Vanda Pharmaceuticals Inc (VNDA) 2022 Q3 法說會逐字稿

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Vanda Pharmaceuticals Third Quarter 2022 Earnings Conference Call. (Operator Instructions). I would now like to hand the call over to Kevin Moran, Vanda's Chief Financial Officer. Kevin, you may begin your conference.

Thank you, Emma. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third-quarter 2022 performance. Our third quarter 2022 results were released this afternoon and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today's call is Dr. Mihales Polymeropoulos, our President, Chief Executive Officer and Chairman of the Board. Additionally, we have Tim Williams, our General Counsel; and Gunther Birznieks, our Senior Vice President of Business Development and R&D Committee member. Following my introductory remarks, Mihales will update you on our ongoing activities. I will then comment on our financial results before opening the lines for your questions.

Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, risk factors, and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our annual report on Form 10-K for the fiscal year ended December 31st, 2021, as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events or otherwise, except as required by law.

With that said, I would now like to turn the call over to our CEO, Dr. Mihales Polymeropoulos.

Thank you, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's third-quarter 2022 results. Over the last quarter, Vanda continued to focus on enhancing performance of its current commercial products, advancing clinical programs, and leveraging innovation to position the company for long-term growth. I will discuss some highlights of our clinical and regulatory efforts, and Kevin will discuss our commercial progress. First on Fanapt. Our clinical program pipeline is advancing with the recent completion of enrollment in the Fanapt bipolar mania clinical study, for which we expect results by the end of this quarter. Additionally, we have completed enrollment in our VQW765 study in performance anxiety for which also we expect results by end of this quarter.

On Tradipitant, preparation of the new drug application in gastroparesis is ongoing with FDA submission expected in the first half of 2023. The submission will include the results from 2 adequate and well-controlled studies in patients with idiopathic and diabetic gastroparesis, which provides substantial evidence of effectiveness in the indication. If approved, Tradipitant will be the first treatment in more than 40 years approved by the FDA for people with gastroparesis. Additionally, a 400-patient open-label study of Tradipitant in patients with gastroparesis is ongoing, which will provide further information on the safety and efficacy of Tradipitant in gastroparesis. We recently presented results of the pooled analysis from Studies VLY-686-3301 and VLY-686-2301, which included a total of 342 patients, 175 on Tradipitant, 167 on placebo, which showed significant improvement in the clinical endpoints of change of nausea, percent [nausea] days, and the gastroparesis core symptom improvement scale, GCSI, at week 4 treatment. In the subpopulation, which excludes non-protocol compliant patients as determined by PK analysis, a total number of 283 patients, highly significant effects were seen in each of these parameters. Improvements were also seen across the other core symptoms of gastroparesis as well. This work was recently presented at the American College of Gastroenterology Conference and received the Presidential Poster Award.

Tradipitant efficacy is also appreciated by patients who are participating in an expanded access program, some already for over a year. Tradipitant motion sickness. On Tradipitant, we're also progressing with the clinical program in motion sickness with a pivotal study currently ongoing and expected to be completed in the first half of 2023. HETLIOZ, enrollment is ongoing in the clinical development programs of HETLIOZ for the treatment of delayed sleep phase disorder and for sleep turbances in autism spectrum disorder. Additionally, we are preparing for the submission of a supplemental NDA for HETLIOZ in the treatment of insomnia. The submission will include the results of 3 adequate and well-controlled studies, 1 4-week study in people with primary insomnia, and 2 trends insomnia new studies induced by phase advance of the sleep [way] cycle.

These studies show that HETLIOZ is effective in improving sleep onset difficulty in people with primary insomnia with the effect observed as [HETLIOZ] is the first line of treatment. This supplemental NDA of HETLIOZ for insomnia is planned to be submitted to the FDA this quarter. VPO-227 in cholera. We recently announced that the FDA has granted orphan drug designation for VPO-227 for the treatment of cholera. Cholera remains a major public health challenge and recognized unmet medical need despite decades-long public health efforts, and we're excited about the potential of VPO-227 to treat patients that suffer from cholera. We expect to submit an investigational new drug application to the FDA for VPO-227 in 2023.

Finally, we recently announced the research and development agreement with OliPass of Korea to jointly develop a set of antisense oligonucleotide, or ASO based on OliPass proprietary modified peptide nucleic acids. This evolving discovery and development platform is intended to support Vanda's development of antisense oligonucleotide or ASO based on precision medicine therapeutics.

Tim Williams, our General Counsel, will now discuss highlights of our legal regulatory activities. Tim?

Thank you, Mihales. I'd like to touch briefly on some key litigation activities, first in intellectual property. As you probably know, we had a trial last March in Delaware Federal Court of serving a family of HETLIOZ patents against several generic drug manufacturers. Patents in this litigation have excise ranging from 2033 to 25 – 2035. So a positive victory on any single patent extends HETLIOZ exclusivity at least into 2033 and possibly all the way into 2035. We expect a decision from the court in the later than the end of this year. I'll turn for a moment to our ongoing regulatory litigation. We continue to challenge regulators when we believe those regulators have ignored or violated law in a manner that harms our business or impacts our ability to help patients.

A prime example of this is our lawsuit against CMS filed in April of this year. At the end of 2021, CMS issued a new rule that expanded the scope of products subject to certain rebate requirements. And it did so by reversing an agency interpretation that has been in place for over 10 years. Rather than getting greater authority from Congress to expand its rebate powers, CMS simply changed its long-standing interpretation of the law and issued the new rule. This new rule now subjects novel product formulations to expensive rebate requirements and has an immediate financial consequence for innovators like Vanda. It also negatively impacts the viability of future product development across the industry to the detriment of patients suffering with unmet medical needs. We are not the only company to challenge CMS on this rule in court, but we hope to be the first to prevail and striking it down. This is just one example of our efforts to advance Vanda's business by holding regulators accountable to the law and our other efforts are more fully described in our public disclosures and publicly available court papers.

