Good morning. My name is Gretchen and I will be your conference operator today. At this time, I would like to welcome everyone to the Harmony Biosciences third quarter 2022 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'd like to ask a question at that time, please press star one on your telephone keypad. Please be advised that today's conference may be recorded. Lastly, if you should require operator assistance, please press star zero. I will now turn the call over to Luis Sanay, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining us today as we review Harmony Biosciences' third quarter 2022 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 presenters on today's call are John Jacobs, President and CEO, Dr. Jeffrey M. Dayno, Chief Medical Officer, Jeffrey Dierks, Chief Commercial Officer, and Sandip Kapadia, Chief Financial Officer. Moving on to slide two. 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 our CEO, John C. Jacobs. John?
Thank you, Luis, and thank you everyone for joining our conference call today. We delivered another strong quarter in Q3 as we continued to execute on our three-pillar growth strategy, and we are excited about the momentum we see in the business, positioning us well for the remainder of the year. I would now like to highlight our progress on each of the three pillars of our growth strategy in the context of Q3 2022 performance, as shown on slide three. Starting with pillar one, which is to optimize the commercial performance of Wakix. In Q3 2022, we delivered another strong quarter for Wakix with net sales of $117.2 million, a 45% year-over-year increase for the quarter. Our performance reflects the continued demand for Wakix and the significant unmet need that remains in the narcolepsy market.
For the remainder of the year, we expect continued growth for Wakix, and we believe that the vast market opportunity which remains in narcolepsy provides us with the opportunity to grow Wakix for years to come. Let's move on to pillar two, which is to expand the clinical utility of Wakix beyond narcolepsy. This morning we announced top line results from our phase II proof of concept study in patients with Prader-Willi syndrome. Top line data showed a positive signal on the primary outcome of excessive daytime sleepiness, and we intend to advance this clinical program in PWS. Dr. Jeffrey M. Dayno will provide more details on the top line study results later in the call. We also continue to make excellent progress on our phase III INTUNE study for Wakix in idiopathic hypersomnia or IH. This opportunity, if successful, could be the next potential indication for Wakix.
The IH opportunity is synergistic with our existing expertise and infrastructure with the same HCP call universe as narcolepsy, which will allow for significant efficiencies for the launch if we succeed. We are excited with the continued advancement of our pipeline programs and are hopeful that these efforts could lead to additional indications for Wakix. Finally, pillar three, acquiring new assets through business development to expand our portfolio beyond Wakix. In late September, we closed our new agreement with Bioprojet, which will enable us to pursue new therapeutics based on pitolisant for the treatment of narcolepsy and potentially other indications mutually agreed to by the parties. If successful, these efforts could expand Harmony's franchise in narcolepsy and potentially other indications by yielding one or more new products with the potential to launch during the Wakix lifecycle. We look forward to providing additional updates as we advance these efforts.
As we have said before, we began our business development efforts early in our company history, so we could take the time to be thoughtful and prudent in what we acquire and flexible in the types of transactions we're able to consider. Over time, our intention is to develop a broad portfolio of rare orphan neurology assets and or assets in other neurological diseases where we can leverage our existing expertise and infrastructure. To achieve this, we intend to leverage our strong financial position to acquire additional assets over time and across a range of development stages, including both early and later stage, with the potential to launch both during and after Wakix lifecycle. We are in a solid position to execute on pillar three as our business fundamentals with Wakix remain strong.
We had approximately $316 million in cash equivalents and investment securities as of Q3, and we anticipate that we will continue to generate cash moving forward. Overall, I'm extremely pleased with the progress on our three-pillar growth strategy. We remain confident in Wakix being a potential $1 billion-plus franchise in the coming years via narcolepsy and additional indications. With that as a foundation, I am truly excited about what we can achieve next at Harmony.
I would now like to turn the call over to Jeffrey Dierks, our Chief Commercial Officer, to provide more details on our commercial performance. Jeff?
Thanks, John. We continue to see strong momentum in our business and made significant strides in the third quarter of 2022, both in net revenue and underlying business fundamentals shown on slide four. Net revenue for the third quarter was $117.2 million, which represents a 45% increase from the same quarter previous year. We're also pleased with the 10% sequential growth from the second quarter of 2022, demonstrating continued strong performance and growth for Wakix in the adult narcolepsy market. I'd like to take a moment to highlight a few of our underlying business fundamentals on slide five that drove our performance in Q3 2022. The average number of patients on Wakix increased to approximately 4,600 in the third quarter.
The growth in Q3 reflects the continued strong underlying demand for Wakix, building upon the strong second quarter we saw earlier this year. Q3 top-line prescription demand, new patient starts, and refill behavior remained strong through the typical summer seasonality, in part due to the following factors. First, Harmony Field Sales in-person engagement with healthcare professionals and their office staff increased in the third quarter. Approximately 85% of all Harmony Field Sales engagements with healthcare professionals and their office staff were in person in Q3, an approximate 10% increase from the previous quarter. The increase in access allowed for further education and engagement with healthcare professionals on the meaningfully differentiated product profile of Wakix and provided an opportunity for our expanded field sales team to drive Wakix growth in both new and existing prescribers. Second, the Wakix prescriber base continued to grow.
