Q2 2020 Vanda Pharmaceuticals Inc Earnings Call

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Well. Thank you to 2020 Vanda Pharmaceuticals Inc. earnings Conference call. My name is and that's not the operator for today's call.

This time.

I know with them.

Why don't we will conduct a question answer session.

Question answer session and your question. Please press Star then one and you touched on.

Please note that this conference is being recorded I'm not trying to convert to keep in mind vendors Senior Vice President and Chief Financial Officer, Kevin You may begin.

Thank you can Uh huh.

Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals second quarter 2020 performance.

Our second quarter 2020 results released this afternoon and are available on the FTC Edgar system and on our website www dot band of pharma dotcom.

In addition, we're providing live and archived version of this conference call on our website.

Joining me on today's call is Dr., Mihael, Polymeropoulos, our president and CEO.

Following my introductory remarks also update you on are ongoing activities I wouldn't comment on our financial results before opening the lines for your questions.

Before we proceed I'd like to remind everyone that various statements. We make on this call will be forward looking statements and then the meaning of federal security laws are forward looking statements are based upon current expectations that involve risks changing circumstances assumptions 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 2019.

Aided by or subsequent quarterly reports on form 10-Q current reports on form 8-K, and other filings with the FCC, which are available on the Fccs Edgar system and on our website.

We encourage all investors to read these reports in or other FCC filings.

Information, we provide on this call that's right 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 a kind of new information future events or otherwise, except as required by law without that I'd now like to turn the call over to our CEO Dr. Mihael Polymeropoulos.

Thanks, very much Kevin Hi, first of all I would like to.

I congratulate paperboard <unk> gorgeous, new it always the.

[laughter] pretty nice HELOC sort of bad debt and we wish that success.

Good afternoon, everyone and thank you for joining though.

Well the world continues to face challenges related to the called the banking dynamic.

Vanda remains focused on ways, we can innovate and improved allied or get paid since we sir.

I wouldn't began with an update on our second quarter 2020 financial performance.

Provides an update on the business.

I'm encouraged by the record performance embark on personal projects during the second quarter two cousin twin.

Despite the challenging climate, we reported a 5% year over year total revenue growth and a 7% growth as compared to the first quarter of 2020.

Herky as revenues grew by 10% compared to the second quarter, 2019, and 18% compared to the first quarter of 2020.

Well, we saw a decline fanapt ramping as compared to the second quarter of 2019 cannot perform in line with other branded drugs in the typical inside Kabi class given the second quarter 2020.

Our sales representatives have song greater flexibility and their ability to adapt to the change of environment and their territories and have found ways to effectively sort of gawkers, both remotely add in person.

In June we began our direct to consumer campaign on schizophrenia and for that aimed at creating awareness about schizophrenia and encouraging people to learn more about could appear to call options and come back.

The program has been well received by people with schizophrenia and their crops as well as healthcare practitioners.

As reported on Monday.

The FDA acceptance our filings we check yes in the people in a small against ends up with a priority review or six bonds with a target action date of December one 2002 way.

We look forward to working with the FDA doing guy to appeal of our applications medically continued efforts to build this important on treatment to patients and their crop.

If approved would be that kept his can big significant value to basins and you presented the same time, he's he's got a commercial tend to provide them.

The estimated SMS patient population the U.S. is approximately 15000 people.

This against <unk> is organized whats called out because see and at this time, we have already connected with approximately 150 to 200 SMS communist quite interested in learning more about her programs and progress.

We're working towards a comprehensive plan to ensure that are coming to people. We got somebody come to a prominent become aware off and are able to gain access to check years as soon as we obtain FDA approval.

Oh, well tradipitant.

Earlier this month, we announced they you see sort of an expanded DOCSIS protocol for Gastroparesis patients that had completed the 12 week randomization study.

This is an individual patient program that was the abuse an approved by the FDA.

Following the approval of the basin.

Recently.

No other pieces have expressed an interest in resuming could give us some trip.

Space and so now pursuing form of live TV approval and bad these prepared support expanded access protocol for the spaces.

Under this protocols that there would provides a dividend and collect safety and efficacy data as we bring took the progress of these pieces.

While these protocols I expect it to expand couldn't additional six months what to do.

Today. So the FDA has indicated that they will come to them extension beyond the six month period upon review.

Okay.

We're very excited with the developer that would be the baby give each other patients recognition that the deeper than is the only treatment that effectively reduced their gastroparesis in Pittsburgh.

Maybe just based on sort of characterize their experiences with typical its life changing.

These reports on money they cannot even further to Expediently conclude the program and pursue marketing authorization.

As we have previously communicated we believe the kind of phase three study can be the last efficacy studies required for I'd be a high.

With enrollment estimated to be completed during the first half of 2021, we expect an ideal timing for Gastroparesis later in 2021.

At the same time, we continue to pursue with the FDA, there's alyssa abide dispute over animal toxicology studies required to support a crime it can be case.

We estimate repairable I suggested basis in the U.S. is over 5 billion pesos manual cool he made a diagnose the.

