Aging Population And New Pitolisant Formulations Will Boost Neurological Care

Key Takeaways

• WAKIX drives recurring revenue growth through deeper market penetration, while next-generation formulations and pipeline expansions extend product lifecycle and address broader neurological indications.
  
• Strong cash flow, regulatory advantages, and a diversified late-stage pipeline support international expansion and continued profitability through high-margin, value-based therapies.
  
• Heavy dependence on a single product, regulatory and pricing pressures, pipeline risks, and rising competition threaten future growth, profitability, and shareholder returns.

Catalysts

A commercial-stage pharmaceutical company, focuses on developing and commercializing therapies for patients with rare and other neurological diseases in the United States.

• Harmony’s core product, WAKIX, continues to penetrate a large and still underdiagnosed narcolepsy market, with prescription demand and patient growth accelerating as increased societal awareness and diagnosis rates for sleep and neurological disorders drive higher patient volumes. These dynamics support further reliable growth in recurring revenues over the long term.
  
• The upcoming launch of next-generation pitolisant formulations (high-dose and gastro-resistant), each with potential patent protection through 2044, is positioned to address substantial unmet medical needs across new indications such as idiopathic hypersomnia, and to extend revenue durability well beyond the first product’s loss of exclusivity—enabling multi-decade lifecycle revenue expansion and protecting long-term earnings power.
  
• Late-stage pipeline diversification in rare neurological diseases—including imminent Phase III readouts like ZYN002 for Fragile X Syndrome, with potential to be the first and only approved therapy—could create a succession of meaningful new product or indication launches annually, increasing the addressable market and supporting top-line growth and sustained profitability.
  
• Harmony’s strong cash flows and over $600 million in cash reserves give it operational capacity to accelerate pipeline development, pursue strategic partnerships or acquisitions in specialized CNS assets, and potentially expand internationally—enhancing revenue streams and generating operating leverage that could support higher net margins over time.
  
• Favorable regulatory tailwinds for orphan and rare neurological disease drugs—including expedited review pathways and orphan drug exclusivity—shorten the time to commercialization and reduce costs, allowing Harmony to capture greater high-margin revenue opportunities and achieve robust, value-based pricing for therapies with demonstrated real-world outcomes.

Harmony Biosciences Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Harmony Biosciences Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Harmony Biosciences Holdings's revenue will grow by 21.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 20.5% today to 33.3% in 3 years time.
• The bullish analysts expect earnings to reach $449.5 million (and earnings per share of $7.22) by about July 2028, up from $152.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.1x on those 2028 earnings, down from 13.8x today. This future PE is lower than the current PE for the US Pharmaceuticals industry at 18.1x.
• Analysts expect the number of shares outstanding to grow by 1.04% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Harmony Biosciences Holdings Future Earnings Per Share Growth

Risks

• Harmony Biosciences remains highly reliant on WAKIX, its primary commercial asset, which comprises the overwhelming majority of its current revenue, making future top-line figures vulnerable to eventual loss of exclusivity in 2030, accelerated entry of generics, or sudden shifts in competitive dynamics that could quickly erode both sales and earnings.
  
• The pharmaceutical sector’s growing regulatory scrutiny and persistent societal pressure for drug price controls may limit the company’s ability to sustain premium pricing for its rare disease drugs, compressing long-term net margins and limiting future earnings potential even if sales volumes grow.
  
• Despite Harmony’s robust-sounding late-stage pipeline, there is considerable risk that one or more pivotal clinical trials—for assets such as ZYN002 or pitolisant HD—fail to meet primary endpoints or experience regulatory setbacks, which would undermine investor confidence and result in weaker future revenue growth relative to current projections.
  
• Intensifying competition from both large-cap biopharma and emerging biotech firms in the sleep/wake and rare neurological disease categories threatens Harmony’s ability to expand and retain market share, potentially limiting revenue and increasing pressure on marketing expenses to defend and grow its brand franchises.
  
• As R&D expenses and milestone payments continue to rise to support multiple late-stage programs, Harmony will increasingly face the industry-wide challenge of escalating costs for innovation; this may require incremental spending or capital raises, which could ultimately dilute shareholders or depress net margins if not offset by robust new product launches.

Valuation

• The assumed bullish price target for Harmony Biosciences Holdings is $70.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Harmony Biosciences Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $31.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $449.5 million, and it would be trading on a PE ratio of 11.1x, assuming you use a discount rate of 6.4%.
• Given the current share price of $36.69, the bullish analyst price target of $70.0 is 47.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.