Harmony Biosciences' Sales and Profits Have Soared. Why Hasn't Its Stock Followed?

Finding value stocks in today's market environment is challenging. To find them in the biotech stock arena is even more unusual. Harmony Biosciences (NASDAQ: HRMY) specializes in biotechnology treatments for rare diseases, and despite having been extremely successful from a financial standpoint, investors haven't seemed to buy the bullish case for Harmony entirely.

The first article in this series focused on Harmony and its work toward developing its pitolisant treatment, marketed under the brand name Wakix. Here, you'll learn more about just how lucrative Wakix has been, but you'll also learn about some of the negatives that have kept the stock price from following Harmony's sales and profits higher.

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Impressive numbers from Harmony

There's no denying that few small biotech stocks have enjoyed the same early success that Harmony has. Wakix got FDA approval in 2019, but by the following year, Harmony posted revenue of $160 million. Over the ensuing five years, Harmony saw its sales rise at an average compound annual growth rate of around 40%. That has the company on track to post sales of nearly $870 million when it releases its final 2025 numbers. Harmony believes Wakix will generate revenue of over $1 billion in 2026.

Many biotech stocks that win approval for an initial commercial drug then turn around and redouble their spending on their pipeline research. Higher expenses then result in continuing losses despite the commercial success. Yet Harmony followed a different path. It became profitable in 2021 , and a combination of sales growth and margin expansion has caused net income to jump more than five times since then. With net income of $186 million over the past 12 months, Harmony's market capitalization of $2.1 billion implies an earnings multiple of just 12.

So why aren't Harmony shareholders more optimistic?

Given this financial performance, it's surprising to see Harmony's stock essentially flat since its IPO. One concern is that Wakix is set to lose exclusive patent protection in early 2030, potentially giving Harmony just four more years before generic competition arrives. Yet Harmony is working on pitolisant variants that could provide patent protection into the mid-2040s.

The bigger concern over Harmony came in 2023, when investors at Scorpion Capital issued a short-seller research report. The report alleged that Harmony used "sham patents" to conduct "scam clinical trials" and that Wakix has "alarming toxicity" and "no efficacy." After having started 2023 near $60 per share, Harmony stock fell as low as $20 after the report came out before recovering somewhat. Yet even now, shareholder lawsuits remain a cloud over the stock.

In addition, Harmony faces stiff competition. Jazz Pharmaceuticals (NASDAQ: JAZZ) has a pair of blockbuster treatments for narcolepsy called Xywav and Xyrem, and together, they brought in nearly $1.3 billion in revenue in the first nine months of 2025. Despite Xywav being a schedule 3 controlled substance under U.S. Drug Enforcement Administration classifications, physicians have been comfortable recommending the treatment, giving Jazz greater market share than Harmony in the space. Also, potential generic competition is lining up in preparation for patent expirations, and that could hurt Harmony's revenue if its efforts to come out with new updated variants fail.

The jury is still out on Harmony Biosciences

Harmony serves as an excellent reminder that focusing solely on financial results doesn't always give you a complete picture of what's going on with a company. In particular, even when a biopharmaceutical stock has a successful treatment that's bringing in substantial sales and earnings, it's essential to make your own assessment about whether the upward trajectory for the company is likely to continue.

Still, an analysis of Harmony isn't complete without looking at what the future holds, both for pitolisant and for the company's pipeline of candidate treatments. The final article of this series on Harmony Biosciences for the Voyager Portfolio will focus more squarely on Harmony's growth prospects.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.