We saw growth in new writers of Wakix, as well as growth in prescribing from existing Wakix writers. Growth in new prescribers continued to come from writers of traditional narcolepsy treatments, as well as healthcare professionals who've been reluctant to prescribe other available scheduled narcolepsy treatments. Existing prescribers continued to find new adult patients with narcolepsy in their practices for Wakix, both naive patients as well as existing patients currently on other treatments with residual symptoms of excessive daytime sleepiness or cataplexy. The continued growth in both the depth and breadth of our prescriber base demonstrates the broad clinical utility of Wakix and what we believe is a significant opportunity for growth in the years to come for Wakix in adult narcolepsy. Recent market research conducted by Harmony with approximately 70 narcolepsy-treating healthcare professionals reinforces our belief and demonstrated strong intent to increase future prescribing of Wakix.
The vast majority of Wakix writers surveyed expressed intent to increase their prescribing of Wakix and cited the patient satisfaction and positive feedback on treatment as a primary driver. Lastly, we saw the impact of our field sales force expansion. Our expanded field sales team that was in place at the beginning of the second quarter extended the reach and frequency of our educational outreach among narcolepsy-treating healthcare professionals in the third quarter. The increase in in-person access, coupled with greater reach and frequency in our education, helped to drive new patient starts among new and existing prescribers. We are excited about what we're seeing from our award-winning sales team and the difference they're making in the narcolepsy community. In summary, we believe our continued strong performance highlights the large remaining opportunity in narcolepsy.
We're beginning to see an anticipated rhythm to our business, and we continue to tap into this opportunity as the market allows around the typical seasonal dynamic that the pharmaceutical industry as a whole experiences each year. The strong performance and solid underlying business fundamentals of Wakix affirm our confidence in the future growth opportunity for Wakix in adult narcolepsy and reaffirms our belief that Wakix is a potential billion-dollar-plus franchise opportunity in narcolepsy and other additional indications. I'll now turn the presentation over to Dr. Jeffrey M. Dayno for an update on our clinical development programs. Jeff?
Thank you, Jeff, and good morning, everyone. I will provide an update on pillar two of our company growth strategy to increase the clinical utility of pitolisant toward potential new indications in additional patient populations living with rare neurological diseases. This morning, we announced promising initial top-line data from our phase II proof-of-concept trial in patients with Prader-Willi syndrome, or PWS. On behalf of Harmony, I would like to thank the patients with PWS and their families who participated in this clinical trial. As shown on slide six, this trial was a randomized, double-blind, placebo-controlled study designed to assess the safety and efficacy of pitolisant in patients with PWS. This proof of concept study was not powered to demonstrate statistical significance but rather was designed for signal detection.
The study included patients ages 6-65 years who were evenly randomized in a one-to-one-to-one fashion to low-dose pitolisant, high-dose pitolisant, or placebo treatment groups. Pitolisant dosing was based on three age cohorts: children six to less than 12, adolescents 12 to less than 18, and adults 18-65. Another objective of the study was to evaluate for a dose response to pitolisant in patients with PWS. The primary endpoint of the study was the evaluation of excessive daytime sleepiness, or EDS, as measured by change from baseline to end of treatment on the Epworth Sleepiness Scale for Children and Adolescents, referred to as the ESS-CHAD, parent/caregiver version of the scale. The demographic data showed the following. A total of 65 patients enrolled in the trial. 91% completed treatment, and all but one patient opted to continue into the open-label extension, which is ongoing.
Mean age of the study population was 12-13, with 51% of the patients male and 49% female. Of the total study population, 52% were children, 29% were adolescents, and 19% were adults. The top-line study results are summarized on slide seven. Mean baseline ESS-CHAD scores ranged from 14.7 to 15.7, representing a moderate to severe degree of EDS at baseline. Mean change from baseline to end of treatment on the ESS-CHAD scores ranged from -3.7 to -5.5 across all age groups and dosage groups, representing a clinically meaningful change in the active treatment groups, which is defined as a greater than or equal to 2-point improvement on this scale, as per the American Academy of Sleep Medicine treatment guidelines that were published in September 2021.
In two of the three age groups, the children and adult groups, there was a clinically meaningful difference with a minimum of two points between pitolisant and placebo, driven by the high dose pitolisant treatment group. In the adolescent age group, there was a high placebo response of a magnitude three times that seen in the other two age groups, which resulted in the lack of a clinically meaningful difference between pitolisant and placebo in this age group. Slide eight shows the results of a responder analysis from the top-line data, which was defined as an improvement on the ESS-CHAD parent/caregiver version of greater than or equal to three points or a score of less than or equal to 10 at end of treatment, which is a more conservative definition of response.
