the performance today will continue to drive our performance in the future, and we're confident in continued growth through the end of this year and into next year. WACIX will remain the only non-scheduled treatment option, broad clinical utility across NT1 and NT2, pediatric and adult patients with EDS and cataplexy, so broad indications and broad utilization, you know, with strong efficacy, very clean safety and tolerability profile, which really differentiates it and makes it a great addition for any combination of treatments in a highly polypharmacy market. We continue to enjoy broad coverage with more than 80% of lives covered, and we believe all of that will remain unchanged with the launch of Orzapil, and we'll continue to propel our growth through 2027. Thanks, Pat. Peter? Yeah, and on your second question about the patent litigation, you're right, it is complicated, Greg, and I'll try to make it as simple as possible. The headline basically is that the schedule is proceeding exactly as we expected and actually even proposed. So there is a scheduled, yesterday the judge issued a scheduling order, that there is a schedule preliminary injunction hearing. To be clear, we're the ones asking for the preliminary injunction. And she granted that. We proposed it in two forms. We proposed it on October 26th in a letter that she asked us to provide on our proposed schedule. And we actually proposed it yesterday again in the morning in a newsletter we sent to the judge. And then in the afternoon, she issued the schedule. So this is progressing exactly the way we expected and wanted. So this is a positive for us. And so the preliminary injunction hearing will take place on the 26th. That then gives her a couple of weeks prior to the 30-month stay ending in mid-February. And then we expect a decision both on the injunction and the end of case. Importantly, the amorphous case still has not been scheduled. And as you pointed out, just based on past history, those things typically get scheduled a couple of years out. So we expect it to be scheduled in 2029, and then a ruling from the judge sometime after that. So this is progressing exactly as we had proposed, and we are looking forward to the upcoming PI hearing and stating our case. And we continue to reiterate the confidence that we have in March of 2030 when you look at both the ANDA case, the still outstanding amorphous case, and our requested preliminary injunction hearing. Just a quick follow-up. I mean, just the request for the preliminary injuction, which sounds like it's going the way that you had proposed, I guess from a more bearish perspective, it gives a sense that you're already anticipating that you could lose in the final ruling so could you just address like how you know those who are trying to think about you know all the implications uh the fact that you did request uh a hearing for the preliminary injunction like how how that may um you know how people may interpret uh that whether rightfully or wrongfully yeah i mean no one should interpret that as our belief that we won't prevail in the ANDA trial, we still have very strong confidence that we will prevail in the ANDA trial. But as you've seen, we've vigorously defended our IP, and we're going to take advantage of every opportunity we have to continue to defend our IP. So it's well within our rights to ask for a preliminary injunction, and asserted that right. And you also have seen that we We asserted our rights by suing AET and Sandoz with the amorphous trial. So it just is consistent with the very assertive approach that we have taken to defend WCAG-XIP. And we believe we will prevail ultimately, but we also believe we'll prevail specifically on the ANDA trial. Thank you very much. Thanks, Greg. Thank you. We will move next with Jay Olson. with Oppenheimer. Please go ahead. Oh, thank you, Jeff, for your leadership over the years, and congrats on all the impressive progress you've made on behalf of patients. Thank you. Thank you, Jay. Thank You. We look forward to staying in touch with you. We have a question about BP205, which is already demonstrating clear points of differentiation based on the clean safety and favorable PK profile. Can you talk about what to expect from the sleep-deprived volunteer study, beyond demonstrating wake-promoting activity, will you assess late-day efficacy, attention, next-night sleep, or other points of differentiation? And then as a follow-up, how will those findings factor into your clinical development plan, especially in terms of potential indications you would pursue? Thank you. Yeah, Jay, thank you for your question. I'll turn it over to Kumar, but I think you're highlighting, you know, the multiple catalysts, BP205, that are coming right around the corner, and the important one, the sleep-deprived healthy volunteer study data. And Kumar can provide sort of more color on, you know, what we anticipate, how that will inform the phase two, multiple phase two trials. Kumar? Right. Good morning, Jay. Thank you for the question, and thank you for