Analyst action and immediate market response
Deutsche Bank has moved Harmony Biosciences Holdings Inc. (NASDAQ:HRMY) from a Buy rating to Hold and lowered its price target to $31.00 from $47.00. The broker's decision follows a bench trial that concluded on Friday, February 20, 2026, in the U.S. District Court in Delaware, where a generics manufacturer, AET Pharma, challenged the patents protecting WAKIX, Harmony's lead drug.
Reports from market sources and sell-side observers indicated the presiding judge appeared to view the case in a light unfavorable to Harmony Biosciences during the proceedings. In reaction, the stock fell 15% by Friday's market close, and InvestingPro data referenced in reports showed a 19% decline over the prior week.
Legal challenge and patent timeline implications
AET Pharma initiated a Paragraph IV Abbreviated New Drug Application asserting that patents covering WAKIX, whose active ingredient is pitolisant and is used to treat narcolepsy and other sleep disorders, are invalid or unenforceable. Prior to the trial, Harmony's exclusivity window for WAKIX was expected to extend to 2030; however, the court proceedings introduce the possibility that the drug could face generic competition as early as 2026.
Deutsche Bank said it reviewed the drug's listings in the FDA Orange Book, patent filings recorded with the U.S. Patent and Trademark Office, and public court filings. Based on that review, the bank concluded that Harmony faces an elevated level of intellectual property risk relative to what is typical when facing challenges from generic filers.
Financial context and ongoing development programs
Despite the legal uncertainty, Harmony disclosed preliminary unaudited net product revenue for WAKIX of approximately $243 million in the fourth quarter of 2025 and about $868 million for the full year of 2025. That full-year figure represents roughly 21% year-over-year growth versus 2024.
The company has provided guidance for 2026, forecasting WAKIX revenue between $1.0 billion and $1.04 billion, a level that would meet the threshold commonly referred to as blockbuster status. Additionally, Harmony announced a collaboration with Beacon Biosignals to integrate EEG measurements into two Phase 3 studies for narcolepsy and idiopathic hypersomnia, using Beacon's FDA-cleared Waveband EEG headband to collect brain activity data during sleep.
Separately, Harmony presented initial positive results from its Phase 3 ARGUS trial for EPX-100 in Dravet syndrome, reporting a median reduction in motor seizure frequency of about 50% among participants. Following that trial update, H.C. Wainwright maintained a Buy rating and a $55.00 price target for the company.
Valuation and analyst perspective
Even with the downgrade and the court developments, Harmony's shares were trading at a reported price-to-earnings ratio of 9.2. Some market commentary referenced that valuation as implying the stock remains undervalued based on InvestingPro analysis, though Deutsche Bank's reassessment highlights a higher-than-typical patent risk profile.
Bottom line
The recent bench trial outcome has prompted at least one major sell-side firm to lower its recommendation on Harmony Biosciences and reduce its price target, spotlighting legal and exclusivity uncertainties for WAKIX. The company continues to report revenue growth and advance clinical programs, but the pending intellectual property questions create a material variable for the drug's longer-term revenue trajectory.