With that, I'll turn it back to Mihales.

Thank you very much, Tim. I'll turn now to Kevin to discuss our commercial progress and financial results.

Thank you, Mihales. I will begin by summarizing our financial results for the first 9 months of 2022 before turning to discuss the third quarter of 2022. Total revenues for the first 9 months of 2022 were $189.9 million, a 5% decrease compared to $200.7 million for the same period in 2021. HETLIOZ net product sales of $119.6 million were the primary contributor and driver of our revenues for the first 9 months of 2022 and saw an 8% decrease compared to the same period in 2021. The first 9 months of 2022 reflect the continued reimbursement challenges for prescriptions for patients with Non-24.

Turning now to Fanapt. Fanapt net product sales of $70.3 million for the first 9 months of 2022 reflect a 1% decrease compared to the same period in 2021. For the first 9 months of 2022, Vanda recorded a net loss of $600,000 compared to net income of $26.1 million for the same period in 2021. The net loss for the first 9 months of 2022 include an income tax provision of $2.3 million as compared to an income tax provision of $7.7 million for the same period in 2021. Operating expenses for the first 9 months of 2022 were $190.2 million compared to $167.1 million for the first 9 months of 2021. The $23.1 million increase was primarily driven by both higher R&D expenses and higher SG&A expenses. The increase in R&D expenses was primarily driven by increases related to our late-stage clinical program for Fanapt as well as a $3 million upfront fee expense in the third quarter of 2022 in consideration for entering into the previously announced OliPass agreement. The increase in SG&A expenses was driven primarily by higher costs associated with legal support related to ongoing litigation, sales activities, commercial support, and other corporate activities. Vanda's cash, cash equivalents, and marketable securities referred to as cash as of September 30th, 2022, was $454.8 million, representing an increase of $48.8 million in cash or 12% as compared to September 30th, 2021, and an increase of $22 million or 5% as compared to December 31st, 2021.

Turning now to our quarterly results. Total revenues for the third quarter of 2022 were $65.3 million, a 7% decrease compared to $70.1 million for the third quarter of 2021. HETLIOZ net product sales were $41.3 million for the third quarter of 2022, a 9% decrease compared to $45.6 million for the third quarter of 2021. Consistent with the first 9 months of 2022, net sales for the period reflect the continued reimbursement challenges for prescriptions for patients with Non-24.

Turning to Fanapt. Fanapt net product sales for the third quarter of 2022 were $24 million, a 2% decrease compared to $24.5 million for the third quarter of 2021. Fanat prescriptions for the third quarter of 2022, as reported by [Equibia Exponent] decreased by approximately 2% compared to the second quarter of 2022. For the third quarter of 2022, Vanda recorded net income of $3.3 million compared to net income of $7.8 million for the third quarter of 2021. The Net income for the third quarter of 2022 included an income tax provision of $2.2 million as compared to an income tax provision of $3 million for the same period in 2021. Operating expenses for the third quarter of 2022 were $61.4 million compared to $59.3 million for the third quarter of 2021. The $2.1 million increase was driven primarily by higher R&D expenses, partially offset by a decrease in SG&A expenses. The increase in R&D expenses was driven primarily by costs associated with our late-stage clinical programs for Fanapt and Tradipitant and a $3 million upfront fee expense in the third quarter of 2022 in consideration of the previously [done] OliPass agreement.

The decrease in SG&A expenses was driven primarily by a decrease in DTC awareness spending, partially offset by an increase in sales force expenditures. Operating expenses for the third quarter of 2022 were essentially flat as compared to $60.9 million for the second quarter of 2022. And again, the third quarter operating expenses included the $3 million upfront fee associated with the OliPass agreement. Vanda's cash balance as of September 30, 2022, again, was $454.8 million, representing an increase of $13.9 million or 3% as compared to June 30th, 2022. Vanda is providing an update to its prior 2022 guidance. Vanda expects to achieve the following financial objectives in 2022. Net product sales from both HETLIOZ and Fanapt of between $240 million and $270 million. This compares to prior guidance of between $240 million and $280 million; HETLIOZ net product sales of between $150 million and $170 million. This compares to prior guidance of between $150 million and $180 million; Fanapt net product sales of between $90 million and $100 million and year-end 2022 cash of greater than $450 million. This compares to prior guidance of greater than $440 million.

With that, I'll now turn the call back to Mihales.

Thank you very much, Kevin and Tim. At this point, we'll be happy to answer any questions we have.

(Operator Instructions). Your first question today comes from the line of Chris Howerton with Jefferies.

This is [Ajay] here for Chris. Can you go over what led to your decision to file on SNDA for HETLIOZ for insomnia now? Have you discussed your application with the FDA? And will you be using the 2008 study? Or is there some new data that you're submitting?

First of all, just to clarify, we have not filed yet SNDA or do we plan to file this quarter. And yes, the chronic insomnia for week study is the 2008 study. And the 2 additional studies in -- that will support this application are change -- insomnia studies or phase advance that we have reported in the past.

There are no further questions at this time. I would now like to turn the call back over to Vanda management for closing remarks.

Thank you very much for joining us for this call, and we'll talk to you in the future. Thank you.