highlighting some of the features that we discussed today in terms of the PK differentiation, in terms of safety and tolerability differentiation for BP205. Regarding sleep-deprived healthy volunteer study, the goal is we anticipate wakefulness that is expected from this class of drugs, that's RxA1, and a favorable safety and tolerance profile. This is going to be a single dose in sleep-deprived healthy volunteers. As long as we hit the benchmark or the ballpark, what we anticipate in terms of efficacy for this class of compounds, that's good for us, for us to move to the next stage of development. What the sleep-depride healthy volunteers study also does is it will help us to bracket the dose range that we'll be taking into phase two studies. We already have an idea based on what we saw with our single ascending dose study, especially with the multiple ascending study based on the target engagement that we have seen with very small doses, doses ranging from 0.1 to 3 milligrams in multiple ascended doses. So the data from the Sleep Deprived Healthy Volunteers will add to the data that we are generating, and that will help us to determine the dose ranges and the design of our multiple phase 2 clinical trials that we plan to initiate in mid-2027 in multiple CNS indications. Great, thank you. Thanks, Jay. Thank you. We will move next with Rudi Lee with Wolf Research. Please go ahead. Hi, thanks for taking my question. And congrats on the tenure. Jack. Hope you enjoy your journey out there. So I have a follow-up question. Sure. For BP205, can you provide more color on the headache AEs? Are they dose-dependent? Do you have any patient discontinued because of headache Aes? And what doses will be passing the sleep-deprived subjects? Are you dosing just QD or include speed dosing? So what do you think would be the right therapeutic those thanks hey good morning grody thank you for the question uh in terms of headache about 25 percent of the participants experienced headache they were mild in severity and that did not lead to any discontinuation so headache did not leave to any discrimination in terms of headache itself it's actually very common in any phase one studies to see headache raised to will be top one, two, or three most commonly reported adverse event because all these studies are done in an inpatient unit. The healthy volunteers are in the unit sometimes for up to 10 days, and it's actually very common for these healthy volunteer participants to report headache. And the second question in terms of QD, BID, split dosing, the data that we have generated really thus far in terms of terminal half-life from our single ascending dose study, in terms effective half-lifes in our multiple ascending-dose study, and the target engagement AEs that we saw with the QD dosing, mind you, the multiple ascended dose study was dosed every day in the morning for 14 consecutive days. Based on everything that we are seeing, we are confident that the bp205 will be qd dosing at this point in development thanks very helpful thanks really thank you we will move next with patrick truchio with hc winwright please go ahead um good morning i have a question on weight kicks just wondering um Steve, where should we be modeling the cost of sales going forward? And did this quarter include cash with charges or royalty tier effects? You know, is it approximately, you know, 30% appropriate going forward. And as far as WACIC buying patterns, could you quantify the third quarter revenue impact of the buying patterns that you referenced and clarify whether you expect the effect to reverse in the fourth quarter? Yeah, Patrick, thanks for your question. I think Adam's going to respond in terms of the buying patterns, and Steve can comment on the other impact. Yeah, sure. Hi, Patrick. I mean, the short answer is we really saw no impact on inventory fluctuations for our third quarter results. Steve, over to you on cost of sales. Yeah, hi, Patrick on cost to sales. Third quarter represents the full impact of the new royalty from the NVIDIA agreement signed in q3 so i would expect that he would see that kind of going forward great and then um if i could just on bt205 um kumar separately from the single dose sleep derived study were any objective overnight sleep measurements collected during the mad portion of program or was the nighttime probability assessment based on participant reported insomnia Patrick, we did not collect any information like attention, concentration, things like that. It's in healthy volunteers. And in terms of AE collection, obviously we collected the AEs based on the standard format that is used in phase one studies. And that's where we noticed insomnia in less than 20% of the participants. We saw urinary urgency and frequency less than 20% of participants only at 1 and 3 milligram doses. Both of these AEs were mild in severity, and importantly to note, neither of these target engagement AEs led to any discontinuation. Great. Thank you so much. Thanks, Patrick. Thank you. Thank you. We will move next with David Anselm