The HRMY (NASDAQ: HRMY) “Wakix Momentum”: Revenue Surge or Pipeline Uncertainty?

Harmony Biosciences is accelerating growth in its narcolepsy franchise, with Q3 2025 results delivering a substantial revenue and EPS beat driven by record patient additions for WAKIX and raised full-year guidance. Net sales surged 29% to $239.5M from $186M a year ago, while net income rose 10% to $50.9M, or $0.87 EPS—beating consensus estimates of $0.66 EPS and $223M in revenue, with adjusted EPS at $1.08 topping the prior year’s $0.99 after adjustments. This reflects momentum from ~500 net patient additions (highest since launch) and average ~8,100 patients on therapy, with the earnings beat sparking a positive stock reaction: shares climbed over 5% post-release to trade at $36.01 today. Operationally, the uptick stemmed from strong demand for the non-scheduled EDS/cataplexy treatment, payer coverage exceeding 80%, and pipeline advancements like Pitolisant HD IND submission, offsetting higher R&D spend ($55M, +117% YoY) on Phase 3 trials. Gross margins held robust at ~75%, but operating expenses jumped 40% on R&D investments and modest S&M/G&A increases. Forward pipeline includes up to five Phase 3 trials by year-end, with topline data expected 2026-2027 across indications like idiopathic hypersomnia and Dravet syndrome, though the ZYN002 Fragile X study missed endpoints. Market dynamics show resilient demand for rare CNS therapies, but regulatory delays and competition from generics create headwinds. The balance sheet is fortified: cash at $778M as of Q3 end (up 54% YoY from strong $106M cash flow), minimal debt (term loan balances low post-repayments), and no major share repurchases noted. Raised FY25 guidance to $845M-$865M in revenue underscores confidence in WAKIX trajectory through 2030, driven by label expansions and global partnerships. Dilution remains nil—no recent issuances.

The bull case strengthens: revenue beat, record patient growth, and $778M cash war chest position for pipeline funding and potential M&A, with adjusted margins targeting 50%+ by 2027.

The bear case lingers: R&D escalation or clinical setbacks (e.g., ZYN002 miss) could strain profits, especially with patent cliffs looming post-2030. HRMY traded as high as $41 in early 2025; at $36.01 today, it’s a growth play (no dividend)—but exposed to biotech volatility, though the beat curbs downside risks.

The Filing:

• Nov 04 Press Release/10-Q/Earnings Call: $239.5M revenue (+29% YoY). • Net income: $50.9M (vs. $46.1M). • Gross margin: ~75% (stable YoY). 

The Context:

• Operational gains: ~500 net patient adds; pipeline progress with Phase 3 initiations. • Cash: $778M (up 54% YoY); Debt minimal. • Stock +5% post-earnings to $36.01 — now +20% YTD at ~11x TTM earnings. 

Bull: Revenue surge + EPS beat + raised guidance = 50%+ margins 2027; pipeline upside.

Bear: R&D costs/clinical risks = potential delays; competition headwinds.

Investor Action:

Buy Signal

• Leverage Wakix momentum and balance sheet strength; cash reserves and guidance hike buffer biotech cycles.

• Monitor pipeline updates and Q4 2025 patient metrics; setbacks here could cap upside near $35.

• Accumulate around $33 for growth players eyeing CNS rebound; hold if FY26 outlook signals expansions, avoid if trial failures resurface.