Q3 2022 Vanda Pharmaceuticals Inc Earnings Call
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Okay.
Good afternoon, My name is 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.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.
If you would like to withdraw your question again press the star one thank you.
I'd now like to hand, the call over to Kevin Moran vendors 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 Dot Vanda pharma dot 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. <unk>, Polymeropoulos, our president and Chief Executive Officer, and Chairman of the board.
Additionally, we have Tim Williams, our general counsel and Gunther <unk>, our senior Vice President of business development and R&D Committee member.
Following my introductory remarks I'm also 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 31, 2021 as updated by our subsequent quarterly reports on Form 10-Q.
Our 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, but that said I would now like to turn the call over to our CEO Dr. Mahalo.
<unk>.
Okay.
Thank you, Kevin and good afternoon, everyone.
Thank you for joining us to discuss <unk> third quarter 2022 results.
Over the last quarter Vanda continue to focus on enhancing performance of it.
<unk> commercial products.
Nancy 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.
Firstly on Fanapt, our clinical program pipeline is advancing with the recent completion of enrollment in the Fanapt bipolar mania clinical study.
We expect results by the end of this quarter.
Additionally, we have completed enrollment in our <unk> W. 765 study in performance anxiety.
Also we expect results by end of this quarter.
Onto the dividend PREPA.
Preparation of the new drug application in Gastroparesis ongoing with FDA submission expected in the first half of 2023.
The submission will include the results from two adequate and well controlled studies in patients with idiopathic and diabetic Gastroparesis, which provides substantial evidence of effectiveness in the indication.
If approved <unk> 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 predicted in patients with Gastroparesis is ongoing which will provide further information on the safety and efficacy of the dividend and Gastroparesis.
We recently presented results of the pooled analysis.
Studies realized 6863301, enviable way 6862301, which included a total of 342 basis, a $175 million dividend 167 on placebo, which showed significant improvement in the clinical.
<unk> a change of nausea.
Percent knows they are free days and the gastro basis core symptom improvement scale GC ESI at week four of treatment.
In the subpopulation, which excludes non protocol compliant patients.
As determined by PK analysis, a total number of 283 basis highly significant effects were seen in each of these parameters.
Improvements were also seen of course, the other core symptoms of Gastroparesis as well. This work was recently presented at the American College of Gastroenterology Conference and received their place Dansville poster Award.
So the dividend efficacy is also appreciated by patients who are participating in an expanded access program.
Ready for a very yes.
So the dividend in motion sickness onto dividend. 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.
<unk> enrollment is ongoing in the clinical development programs for <unk> for the treatment of delayed sleep phase disorder and for sleep disturbances in autism spectrum disorder.
Additionally, we're preparing for the submission of a supplemental NDA for <unk> in the treatment of insomnia.
This submission will include the results of three adequate and well controlled studies.
One four week study in people with primary insomnia and two times in some your studies induced by phase advance obviously playing cycle.
These studies show that <unk> is effective in improving slip ons had difficulty in people with primary insomnia with effect observed as early as the first slide of treatment.
This supplemental NDA of catalyst for insomnia is planned to be submitted to the FDA this quarter.
<unk> two seven in Colorado.
We recently announced that the FDA has granted orphan drug designation for VPN to two seven for the treatment of Colorado, Colorado 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 <unk>.
Two seven to treat patients that suffer from color.
We expect to submit an investigational new drug application to the FDA for a BP or two to seven.
In 2023.
Finally, we recently announced the research and development agreement with <unk> of Korea to jointly develop a set of antisense oligonucleotides or ASO based on <unk> proprietary modified peptide nucleic acids.
This evolving discovery and development platform is intended to support vendors development of anti sense oligonucleotide based precision medicine therapeutics.
Okay.
Kevin Williams, our general Counsel will now discuss highlights of our legal regulatory activities Tim.
Thank you Bill Hollis.
I'd like to touch briefly on some key litigation activities first in intellectual property that.
As you probably know we had a trial last March in Delaware Federal Court asserting our family of heavy those patents against several generic drug manufacturers.
And this litigation has expertise ranging from $2033 25, 2035, so a positive victory on any single patent extends <unk> exclusivity at least into 2033 and possibly all the way into 2035, we expect a decision from the court no later than the end of this year.
I'll turn for a moment to our ongoing regulatory litigation.
We continue to challenge regulators, where we believe those regulators have ignored or violated law in a manner that harms our business or impact our ability to help patients.
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 had been in place for over 10 years.
Rather than getting greater authority from Congress to extend its rebate powers <unk>.
MS simply changed its long standing interpretations of the law and issued the new rule.
This new rule now subjects novel product formulations, too expensive rebate requirements and has an immediate financial consequences for innovators like vanda.
That 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 that challenge CMS on this ruling court, but we hope to be the first to prevail in striking it down.
This is just one example of our efforts to advance vantage business by holding regulators of carnival 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 the house.
Thank you very much Tim.
I'll turn now to Kevin to discuss our commercial progress and financial results.
Thank you miles.
I will begin by summarizing our financial results for the first nine months of 2022 before turning to discuss the third quarter of 2022.
Total revenues for the first nine months of 2022 were $189 9 million, a 5% decrease compared to $200 7 million for the same period in 2021.
U S net product sales of $119 6 million were the primary contributor and driver of our revenues for the first nine months of 2022 and saw an 8% decrease compared to the same period in 2021. The first nine months of 2020 to 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 nine months of 2020 to reflect a 1% decrease compared to the same period in 2021.