Response rates were 70% in the high-dose pitolisant group, 55.6% in the low-dose pitolisant group, and 52.6% in the placebo group. Lastly, slide nine shows a snapshot of the overall safety tolerability profile of pitolisant seen in this trial, which was consistent with the known safety tolerability profile of pitolisant. Adverse events were reported in 57% of patients on pitolisant and 65% of patients on placebo. Treatment-related adverse events were reported in 26% of patients on pitolisant and 30% of patients on placebo. The most common adverse events reported were anxiety, irritability, and headache. There was 1 serious adverse event in a patient in the placebo treatment group.
In summary, we are encouraged with the top-line data which showed that treatment with pitolisant resulted in a clinically meaningful reduction in the ESS-CHAD parent/caregivers scores in all age groups and across both low-dose and high-dose treatment arms, as well as a clinically meaningful difference from placebo in the children and adult subgroups. Pitolisant was well-tolerated in this clinical trial with an overall safety tolerability profile that is consistent with the known safety tolerability profile of pitolisant. Looking ahead, we expect to receive the full data set before the end of the year, which will include the results on the secondary outcomes, including caregiver and clinician global impression scores, as well as measurements of behavioral symptoms, cognitive function, and hyperphagia.
The positive signals observed on the primary outcome of EDS from this proof of concept study are promising, and we look forward to receiving the full data set from this initial signal detection study, which will further inform our understanding of the data as we plan to advance our clinical development program for pitolisant in patients with PWS. In the meantime, I want to thank our clinical investigators and their teams who partnered with us in the conduct of this trial, as well as the patients with PWS and their families who participated, for whom we are grateful. As we know, there are limited therapeutic options available for people living with PWS, resulting in a significant unmet medical need. Turning to our other clinical development programs shown on slide 10, we have made significant progress on those as well.
Starting with our development program in idiopathic hypersomnia, or IH, which we are very excited about. After initiating our phase III registrational trial in adult patients with IH in April, known as the INTUNE Study, we are seeing very good momentum in patient enrollment, with over 70% of our planned clinical trial sites being active. If this phase III trial is successful, it could represent the next new indication for Wakix in adult patients with IH. Moving on to our development program, myotonic dystrophy, or DM. Enrollment continues in our phase II proof of concept study in adult patients with type one myotonic dystrophy, or DM1. We have activated sites in Canada in areas where there is a large population of patients with DM1.
We anticipate top-line data from the phase II proof of concept study in 2023, and we'll provide an update on the timing of this data readout early next year. Finally, with regard to pediatric narcolepsy and a pediatric indication for Wakix, our partner, Bioprojet, completed a phase III trial in pediatric narcolepsy patients. Bioprojet submitted the data to the EMA in the second quarter this year, seeking approval for a pediatric narcolepsy indication. EMA's decision on Bioprojet's pediatric narcolepsy submission is anticipated early next year, which could help inform our strategy related to submission of this data to FDA. In the meantime, we are committed to obtaining pediatric exclusivity for Wakix and submitted a request for a pediatric written request, or PWR, during the third quarter. We will provide an update on our interactions with FDA related to this request once we hear back from them.
To conclude, we have made significant progress in advancing our clinical development programs at Harmony. We are encouraged by the initial top-line data from the PWS phase II proof of concept study and the positive signal that was generated for EDS. We look forward to learning more when the full data set is available later this year, after which we will request an end of phase II meeting with FDA. Our plan is to present the findings at a future medical meeting and submit the full results for publication to a scientific journal. For IH, we are very excited about the interest and momentum we are seeing in our INTUNE study, a phase III registrational trial in adult patients with IH.
We continue to appreciate all the efforts of the clinical investigators and their teams who are partnering with us in the conduct of this trial and the interest from the IH patient community. If this phase III trial is successful, it could represent the next new indication for Wakix in adult patients with IH. I will now turn the call over to our CFO, Sandip Kapadia, for an update on our financial performance. Sandip?
Thank you, Jeff, and good morning, everyone. This morning, we issued our third quarter 2022 press release and filed our 10-Q, where you'll find the details of our financial and operating results. Our third quarter performance is also shown on slides 11, 12, and 13. We experienced yet another strong quarter of performance with year-over-year growth across several of our key metrics. We're pleased with our year-to-date performance and the momentum we're seeing for the remainder of the year. For the third quarter of 2022, we reported net revenues of $117.2 million, compared to $80.7 million in the prior year quarter. This represents a growth of 45% and reflects the strong underlying demand for Wakix.
In the third quarter of 2022, operating expenses were $82.3 million, compared to $45.1 million in the prior year quarter. The higher operating expenses were primarily driven by the $30 million initial licensing fee, part of the new agreement with Bioprojet, as well as our ongoing commercialization of Wakix and patient enrollment in our clinical trials. Operating income for the third quarter was $11.9 million, compared to $21.1 million, a 43% decrease versus the prior year quarter. However, excluding the one-time $30 million initial licensing fee, operating income almost doubled versus the prior year quarter. In the third quarter of 2022, we released the valuation allowance on our deferred tax asset, resulting in a one-time $74.5 million income tax benefit for the quarter.