with Piper Sandler. Please go ahead. Thanks. First, Jeff, I just want to wish you all the best. I've really enjoyed working with you over the years, so all my best to you. And now to my questions, just a couple. on 205. As you think about evaluation of the drug in orexin deficient patients, how do you think it will behave from a tolerability perspective? In other words, insomnia, polychorea. I know that you have the data in healthies, but do you expect it to behave differently once you're putting it into actual orexin deficient patients as you think about tolerability, particularly insomnia and polypuria. So that's number one. And then secondly, appreciate, Peter, the transparency on business development, M&A. You did talk about a broader aperture within CNS, and that sort of leads me to wonder, are you thinking about, say, psychiatry? And part of the reason I'm asking is because we are seeing a number of psychiatry-focused orexin programs that are moving forward, such as Alkermes program and MDD for one of its orexins. So these are obviously much bigger markets, but how are you thinking about that? That to me is a big change from what Harmony had historically been thinking regarding this M&A. So I'd love to hear more thoughts on that. Thank you. David, good morning, David. Thanks for your questions. Thanks for your kind words. I've enjoyed working with you as well over the years. First, let me frame in terms of, you know, BP205 and disorders beyond erection deficiency. I think, you Know, as we said, it starts with regards to the potential, the high potency. So I think the, you Now, framing this opportunity is, you Knew, the most potent erection to agonists in the clinic and the opportunity for lower clinical doses, overall achieving driving towards a favorable risk-benefit profile, and that's, I think, the opportunity that we're seeing in the emerging data. I think Kumar can expand on that, but, you know, that is what we believe is the real opportunity in the high potency of BP-205. Thank you, Jeff. Hey, good morning, David. Thank You for the question. That's a great question. Look, from a clinical development perspective, what happens is, in general, I'm not talking specifically for PP2 or fire narcolepsy, in general the tolerability profile is much better in patients compared to healthy volunteers. That's what we have seen. But specifically in NT1, there's a question that I don't know the answer, to be honest with you, because these are also the patients whose physiological system has never ever been exposed to any meaningful exposure to orexins. So, we just need to see what happens in the clinical setting. But outside of NT1, David, in NT2, IH, in broader CNS indications, these individuals have intact orexin physiology, and the healthy volunteers also have intact to orexin physiology. So I'm actually pretty confident that the safety and tolerability profile, which is very favorable, that we saw in the MAD dose, extends to patient population who have intact orexins physiology that is intended to IH and broader CLS indications. Thanks, Kumar. Peter on business development. Yeah, thanks for the question, David. First of all, just to reiterate, sort of our priority areas are where we have franchises now and emerging franchises. So clearly, sleep is a high priority given our leadership in the sleep space. We have an emerging franchise in epilepsy, so that's a high area of interest. In terms of those broader indications that you asked about, we've been silent to date on what specific indications we're pursuing with orexin, but we have said that the broad categories of interest are things that, you know, relate to areas of orexin's role in various disease processes. And those include cognition, attention, mood, fatigue, just as broad categories. And so as we continue to move forward our planning for our orexins strategy, those final indications that we ultimately start studies in next year will also be areas of interest that we would also pursue BD opportunities in. So I can't get really specific yet, but I think that gives you some broad strokes. And when we become more transparent with you next year when we kick off those Phase II studies, I think you'll have a better understanding of what those areas are and how that could be pulled through in our BD strategy. Yeah, David, just that. But I think that, you know, the opportunity with BP-205 and broader erection space, you know, in broader CNS indications is really what's sort of opening up the aperture from a BD perspective. So, you now, given the excitement there, given opportunity with the BP-505, you know, then we see the BD aperture opens up with regards to opportunities in those broad CNS indication as well. David Wong All right. Thanks, guys. That's helpful. David Wong Thanks, David. Thank you. We will move next with David Wong with Deutsche Bank. Please go ahead. David Wong Hi. Good morning, and thanks for taking my questions. Jeff, let me echo everyone else. It was a pleasure working with you, and I wish you only the best in your next