What happened
Shares of Harmony Bioscience Holdings (HRMY -1.70%) were down 26% early Tuesday afternoon after short-seller Scorpion Capital said it planned to file a citizen's petition with the Food and Drug Administration (FDA), asking for the withdrawal of Harmony's narcolepsy drug. The stock is down more than 39% so far this year.
So what
On Tuesday, Scorpion Capital issued a report slamming Harmony Bioscience, saying it had received adverse event reports from the FDA regarding Harmony's narcolepsy therapy, Wakix (pitolisant). Harmony, a pharmaceutical company that focuses on neuroscience therapies, reported full-year 2022 revenue of $437.9 million, all from Wakix, a rise of 43%. The company also reported full-year net income of $181.5 million, up 426%.
Now what
Short-seller reports can be full of hyperbole. The report raised questions about the drug's toxicity and the credibility of Harmony's clinical trials for the therapy. It's important to note that Wakix was first approved by the FDA four years ago.
"We are aware of this report from an activist investor and disagree with their assertions," a spokesman for Harmony Biosciences told Benzinga. "We remain committed to helping those who live with devasting rare diseases, and our science has been subject to peer review and received global regulatory approval. We'll continue to innovate and develop safe and effective medications for those in need. With regards to a Citizen Petition, we have not seen anything filed publicly at this time."
Regardless, a report of this nature will drive the stock down in the short term. it doesn't help that the company's former CEO, Jeff Jacobs, left in January with Jeffrey M. Dayno now serving as interim CEO. If the report by Scorpion Capital leads to some action by the FDA, that would be catastrophic for Harmony considering how important the therapy is to the company's financials. The company has a small pipeline, with only one molecule being studied besides Wakix.