The release was driven by our history of profitability, which is a positive indicator of our ability to realize the value of the deferred tax asset in future periods. Non-GAAP adjusted net income for the third quarter was $58.1 million, or $0.95 per diluted share, compared to $23.4 million, or $0.41 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 this measure. During the third quarter of 2022, we generated approximately $55 million in cash from operations and ended the third quarter with $316 million of cash equivalents, and investment securities. As a reminder, the $30 million initial licensing fee to Bioprojet was incurred in the third quarter but will be paid in the fourth quarter.
Looking ahead, we expect quarter-over-quarter in net revenue growth for Q4. We also expect to see increase in ongoing investments in R&D, SG&A as we continue enrollment in our phase III IH registrational trial and continue commercialization of Wakix. In conclusion, our strong performance with Wakix and the resulting cash generation is enabling Harmony to make important investments in our business while maintaining profitability and adding to our strong cash balance to execute on our three-pillar growth strategy. With that, I'd like to turn the call back to John Jacobs for his closing remarks. John Jacobs?
Thank you, Sandip. In summary, our strong performance positions us well to execute on our three-pillar growth strategy. Based on the year-to-date results and demand trends we're seeing for Wakix, we're confident that 2022 can be our best year yet in company history. Our intent is to continue growing Wakix sales in narcolepsy via good commercial execution and strong organic demand for this unique and meaningfully differentiated product. To continue to advance our clinical programs with the goal of expanding the utility of Wakix beyond narcolepsy to help bring this innovative therapy to new patient populations, and to continue to acquire new assets beyond Wakix to develop a broad portfolio of rare orphan neurology assets and or assets in other neurological diseases where we can leverage our existing expertise and infrastructure. We look forward to updating you on our progress. This concludes our planned remarks today.
Thank you for joining our call, and I will now turn things back over to the operator to facilitate the Q&A session. Operator, can we please open the call to questions?
Thank you. At this time, if you'd like to ask a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two. We remind you to please pick up your handset and please limit yourself to one question and one follow-up question. We'll take our first question from Francois Brisebois from Oppenheimer.
Hi. Thanks for taking the question. Congrats on a strong quarter here. Just, you know, in terms of both the quarter and the data. Maybe just on PWS or just to be clear, EDS for PWS to start, the placebo response in the adolescent, is that something that you guys have thoughts about why that might have been so strong? Just, I know it's dangerous to cross compare, and this was not powered for stat sig, but just looking at your previous trials, is there maybe an expectation that with this patient population, placebo response might be higher than the narcolepsy patient population? Thanks.
Jeffrey Dayno, you wanna take that?
Sure, yeah. Good morning, Frank. Thanks for the question. With regards to the placebo response in the adolescent group. First of all, it's a bit too early to tell, you know, what's happening there without having seen all the data yet. The first thing in terms of we know that group, if you look at the, you know, the numbers, it's a small n in that group there were nine patients. You know, there's potential for greater variability. We also saw just in the top line data that there was one outlier, you know, in that group. Given, you know, the outlier and the small N driving some of that variability.
With regards to placebo response in the other age groups, in the children and in the adults, they were consistent with what we saw in the narcolepsy trials. We will obviously be looking into that further. The one other thing too is that, when we have the PK data, we'll be able to look at PK/PD correlation exposure response. You know, overall, we're very encouraged by, you know, the overall data in terms of movement, on the ESS, you know, in all of the age groups and in both dosage groups of, you know, more than two points showing a clinically meaningful, change in the ESS. You know, as well as the separation, a clinically meaningful difference, you know, in the children and the adults.
We'll look at that, you know, the placebo outlier in the adolescent groups when we have the full data set.
Okay. Maybe,
The data, Frank, we're very excited about it.
Go ahead, yeah.
This is a tough patient community to treat. As you know, there's been many struggles to try to get therapies for patients in this group. The patient community is encouraged so far with what we've seen, and so are we.
Okay, great. I'll offer it up on a follow-up question. Just any issues. I'm just wondering as the sales keep ticking up steadily, have you seen any issues with reimbursement in terms of patients that might also be on oxybate or has that not been an issue? Do you have a breakdown what percentage you think of patients are actually on both pitolisant and oxybate and whether or not that percentage has grown? Thank you.
Thanks, Francois Brisebois. Jeffrey Dierks, do you want to take that one?
Sure. Thanks for your question, Frank. What we've seen is really strong favorable market access really since very early in our launch, Frank. We haven't seen any challenges with respect to reimbursement and getting coverage for Wakix patients across commercial, Medicare or Medicaid. When you're looking at patients that may be concomitantly on both pitolisant and sodium oxybate, it's a relatively low percentage. What we've shared publicly, it's low double digits, Frank. Given that this is a rare orphan patient community and you've got a small percentage of these patients, and they're spread out over about 125 different managed care accounts, we have not seen any challenges in these small cohorts of patients on both oxybate and Wakix continuing to get reimbursement for treatment.
Okay. Thank you very much. That's it for me.
Our next question comes from David Amsellem from Piper Sandler.
