Harmony Sciences shares plunged Wednesday after the Food and Drug Administration rejected its bread-and-butter drug as a treatment for a daytime sleepiness condition.
The company hoped to win approval for Wakix as a treatment for idiopathic hypersomnia, a chronic disorder that causes excessive daytime sleepiness despite getting adequate sleep at night. Wakix is already approved to treat excessive daytime sleepiness and cataplexy — sudden episodes of muscle weakness — in patients with narcolepsy.
Investors didn't expect the approval after Wakix missed the primary goal of its Phase 3 study. But Harmony was angling for approval based on the totality of the data, unmet need and few therapeutic alternatives for patients with idiopathic hypersomnia.
The FDA rejected the application earlier than usual, at its filing, "which comes as a surprise," Needham analyst Ami Fadia said in a report.
Harmony Biosciences stock tumbled 9.6% to 35.32. Shares had been climbing the right side of a cup-with-handle base with a buy point at 40.93, but undercut their 50-day moving average, according to MarketSurge.
Harmony Biosciences' Next-Gen Drug
Fadia noted Harmony has a next-generation versions of pitolisant, the chemical backbone behind Wakix, in clinical testing. A high-dose version of the drug could have better effectiveness.
But the rejection delays a launch into idiopathic hypersomnia treatment by more than three years, she said. The company is targeting approval in 2028 for its next-gen drug.
In response, Fadia cut her price target on Harmony Biosciences shares to 50 from 52, but kept her buy rating.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