chapter. Jeff Chang Thank you, David So, in terms of questions, first, you know, noticing a little bit of quarter-over-quarter deceleration for WACICs in terms the net patient ads, is there anything to read there? And if you could just remind us and maybe speak to the underlying demand this quarter versus last. And then, in term of the amorphous formulation of the tolicent where you licensed that in from, I believe, Novidium. How does that now fit into your life cycle management plans alongside the Tolleson HD and GR? Thanks a lot. Hi, David. Thanks for the question. Very pleased with quarter-over-quarter results achieving 400 patient adds in third quarter. As you know, over the last six years, WACIX typically has added between 1 and 400 patients in a quarter. This quarter marks now five out of the last six quarters with 400 or more patient ads. So that really emphasizes an acceleration of growth in year seven. And we're very pleased with that momentum, and we can see continued momentum as we enter the fourth quarter and continue that growth through the end of the year. We're fully on track with our estimates internally through three quarters, very confident in our ability to achieve guidance of 1 to 1.04 billion for the year, and looking forward to hitting that major milestone for the company. Thanks, Alan. Kumar? Yeah. Good morning, David. Thanks for the question. Regarding amorphous form of pitolosan, this is the form of Pitolosin that has an issued patent, and it's ND42. In terms of how it fits within the broader Pitolossin franchise, one of the things that we always wanted to explore is that there are certain symptoms like fatigue in broader neuropsychiatric indications, and amorphous form of pitulacent offers us that opportunity to look into some of those broader indications that we couldn't pursue with, for example, VACIX or pitulasant HD, where we are specifically looking into rare orphan disorders. Just as an FYI, with VACX formulation, we actually did generate positive data, both in sleep and fatigue in myotonic dystrophy. So we have shown there is a proof of concept that histaminergic mechanism of action can be helpful in fatigue. And that's what we want to do. We want to look at certain symptoms in broader neuropsychiatric indications with the amorphous form of patellofent. And it also gives us the opportunity to explore new formulations with that formulation as well. So not just a new indication space, but also with a new route of delivery. Daniel Breel Thank you, Peter. Thank you. We will move next with Daniel Brele with Truist. Please go ahead. Daniel Breal Hi, guys. Good morning. I also want to wish you the best, Jeff. It's been great getting to know you over the years and likewise hope to connect again in the future. I just wanted to ask on, I'm sorry, BP205. So you saw a target engagement at 0.1 milligrams and urinary AEs at one in three. So how confident are you that you can get clinically meaningful efficacy below the exposure where these on-target AEs emerge? And do you think this separation is being driven more by 205 potency, C-max, or overall exposure? Thank you. All right. So Daniel, when you say the separation of EAs, I assume the separation of insomnia that was observed at all four doses, whereas urinary frequency and urgency were observed only at one and three milligram doses. Good question. what we can say, as I mentioned earlier, is the observation of target engagement at 0.1 mg was not a surprise for us, given the potency of BP205 and what we had seen in the preclinical model. In terms of how we can extrapolate these to efficacy. We will be testing these doses. We haven't disclosed exactly the doses that we'll be testing in sleep-deprived healthy volunteers, and we will see. Ultimately, the goal is to derive efficacy, good efficacy, clinically meaningful efficacy, without causing troublesome AEs, and that includes target engagement AEs which are insomnia, urinary frequency, and dosing C. And if I could just add a perspective, I think people should not expect that we'll completely avoid those target engagement side effects. They are part and parcel of raising the rexin levels. Anything that raises rexins levels is likely to have those. What we aim to do is have them be low enough where they're not problematic, and that's what we saw in the MAD study after, you know, 14 days of repeated dosing. They were mild in severity. They didn't lead to discontinuation, and they were, by definition, not problematic. And so that's what we're aiming for in terms of striking the right balance in the doses we select to give us that efficacy that we think that will generate from the strong potency that we have, but also minimize, but probably not avoid, the on-target AEs. Yeah, yeah. I was going to mention the same thing, that we're not going to avoid the on target AEs, but it's the overall, again, back to the overall benefit-risk profile, what we're driving towards. Obviously, you know, Danielle, some of the other erection development programs, you're seeing higher rates. You're seeing some