Thanks. Just a couple. First, can you comment, and I apologize if I missed this, on patient persistence? I'm wondering in particular how that has changed, if at all, as you're seeing more and more patients regularly, you see doctors in person. Talk about that and particularly persistence in the context of other wakefulness-promoting agents, such as oxybate and modafinil. That's number one. Secondly, you know, you've talked a lot about business development and M&A. I know you got a lot of questions about it, but I wanted to ask something a little more targeted, which is your appetite for adding a late-stage asset or even a commercial stage asset where you can, in some way, leverage the commercial infrastructure you had in place.
To the extent you do something that's sort of a larger size, you know, how large can you go in terms of, you know, capital allocation? Thank you.
All right. Jeffrey Dierks, why don't you take the first question, and I'll take the second one?
Sure. David, with respect to patient persistency, what we've disclosed publicly is that you continue to see discontinuation rates of drugs in this entire category range between 30% and 50% at 12 months. Consistent with other chronic medications, there usually is an additional discontinuation rate after the first year. It's at a much lower rate, but it does continue over time. What we've actually seen recently, and it probably doesn't come as any surprise and certainly doesn't come as a surprise to some of the healthcare professionals, is as we're coming out of the COVID time period, and as we're getting greater engagement between patients and their healthcare professionals, we have seen a slight increase in improvement in the discontinuation rates among all of these products.
Now, healthcare professionals tell us that Wakix DC rate is consistent with other products in this category. Their perception is it's a little bit better than what they're seeing with some of their other traditional medicines. We're seeing great, you know, persistency for those patients that stay on the drug. About 90%+ of patients are compliantly taking the drug every day as prescribed by their doctor. Extremely pleased by what we're seeing in the marketplace, the receptivity of the product and patient feedback.
Yep. David, your second question, that absolutely we're open to later stage assets and assets that may already even be revenue generating. As we said all along, you know, we started this journey in business development very early in our company history, so we could be very prudent and choiceful in what we acquire with a distinct focus on what we know how to do well at Harmony, rare orphan neuro and or neurology, where we can leverage our strong and proven successful infrastructure and experience base in this arena. That absolutely includes later stage assets. In fact, our desire is to build a portfolio of both early stage and later stage assets that has the potential for product launch both during and post Wakix lifecycle. Finally, we're in a very good position on capacity.
Sandip, did you wanna address our capacity for doing deals?
Sure. As you mentioned, John, we're in a very strong position. We're at, as of the end of the last quarter, we had $316 million on the balance sheet. As you also saw, we had a really strong cash generation, $55 million this past quarter we generated from operations. Of course, we continue to have access to capital, whether it be the debt, additional debt capital. We have still a $100 million shelf at Blackstone that we can certainly pull on. Then of course, we can also access the public market. I think, you know, we have a lot of optionality in terms of capital allocation.
Thank you, Sandip. Thank you, David.
Thank you.
Operator, any additional questions?
Do we still have connectivity on the line?
We do.
Hey, Gretchen?
Yes. Our next question comes from Charles Duncan from Cantor Fitzgerald.
Super. Hopefully you can hear me. John and team, congrats on a-
We can.
On a great quarter. I had two questions, one commercial, one pipeline. With regard to the commercial question, I guess I'm wondering if Jeff or John could speak to the current field sales force. I guess I'm wondering if you feel like, with the incremental growth in it, do you feel like it's optimized? Would you consider. I think you mentioned that you are, I guess, fully understanding the rhythm in your business. Does that point to possible guidance for next year?
Yeah. Jeff, why don't you address the sales force component and then Sandip can address our thoughts around guidance. Go ahead.
Sure. No, great question, Charles. Thanks very much for asking. Our field sales team, we have 77 individuals in the field. Charles, we do believe and feel that it is optimized for the current adult narcolepsy opportunity. We're calling on about 9,000 healthcare professionals. Given what we saw earlier in this year about the broadening of the prescriber opportunity outside of those oxybate REMS-enrolled doctors for physicians that traditionally did not prescribe scheduled medicines, we added 10% more to our field sales team. What we saw in the third quarter is with greater openness and engagement, we were able to increase the reach and frequency of our healthcare professionals, which really helped to drive new patient starts in both new and existing prescribers.
One of the other things, Charles, that we've also done to help augment our current in-person field sales team is what we learned through COVID is that there is always going to be an element of telemedicine and virtual detailing that's going to exist in healthcare professionals' practices. We have engaged an inside sales rep or a remote healthcare professional outreach team. We've increased that group to six individuals that are starting in the fourth quarter of this year. That helps us reach some of the white space areas where there may not be a representative aligned to a healthcare professional. It helps us provide greater reach and frequency to some of the urban areas in our territories.
It also allows for us to continue to engage with healthcare professionals should we see a vacancy in a territory, which really helps make sure that the patient and the healthcare professional community continue to get supported from Harmony during those times. Hopefully that helps.
Thank you, Jeff, and then
Yeah. With respect to guidance, as you mentioned, I mean, next year would be the natural point where we would certainly consider. I can't really provide guidance on guidance at this stage. You know, generally that would be the point that we would consider. Look, we've got a good history of proven success over our launch. We have a good cadence there. You know, we're pleased with the overall performance, and you know see continued growth opportunity as you know, as John mentioned, continue to see Wakix as a billion-plus franchise in the coming years with narcolepsy and other indications. You know, more to come. We'll update you and you know, as we go into next year.
