Jazz Pharmaceuticals JAZZ and Harmony Biosciences HRMY have emerged as notable players in the neuroscience space, especially in the sleep disorder segment.

Jazz Pharmaceuticals markets multiple neuroscience drugs, including the blockbuster oral sleep disorder drug Xywav and the cannabidiol (CBD) drug Epidiolex.

Harmony Biosciences has only one marketed drug in its portfolio, Wakix (pitolisant), which is approved to treat excessive daytime sleepiness (EDS) or cataplexy in narcolepsy patients.

Both companies are experiencing consistent sales and earnings growth. But, which one makes for a better investment pick today? Let's examine the fundamentals of the two stocks closely to make a prudent choice.

The Case for JAZZ

Jazz derives more than two-thirds of its total revenues from its neuroscience franchise.

Xywav is approved to treat three conditions, including cataplexy and EDS in narcolepsy patients. Being a low-sodium formulation, this drug also does not carry warnings and precautions related to high sodium intake, which currently makes it the only approved oxybate therapy to do so. Xywav is also the only FDA-approved treatment for the full spectrum of idiopathic hypersomnia (IH). Sales of this blockbuster drug rose 16% year over year to $1.5 billion in 2024.

Jazz is the only company to market an FDA-approved drug that contains a purified drug substance derived from marijuana. Its involvement in the cannabis sector centers on Epidiolex — an oral solution approved to treat seizures associated with Lennox-Gastaut syndrome, Dravet syndrome and tuberous sclerosis complex. Sales of this drug have not only strengthened Jazz’s neuroscience portfolio but also reduced its reliance on the oxybate franchise. Epidiolex sales rose 15% year over year to $972 million in 2024, driven by expanding global launches and a growing prescriber base. We expect the drug to achieve blockbuster status in 2025.

Jazz has built a diverse product lineup that also includes oncology drugs. The company currently markets five oncology drugs — Defitelio, Vyxeos, Zepzelca, Rylaze/Enrylaze and Ziihera — which accounted for 29% of its 2024 product revenues. Jazz is also focused on expanding the labels of these marketed drugs.

Jazz recently announced its intent to buy clinical-stage biotech Chimerix for $935 million. If this deal goes through, the company will add Chimerix’s lead candidate, dordaviprone, which is nearing approval from the FDA (PDUFA date Aug. 18, 2025) for certain glioma (brain tumor) patients. Jazz expects to complete the transaction in the second quarter of 2025.

However, Jazz has not eluded its share of pipeline setbacks. Earlier this year, it decided to stop developing suvecaltamide across both essential tremors and Parkinson's disease tremors after the drug failed to achieve the primary and key secondary endpoints in separate mid-stage studies.

Total 2024 revenues rose 6% year over year to $4.1 billion, which includes $2.9 billion from the neuroscience franchise and $1.1 billion from the sale of oncology drugs. Jazz expects 2025 sales to be in the $4.15-$4.40 billion range, suggesting 5% year-over-year growth at the midpoint. The company’s cash reserves totaled $3 billion as of 2024-end.

The Case for HRMY

Harmony Biosciences’ Wakix is a first-in-class therapy with a novel mechanism of action designed to enhance histamine signaling in the brain by binding to H3 receptors. Per HRMY, this flagship drug is the only FDA-approved treatment for narcolepsy that is not scheduled as a controlled substance, offering a unique advantage in the market.

Harmony generates the entirety of its top line from this drug’s sales. The company’s 2024 sales rose 23% year over year to $715 million, driven by continued demand across narcolepsy patients. It expects 2025 sales to be in the band of $820-$860 million, suggesting 18% year-over-year growth.HRMY’s cash balance, as of 2024-end, amounted to $576 million.

Since Wakix is expected to lose exclusivity by the end of this decade. HRMY is also evaluating two next-generation formulations of Wakix — pitolisant Gastro-Resistant (pitolisant GR) and pitolisant High-Dose (pitolisant HD). Late-stage development on both versions is expected to start before this year’s end.

Sleep disorder is not the only therapeutic area common between HRMY and JAZZ. Harmony is also exploring the cannabis space; it acquired Zynerba Pharmaceuticals in 2023, adding the pharmaceutically manufactured synthetic CBD gel ZYN-002 to its neurobehavioral franchise. This pipeline drug is being evaluated in the phase III RECONNECT study in a rare genetic disorder called Fragile X Syndrome (FXS). Top-line data from this study is expected in third-quarter 2025. HRMY also plans to start a late-stage study on ZYN-002 in 22q11.2 deletion syndrome (22q) later this year.

However, Harmony Biosciences is not devoid of pipeline/regulatory setbacks. Earlier this year, the company reported that it received a Refusal to File (RTF) letter from the FDA for a regulatory filing seeking to expand Wakix’s label as a treatment for EDS in adult patients with IH. Based on this setback, Harmony has decided to focus on developing pitolisant HD in the IH indication.

How Do Estimates Compare for JAZZ & HRMY?

The Zacks Consensus Estimate for Jazz’s 2025 sales and EPS implies a year-over-year increase of around 6% and 12%, respectively. EPS estimates for both 2025 and 2026 have been trending upward over the past 60 days.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for HRMY’s 2025 sales and EPS implies a year-over-year increase of 18% and 16%, respectively. EPS estimates for 2025 and 2026 have declined over the past 60 days.

Image Source: Zacks Investment Research

Price Performance and Valuation of JAZZ & HRMY

Shares of JAZZ and HRMY have lost around 17% each (year to date) compared with the industry’s decline of 8%, as seen in the chart below.

Image Source: Zacks Investment Research

From a valuation standpoint, Harmony Biosciences is more expensive than Jazz Pharma, going by the price/earnings (P/E) ratio. HRMY’s shares currently trade at 8.63 forward earnings, higher than 5.07 for JAZZ. However, with the markets hitting new lows amid the tariff impact, both stocks are trading at discounts to their five-year mean.

Image Source: Zacks Investment Research

JAZZ or HRMY: Which is a Better Pick?

Though both companies have demonstrated strong performance in their respective areas, Jazz Pharma seems to be the better pick. While Harmony Biosciences’ top-line growth is encouraging, its reliance on a single product presents a concentration risk.

Jazz, on the other hand, offers a diversified portfolio in neuroscience and oncology, rising EPS estimates and robust cash reserves. Despite pipeline setbacks, its strategic acquisitions and marketed products make it a resilient player worth holding in 2025 and beyond. The stock is currently available at a more attractive valuation than HRMY.

Also, Jazz carries a Zacks Rank #2 (Buy) while Harmony has a Zacks Rank #3 (Hold). This further reinforces Jazz’s favorable standing in the current investment landscape. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report

Harmony Biosciences Holdings, Inc. (HRMY) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research