of that in the ORCA full label. That is what we are trying to prove out here and achieve. There's an interesting analog in the market, and it's called WACIX. WACix has a very favorable overall, you know, safety, tolerability, and efficacy profile, you now, risk-benefit profile, which leads to its broad clinical utility. So that is how the development program is designed to sort of demonstrate that with BP-205. Thank you. We will move next with Jason Garbury with Bank of America. Please go ahead. Hi, this is Melanie on for Jason. Thanks for taking our question. Just one in the litigation so if the generic gets a non-existent ruling on polymorph can you talk about just potential at-risk launch scenarios that investors should be should understand heading into 2027 thanks yeah a couple of uh thoughts first of all there's two uh patents that are the subject of the anda one is the polymorp patent that you mentioned the other one is a method of use patent And so they are claiming that they do not infringe on the polymorph patent and introduce lots of evidence in the trial that they have an amorphous formulation. And so we'll come back to that in a second. And then the method of use, they're challenging the validity of that patent. And this is an issued patent, and issued patents that get screened and approved by the Patent and Trademark Office are presumed valid patents. And so all we have to do is prevail on one of those two. And so then the amorphous trial, after they introduced all this evidence to try to avoid the claim that they're infringing on our polymorph patent, they introduced lots of evidence about amorphus. And so we have an exclusively licensed amorphos patent. Actually, now we have a second one as well that was issued this quarter that was mentioned in the press release also, protecting amorphous form of pitolosin. And so we talked about how we're developing that due to an earlier question, but we're also asserting those patent rights against AET and Sandoz because it's very clear that they do have an amorphos formulation. So ultimately, there's three patents at play here. All we have to do is prevail on one of them, and we believe very strongly that we can prevail on all three, but all we need to do prevail on one of them, but as mentioned before, we have every right to ask for a preliminary injunction, and so we did that, and that hearing will be scheduled because we think it's important for the judge to hear the amorphous case prior to any generic entering, given the obvious connectivity of the amororphous lawsuit to the formulation that A&T and Sandoz plan to launch. Thank you. We will move next with Seoyoon Shim with UBS. Please go ahead. Hi. Thank you for taking our question, and Deb, congrats on your retirement and thank you for all the helpful discussion over the years. On the PI proceeding, given AT's argument that Harmony does not practice the 920 patent with Wekex and that monetary damages could therefore be adequate. Can you discuss how you plan to demonstrate the irreparable harm from a potential generic launch to support the PI? And if I can squeeze in on BP-205. So you have noted that urinary frequency urgency were only shown at one and three meg. across the cohorts, the 0.1, 0.6, 0139 cohorts. Did you see any dose-dependent trends in insomnia rates as well? Thank you. Yeah, I'll just quickly mention on the first one, we're not going to be able to reveal to you the strategy and the arguments that we will put forth in the upcoming PI hearing. But all of those documents will be public along the way once we file them, and certainly they will be published during the PI hearing, So I won't disclose any of that now other than to say we feel we have a very strong case to not only demonstrate irreparable harm but also the importance of the amorphous trial. And it's important to note that A&T and Sandoz have never claimed that our lawsuit is a sham lawsuit, that they argue against the merits. and so we believe that along with a strong irreparable harm argument will be laid out in the documents and in front of the court and we're looking forward to that opportunity thank you Peter hey good morning for you thanks for asking this question in terms of the relationship between dose and AE we haven't disclosed that information these are preliminary data from the multiple ascending dose study. We are still looking into exposure-AE relationship, which is much more meaningful than the dose-Ae relationship. Once we have all of those data, we'll present the full data set at an upcoming medical conference. Thank you. Got it. Thank You. Thank you, Dr. Kahn. This concludes our Q&A session. I would now like to turn the call back to Jeff Dano for any closing remarks. Thank you, Nikki. And I just want to thank everyone for joining our call today and for your continued interest in Harmony Biosciences. Thanks, and have a great day. Thank you. This does conclude today's Harmony Bioscience's third quarter 2026 financial results conference call. You may now disconnect your line and have a wonderful day.