Thank you, guys. Thank you, Charles.
Can I ask a question on the pipeline?
Sure.
Okay, super. Just quickly, with regard to the PWS results, nice to know that you're waiting for some additional details. I guess I'm wondering if you could speak to what you would like to do. Could you anticipate moving into next stage of development next year, and could that be pivotal? Is there any way to provide information on how many of the patients or percentage roughly decided to continue in the open label extension?
Go ahead, Dayno.
Yeah, sure, Charles. Good morning. In terms of, you know, our plan, I think that, you know, we're encouraged by the positive signals that we've seen from the top-line data. Obviously, the next step is to look at the full data set, you know, which will further inform our understanding around the data. It's our intent to request an end-of-phase II meeting with FDA, as we do plan on advancing, you know, our clinical development program for pitolisant and Prader-Willi syndrome. Obviously, next steps, you know, look at the full data set, inform the strategy of approaching FDA and the phase II meeting, and then plan to go into a pivotal phase III trial.
With regards to the last part of your question, we saw that, you know, 65 patients were enrolled in the trial. 91% completed the treatment, and all but one patient opted to go into the open label extension. The majority of the patients that completed went into the open label extension, and that's what we saw from, you know, the initial top-line data.
Yeah. Well said.
Very good.
Charles, we're excited about this data, especially on behalf of the patients and their caregivers and all the KOLs and folks who worked with us to do this. This is a community who really needs therapeutic options. Dr. Dayno and his team really did a great job leading us through the COVID pandemic, all the challenges to complete a clinical trial on time, Jeff, like you and your team did. You should be really proud of this accomplishment.
Yeah, yeah.
On behalf of patients. It is our intention to work into a phase III, but as Dr. Dayno says, next step is a post-phase with FDA, and we look forward to keeping you posted.
Yeah. Charles-
Yeah
Just those numbers. Yeah, 65 enrolled, 59 completed the treatment, and then 58 of the 59 went into open label extension, and that is ongoing.
Excellent. Thanks for the update.
Sure.
Our next question comes from Corinne Jenkins from Goldman Sachs.
Hey, Corinne.
Good morning. Yeah, good morning. I think it looks like gross to net has improved pretty considerably year-over-year. I think list price is up 5%. It looks like net revenue per patient is up about 10%. Could you talk about what you're seeing with respect to gross to net and how we should expect that to continue moving forward? Also, just if there's any impact of stocking on what that looks like in this quarter.
Yeah. Hi, Corinne, it's Sandip Kapadia. In terms of gross to net, I mean, as you know, gross to net increases typically in the first quarter and then relatively stable for the balance of the year. What we've seen is, you know, a similar evolution this year as well. You know, versus last year, we did have a price increase earlier this year. So we have a net price increase over last year. But generally gross to net has been relatively stable for you know, quarter two and quarter three.
Jeff, is there any additional color you wanna add to that?
Sure, Corinne. One other thing when you're kind of looking at the average cost per patient. Just as a reminder, our patient assistance program demand has been relatively flat. As we continue to add the average number of patients, we're starting to see a higher percentage of revenue generating patients, which is likely reflective in the average cost per patient that you're seeing. I thought that might be helpful as well as you're looking at your data.
Yep.
Yeah, that's really helpful. Thank you. Maybe could you just contextualize the data that we saw on Prader-Willi syndrome versus other wake-promoting agents that might be used off label in that population?
Dr. Dayno, you wanna take that one?
Corinne, I think that in terms of contextualized, probably the reference with regards to what we saw with pitolisant in the narcolepsy studies. You know, we see similar trends with regards to clinically meaningful change in across all the age groups in both dosage groups. You know, greater than 2-point difference on the ESS. In terms of there's not a lot of data in terms of other wakefulness agents used off-label in Prader-Willi, so it's hard for me to comment on that in terms of the other agents used off-label. There's no randomized controlled trials to give a frame of reference.
Yeah. Well said, Jeff. There are a few very small studies, Corinne, maybe ISSs, other things out there that just have weak results. I think that just the general takeaway from that is that it's a very unsatisfied marketplace. There's a tremendous need for new therapeutic options, and as you know, a lot of companies have made valiant efforts to try to help these patients to no avail, and that's disappointing for everyone, our industry and that patient population. We're very excited about and encouraged about these initial top-line results in this POC study right now, so.
Great. Thank you.
Our next question comes from Chris Howerton from Jefferies.
Chris.
Hey, good morning. Thanks so much for taking the questions. I guess two, probably both for the Jeffs. On the commercial side, I guess I just wanted to better understand, you know, how you anticipated seasonality impacting the quarter. You know, I think you signaled ahead of time that you would've anticipated some headwinds to new patients due to the end of the summer. I guess I just wanted to see, like, did you actually see that, and what were your learnings, you know, with respect to this quote-unquote seasonality? Then on the pipeline question, you know, I guess what I'm curious is excessive daytime sleepiness an approvable endpoint for Prader-Willi syndrome? And, you know, what might be some other important clinical features in the eventual package to get a label in that indication? Thank you.
