Harmony Biosciences Holdings, Inc.

HRMY Details

Harmony Biosciences Holdings, Inc. (NASDAQ: HRMY) is a commercial-stage pharmaceutical company focused on developing and commercializing new therapies for patients with rare neurological diseases. Pitolisant, a drug sold under the WAKIX brand name that was launched on November 01, 2019, to treat excessive daytime sleepiness (EDS) in adult narcolepsy patients, is currently the only source of revenue for HRMY. It holds an exclusive license to develop, produce, and market Pitolisant in the United States from Bioprojet Société Civile de Recherch, a France-based independent (privately owned) research business.

AASM Recognizes Benefits of WAKIX: The American Academy of Sleep Medicine (AASM) issued an updated clinical practice guideline on September 02, 2021, adding WAKIX (Pitolisant) as a recommended treatment option for narcolepsy patients. This evidence-based guideline can aid healthcare providers in making therapeutic decisions for their narcolepsy patients.

Strategic Collaboration with Blackstone: HRMY and Blackstone, one of the world's leading investment firms, signed a strategic financing agreement on August 10, 2021, under which Blackstone will invest up to USD 330 million in HRMY in the form of financing and growth capital. USD 300 million of the invested amount will be in debt capital and USD 30 million in equity investment in HRMY common stock.

H1FY21 Results: The company reported a massive increase of 130.78% YoY in net product revenues to USD 133.50 million during H1FY21 (ending June 30, 2021) compared to USD 57.85 million during H1FY20, due to growing commercial sales of WAKIX, clubbed with the increase in its sales price. HRMY witnessed a significant increase in net income to USD 21.50 million during H1FY21 vs. a net loss of USD 38.65 million reported in H1FY20. As of June 30, 2021, the company's balance sheet stood with cash and cash equivalents of USD 159.69 million, with a total debt of USD 195.61 million.

Key Risks: HRMY is primarily concerned with selling a single product (WAKIX), and over-reliance on a single product may negatively influence the firm's financial strength if it fails to extend its product variety in the future, which generally takes time. Furthermore, CVS Caremark, Pantherx, and Accredo, three of HRMY's key clients, contributed 37%, 35%, and 28% of the gross product revenues, respectively, during H1FY21. As a result, putting too much dependence on a few clients for revenue might harm the company's financial health in the long term.

Valuation Methodology: EV / Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

HRMY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: HRMY's share price surged 42.20% in the past month and is currently trading at a mid-band of the 52-week range of USD 25.09 to USD 52.74. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 70.90. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 33.85. Considering the uptick in the stock price, we believe the current share price adequately reflects the decent business fundamentals. Hence, we recommend a "Sell" rating on the stock at the current price of USD 38.31, up 5.98% as of September 07, 2021, 12:32 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.