Harmony Biosciences rebounds on guidance despite earnings miss
Company reaffirms 2026 blockbuster revenue target of $1.04 billion for WAKIX narcolepsy treatment
Harmony Biosciences shares rallied 3.7% in Tuesday trading after the biotechnology company reaffirmed ambitious revenue guidance for 2026, offsetting investor disappointment over a fourth-quarter earnings miss that had already driven the stock down more than 27% earlier this month.
The Pennsylvania-based company reported non-GAAP earnings per share of $0.57 for the fourth quarter of 2025, missing the analyst consensus of $0.86 by 33.8%. However, revenue of $243.8 million beat estimates by 9.5% and grew 22% year-over-year, while full-year sales of its flagship narcolepsy treatment WAKIX reached $868.5 million, a 22% increase from 2024.
The earnings shortfall reflected substantial operating expense growth as the company invests heavily in its late-stage pipeline. Research and development spending surged 44% to $49.9 million in the quarter, while general and administrative expenses jumped 99% to $57.6 million compared to the prior year. Total operating expenses rose 50% to $136.7 million, weighing on profitability despite the commercial success of WAKIX.
Despite the profit pressures, management maintained its previous 2026 WAKIX net revenue guidance of $1.0 billion to $1.04 billion, positioning the drug to achieve blockbuster status. Jeffrey M. Dayno, the company's chief executive, said WAKIX remains "on track to exceed $1 billion in revenue and achieve blockbuster status in 2026," citing "the strength and durability of the pitolisant franchise."
The guidance reassurance provided a catalyst for the stock after a precipitous decline. Harmony shares had fallen from approximately $38 in early February to around $26.76 by February 20th, a drop of roughly 29%, partly due to a downgrade from UBS on February 11th. Notably, while UBS downgraded the stock from "Buy" to "Neutral," the bank simultaneously raised its price target to $46, suggesting analysts see long-term value despite near-term concerns.
Harmony's pipeline features five ongoing Phase 3 registrational trials across five distinct central nervous system indications, which management said positions the company for multiple near-term catalysts. A key upcoming milestone is the planned submission of a new drug application for Pitolisant GR, a gastro-resistant formulation designed to minimize gastrointestinal side effects and allow therapeutic dosing without titration, scheduled for the second quarter of 2026 with an anticipated PDUFA date in the first quarter of 2027.
The company recently received FDA approval for WAKIX in pediatric cataplexy on February 13th, expanding the drug's addressable market. Phase 3 topline data for pitolisant in Prader-Willi syndrome is expected in the second half of 2026, which would support pediatric exclusivity for WAKIX.
Analysts remain broadly bullish on the stock, with a consensus "Buy" rating and an average price target of approximately $45.70, according to market data. The stock currently trades at about 8.5 times trailing earnings and 6.1 times forward earnings, suggesting significant upside if the company executes on its growth targets.
Cash and investments totaled $882.5 million at year-end, more than 50% higher than the $576.1 million at the end of 2024, providing ample resources to fund the pipeline expansion through the next several years. The company also announced settlements with three additional generic filers, allowing generic products to launch no earlier than March 2030 if pediatric exclusivity is granted, reinforcing near-term revenue protection for WAKIX.
Harmony's gross margin of 77.7% demonstrates the profitability potential of its commercial franchise once operating expenses stabilize. The company faces the challenge of balancing pipeline investment with maintaining healthy profit margins, a dynamic that has contributed to the stock's volatility in recent months.