Thanks, Chris. Jeffrey Dierks, you wanna take the first part of that?
Sure. Good morning, Chris. Thanks for the question. Certainly, we're extremely pleased with our performance in the third quarter of $117.2 million. You know, to put that into context, it was about a 10% increase from the second quarter. As a reminder, our growth from Q1 to Q2 was 25%. If you're looking at the relative rate of growth between those quarters, you could see it's reflective of the impact of that summer seasonality. As I shared in my prepared remarks, we did see a couple of strong drivers that helped to overcome and offset some of that summer seasonality. Obviously, we saw an increase in in-person engagement, which we know is very meaningful.
We saw the impact of our expanded field sales team, and we also saw the continued growth in the depth and breadth of our prescriber base. We believe obviously our strong performance is really highlighting the large remaining opportunity in adult narcolepsy, and we are starting to begin to see that anticipated rhythm, right? You get typical seasonal dynamics in the first and the third quarter, where rates of growth tend to be a little bit lower, followed by stronger traditional second and fourth quarters. We're excited obviously about the growth opportunity for Wakix and moving forward, and we remain confident that this has an opportunity to continue to grow for years to come.
The second part of the question.
Yeah.
Dr. Dayno?
Yeah. Chris, good morning. In terms of EDS as an approvable indication in patients with Prader-Willi, EDS is a common symptom in that patient population, you know, seen in over 50% of the patients. Based on our dialogue with FDA and this first signal detection study, you know, we believe it's an approvable indication, you know, with clinically meaningful data. We're encouraged by the initial top-line results, and obviously, you know, we'll engage further with the agency towards designing a pivotal phase III trial. In terms of the other symptoms, obviously, this phase II proof of concept study, we're looking at other outcomes, as you're aware, you know, the behavioral symptoms, cognition, and hyperphagia.
We look forward to seeing, you know, those data and, you know, if the data, you know, supports clinically meaningful changes on those scales, then we would, you know, include that in terms of the design of the phase III trial, with regards to other symptomatic, you know, indications, in a label. I think that, you know, we will wait to see the full data set, and that'll inform our approach with FDA and then, you know, design a phase III trial.
Okay. All right. Well, very good. I appreciate you taking the questions, and congrats on the quarter again.
Thank you, Chris.
Our next question comes from Graig Suvannavejh from Mizuho Securities.
Hey, good morning, team. How are you? Congrats on a great quarter. One of my questions is about the trends that you might be seeing for Wakix as you exit, or as you've exited out of September and into October. Any color you can just provide for us. I just wanted to get a, I think Jeffrey Dierks, you had mentioned this, but just get a confirmation on how you are viewing the fourth quarter, in terms of the, I guess, the seasonality of the fourth quarter being a stronger quarter. I just wanted to make sure that those comments still hold up, and then I've got a follow-up question. Thanks.
Yeah, Graig, obviously, we're not providing forward-looking guidance, but we have said that we expect continued growth for the rest of this year. I don't know, Jeffrey Dierks, if you wanna add a little bit more color to that.
Yeah. I appreciate the question, Graig. Consistent with John, yeah, even though we can't speculate moving forward, we continue to see strong momentum in our business and top line, demand in new patient starts and refill behavior. We do anticipate growth in all of our underlying business fundamentals moving forward quarter over quarter. That's probably about as much context as I can kinda give you. We're very confident in our ability to continue to grow this brand moving forward.
Yeah. I think, Graig, overall context is important for the audience to understand, right, that there's 72-80 thousand diagnosed narcolepsy patients in the U.S. with tremendous unmet need that remains. We see a lot of long-term opportunity for Wakix to continue to penetrate this marketplace to help patients who are in need. It's a polypharmacy market. Wakix is often combined with other therapies to add synergistic benefit and help these patients. We see potential growth for Wakix for years to come, and that's why we're confident in saying we see Wakix as a billion-dollar plus franchise in narcolepsy and other indications in the years to come.
Okay. Thank you very much. My final question just had to do with the data that you just shared with us in terms of the proof of concept phase II in Prader-Willi syndrome. I know that you're expecting to see the full data set and particularly data on some of the secondary endpoints. Is there anything in particular that you're trying to get an assessment of that really will help to inform kinda how you're thinking about the next steps or what the pivotal phase III or what the clinical trial design might be in terms of what's next for that program?
Dr. Dayno, you wanna take that one?
Sure, yeah. Thanks for the question, Graig. In terms of the dataset, obviously, the primary focus is around excessive daytime sleepiness. You know, pitolisant mechanism of action, the mechanism-based approach to our lifecycle management. That's the primary focus, where we had the most confidence. The initial top-line data readout and those signals, you know, that we're encouraged about. As a signal detection study and looking at other key symptoms, as I alluded to, just before, you know, other symptomatology. We'll look for signals on the behavioral aspect, you know, of this patient population, cognitive function, and obviously hyperphagia as the cardinal symptom, of PWS. That full data readout will inform, you know, the overall aspect of the signal detection study.