The only if you have proved creep back for Gastroparesis is metoclopramide approved the 1979, which due to its become Phillips severe side effects carries a black box warning and limitations of years of no more than three months.

Based on I keep your data there over 3 million prescriptions of oral metoclopramide I'm getting.

Given that highly limited treatment options and the safety and Tolerability profile to make a compromise we believe that in your kind of be put it keeps Utica markets here and there is.

A billion dollar peak revenue opportunity provider.

On motion sickness recruitment is screen you know you pay so for the people go deeper on phase three program is ongoing.

After the successful meeting with the S.P.A.M. here. This year, we have agreement would be appropriate endpoints and trial designed to evaluate the deepest than in the two kind of motion sickness.

Well piece and I did Acacia continues with a talents that make no boats are scheduled got this time.

However, there we'll miss you know, it's really it's safe to do so.

I just don't Pico program circuitry on hold given the effects of the pandemic on the conduct of clinical trial.

Finally, the coupon for RBC the studies, so depending patients with severe form of coffee 19.

Slowed down given the significant reduction of hospitalizations in the New York idea.

We plan to conduct and im pretty monalisa and determine next steps.

I will now turn the call back to Kevin Kevin.

Thank you mobs.

I'll begin by summarizing our second quarter 2020 financial results.

Total revenues for the second quarter of 2020 were 62.2 million.

A 5% increase compared to 59.1 guy for the second quarter of 2019.

HETLIOZ net product sales were 41.6 million, a 10% increase compared to 37.8 million in the second quarter of 2019.

Year over year growth and the HETLIOZ business was driven by a combination of unit demand and net price favorability.

Second quarter of 2020, so our highest net product sales and specialty pharmacy orders since the launch of HETLIOZ and moves the result of exceptional patient adherence countered by lower new patient starts during the quarter.

As of June Thirtyth 2020, the specialty pharmacy channel held less than two weeks of inventory on hand.

Specialty pharmacy inventory on hand calculated based on trailing demand at the end of the second quarter of 2020 was flat when compared to the first quarter of 2012.

Fanapt net product sales were 20.6 million.

3% decrease compared to 21.29, and the second quarter of 2019.

As of June Thirtyth, 2020, wholesalers have lower inventory on hand calculated based on trailing demand when compared to the first quarter of 2020.

The value of this inventory change with less than $100000.

And now prescriptions in the second quarter of 2020 as reported by a quickie exponent decreased by 3% compared to the first quarter of 2020.

The performance of the for that business. During the period was impacted by the pandemic and the related disruption to patient visits with their physician and restrictions on physical access to our salesforce to health care providers.

Based on a quick you reported data for the second quarter of 2020, other branded drugs and atypical antipsychotic class. We're also negatively impacted by the pandemic.

For the second quarter of 2020, Vanda recorded net income of 8.7 million compared to net income of 11.5 million for the second quarter of 2019.

The second quarter of 2020 net income of 8.7 million included a provision for income taxes of 2.4 million as compared to a provision for income taxes of effectively zero in the second quarter of 2019.

Operating expenses in the second quarter of 2020 were 53 million compared to 49.2 million in the second quarter of 2019.

The $3.8 million increase was due to a combination of higher R&D expenses related to our late stage clinical programs and higher commercial expenses related to non 24 awareness and fanapt marketing efforts.

Operating expenses in the second quarter of 2020 decreased by 5.1 million as compared to 58.1 million in the first quarter of 2012.

The primary drivers of this decrease were lower R&D expenses related to new recruitment for clinical trials being placed on hold as a result of the global pandemic and lower corporate expenses.

We expect operating expenses in the second half of the year to be highly dependent on the developments in the global pandemic and the extent to what you continue to impact our R&D in commercial activities.

I mean, its cash cash equivalents and marketable securities referred to as cash as of June Thirtyth 2020 were 339.8 million.

Representing an increase in cash at 47.29 compared to June Thirtyth 2019.

We will continue to assess the impact of the evolving pandemic on our business and operations and will provide future updates to our financial guidance as necessary.

The financial objectives. We previously communicated included the following financial objectives.

Net product sales from both the essence map of between 240 and 260 million.

HETLIOZ net product sales of between 155 and 165 million.

Fanapt net product sales of between 85 and 95 million.

In addition vendors, providing an update to year end 2020 cash and expects to achieve the following financial objective.

Your end cash is expected to be greater than 340 million.

This compares to prior guidance of greater than 320 million.

I'll now turn the call back in the house.

Okay.

Thank you very much Kevin.

At this point, we will be happy to answer you may have.

Thank you well now begin the question answer session. Eva question. Please press Star then one on your Touchtone phone.

We wish to be more from the Q. Please press the pound or the hosking are using a speaker phone you meet the pick up that have that first before passing the numbers.

Once again, it's a question. Please press Star then one touchtone phone.

We have no questions at this time I'll now turn the call back to vendor management for closing remarks.

Thank you very bucks.

Yeah. Thank you all for joining this call I will talk to you said.

Okay.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.