Concerns Over Harmony Biosciences: FDA Setback, Patent Risks, and High-Risk Pipeline

Analyst Jason Gerberry from Bank of America Securities reiterated a Sell rating on Harmony Biosciences Holdings (HRMY – Research Report) and decreased the price target to $31.00 from $32.00.

Jason Gerberry’s rating is based on several concerns surrounding Harmony Biosciences Holdings. Firstly, the FDA’s refusal to review the label expansion for Wakix in treating idiopathic hypersomnia has put pressure on the stock, especially since the Phase 3 INTUNE study did not demonstrate significant benefits. This setback aligns with the expectation that Wakix would not receive approval due to its uncertain future market potential and intellectual property concerns.
Additionally, the company’s strategy to pursue a next-generation formulation of pitolisant for idiopathic hypersomnia presents significant risks, with key clinical trials and regulatory approval not expected until 2028. Furthermore, ongoing patent litigation and a maturing patent portfolio for Wakix add to the uncertainty, as does the lack of substantial clinical catalysts to offset potential revenue losses from adverse legal outcomes. The pipeline is also considered high-risk with limited data, notably concerning the Zygel Phase 3 study for Fragile X Syndrome, which is seen as a high-risk opportunity due to previous trial failures.