Based on those findings, you know, we'll inform our approach to design of a phase III trial. Really primary focus around excessive daytime sleepiness, and we're encouraged by the positive signals, you know, that we've seen in terms of movement on the ESS scale across, you know, all the age groups and both dosage groups of pitolisant.
If I could have just one last follow-up question just on that. I think you mentioned that you would expect to share the full results at a medical conference. Is it fair to assume that this would be sometime in 2023, maybe first half of 2023?
We haven't provided timing, Graig, yet on a particular conference, but what we have said is that we expect to have the full data set prior to the end of the year.
Oh, okay. Thank you so much for that clarification.
Welcome. Thank you, Graig.
The next question comes from Amin Fadia from B. Riley and Company.
Hello. This is Amin for Amy. Thank you for taking the question. I have a question on the clinical trial results. So on the PWS patients, they are usually on polypharmacy. I wanted to know if you can add some color on whether there were any drug-drug interactions that you needed to change the prescriptions that patients on the trial needed to take, and is there any rate on any changes on that on their medication because of drug-drug interactions? Also, you reported around 12% adverse event, which is anxiety.
Is there anything that makes you confident that the level of anxiety would decrease as in the open-label extension as you're not increasing the dose during this period?
Amin, with regards to drug-drug interaction. The only FDA-approved drug for patients with Prader-Willi is growth hormone, and we know that they're on other medications for behavioral symptoms, et cetera. There were no specific in terms of drug-drug interactions. It's basically guided by the, you know, the label for Wakix with regards to the known drug-drug interactions of what was allowed and not allowed. Other therapies that they're on, you know, that don't have a known drug-drug interaction with pitolisant were allowed, you know, in the trial.
In terms of the level of anxiety, you know, the safety and tolerability profile that we saw in the study is very consistent with the known safety and tolerability of pitolisant with what we saw in narcolepsy as well as other clinical trials.
I think that's the initial data that you know that we have. When we see the open label extension and longer-term exposure you know we'd be able to comment further on you know on that.
Just to comment, I mean, good question, actually, when it comes down to the practicality of using a drug to help patients who may be on polypharmacy. In the narcolepsy space, as you all know, Wakix can be safely added on to standard of care therapies. We have the drug-drug interaction data right in our label for, you know, the wake-promoting agents as well as sodium oxybate products. That's one of the benefits of Wakix, is that it has a very clean profile, and it's able to be added onto many meds. As you heard Dr. Dayno, there wasn't a tremendous need to change therapies on these patients, though there may be some need for a select group of patients down the road.
Wakix generally is well-tolerated and can generally be added on to many of the known therapies in the neuro space.
Thank you.
Our last question comes from Danielle Brill, from Raymond James.
Hi, guys. This is Alex. Hey, this is Alex on for Danielle. Sorry she couldn't make it.
Hey. Hey, Alex.
How's it going?
Good morning.
As expected, you know, 3Q, we expect to be a bit softer. I mean, but you still got the normal 300 net patient adds. I mean, should we expect a ramp up from this 300 benchmarking 4Q looking forward? If I could just tackle one more follow-up. I'm sorry if I missed it. Just appreciating more color on how new patient starts compared to the last two quarters.
Thanks, Alex. Jeffrey Dierks, any comments on Alex's question?
Yeah, Alex, thanks very much for the question this morning. With respect to how to think about new patient adds moving forward, I mean, it's certainly we're extremely pleased with our continued momentum, adding about 300 patients quarter-over-quarter. Although, again, we're not providing any forward-looking guidance on our business, we can kind of point you back to what we've accomplished in that normal seasonality that we've seen over the last couple of years. We have very strong top-line prescription demand. New patient starts has been relatively consistent, building on the momentum coming out of the second quarter. As John shared earlier, we believe that there is still a large untapped remaining opportunity in narcolepsy. We're very excited about our ability to continue to grow the brand and the underlying fundamentals moving forward.
Hopefully those two pieces of information help with respect to how to think about our business moving forward as well as thinking about new patient adds from the third quarter and the second quarter.
Thanks, Jeff. Thanks, Alex.
If I could do one more. Are you seeing any patterns in 4Q inventory stocking ahead of any, you know, expected new year price increases? If so, could you walk us through what, if any, inventory impacts you expect for the upcoming quarter?
This is John Jacobs.
I mean, you know, generally you do see some increases in inventory, driven mostly due to just the holiday season. You'll see a couple of days typically in the inventory quarter. Then that obviously reverses in Q1 as it has some of those impacts. You know, beyond that, there's not much I can share. It really will be variable depending on the time when the holidays fall and those are other impacts as well.
I would say nothing unusual then.
Yeah, nothing different from the same other years.
Cool. Thanks so much.
Thanks, Alex.
Thank you. I'm showing no further questions. This does conclude today's Harmony Biosciences third quarter 2022 financial results conference call. You may now disconnect your line and have a wonderful day.
Thank you, everybody.