For the first nine months of 2020 to Vanda recorded a net loss of 600000 compared to net income of $26 1 million for the same period in 2021 the.
The net loss for the first nine months of 2022 included 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 nine months of 2022 were $190 2 million compared to $167 1 million for the first nine months of 2021 to.
$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 and consideration for entering into the previously announced only past 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.
<unk> cash cash equivalents in marketable securities referred to as cash as of September 32022 was $454 8 million, representing an increase of $48 8 million in cash or 12% as compared to September 32021, and an increase of $22 million or 5%.
Compared to December 31, 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.
<unk> net product sales were $41 3 million for the third quarter of 2022, 9% decrease compared to $45 6 million for the third quarter of 2021.
Consistent with the first nine months of 2022 net sales for the period reflects the continued reimbursement challenges for prescriptions for patients with non 24.
Turning to <unk>.
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, Fanapt prescriptions for the third quarter of 2022 as reported by equivalent exponent decreased by approximately 2% compared to the second quarter of 2022.
For the third quarter of 2020 to Vanda recorded net income of $3 3 million compared to net income of $7 8 million for the third quarter of 2021.
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 answer dividend and a 3 million upfront fee expense in the third quarter of 2022 and consideration of the previously discussed over the past 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 in the third quarter operating expenses included the $3 million upfront fee associated with the <unk> agreement.
<unk> cash balance as of September 32022, again was $454 8 million, representing an increase of $13 9 million or 3% as compared to June 32022.
Vanda is providing an update to its prior 2022 guidance.
<unk> expects to achieve the following financial objectives in 2022 net.
<unk> net product sales from both <unk> and Fanapt of between 240 and $270 million. This compares to prior guidance of between $240 and $280 million.
<unk> net product sales of between $150 $170 million. This compares to prior guidance of between 150 and $180 million.
Net product sales of between 90, 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 my House.
Thank you very much Kevin and Tim at.
At this point, we'd be happy to answer any questions you may have.
Okay.
As a reminder, if you'd like to ask a question.
<unk> followed by the number one on your telephone keypad.
Your first question today comes from the line of Chris Howerton with Jefferies.
Your line is now open.
Hi, This is Dave Hager for Chris.
Can you go over what led to your decision to file.
S NDA for the Osburn omni enel.
Have you discussed your application with the FDA and will you be using the 2008 that you or is there some new data that youre submitting.
First of all.
Just to clarify we have not filed yet this NDA how do we plan to file this quarter.
And yes, the chronic insomnia four week study is the 2008 study and the two additional.
Studies in.
That will support this application our Tianjin Sanya studies with phase advance that we have reported in the past.
Gotcha. Thank you.
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 will.
I'll talk to you in the future. Thank you.
Okay.
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Good afternoon, My name is <unk> and I Hope your conference upgrade or today.
At this time I would like to welcome everyone to the van to Pharmaceuticals third quarter 20 twenty-two earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press start followed by the number one on your telephone keypad. So.
So you would like to withdraw your question again press the start one thank you.
I would now like to hand, the call over to Kevin Moran Vendor's, Chief Financial Officer, Kevin You May begin your conference.
Thank you I'm all.
Good afternoon, and thank you for joining us to discuss man of Pharmaceuticals third quarter of 2022 performance.
Our third quarter of 2022 results released this afternoon and are available in the SEC's Edgar system.
On our website www dot <unk> dot com.
In addition, you are providing live and archived versions of this conference call on our website.
Joining me on today's call as Dr. <unk> polymer uplift, our president and Chief Executive Officer, and Chairman of the board.
Additionally, we have Tim Williams, our general Counsel and got their business are senior Vice President of business development and R&D Committee member.
Following my introductory remarks, but also update you on our ongoing activities I will then comment on our financial results before opening 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.
Are 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 31, 2021 is updated by our subsequent quarterly reports on Form 10-Q.
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.
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 revised 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 with that said I would now like to turn the call over to our CEO Dr. Mollify.
<unk>.
Thank you, Kevin and good afternoon, everyone.
Thank you for joining us to discuss vendors third quarter of 2022 results.
Over the last quarter Vander continued to focus on enhancing performance of its guidance.
Commercial products advancing clinical programs and leveraging innovation to position the company for long term growth.
I will discuss some highlights of our technical and regulatory efforts and Kevin will discuss our commercial progress.
Firstly Fanapt are clinical program pipelines advancing with the recent completion.
Element in different nap bipolar mania clinical study.
We expect results by the end of this quarter.
Additionally, we have completed enrollment in our <unk> W. 765 study and performance anxiety, which also we expect results.
The end of this quarter.
I wanted the dividend.
<unk> is a new drug application gastroparesis ongoing with FDA submission expected in the first half of 2023.
The submission will include the results from two adequate and well controlled studies in patients with idiopathic and diabetic gastroparesis, which provide substantial evidence of effectiveness in the indications.
If approved the data will be the first statement in more than 40 years approved by the FDA for people with Gastroparesis.
Additionally, 400 basin up enables 30 to a dividend interfaces with Gastroparesis.
Is ongoing which will provide further information on.
The safety and efficacy of true dividend and Gastroparesis.
We recently presented results of the pooled analysis.
Studies worldwide 6863301, and <unk> 6862301, which included a total of 342 bases and 170 500, <unk> 100, 607 on placebo, which showed significant improvements in the clinical Ed.
Oh change of nausea.
Percent nosy are free days and the gossip basis core symptom improvement scale Gcs sie do week for equipment.
In the subpopulation, which excludes non practical compliant patients.
As determined by VK analysis, and total number of 283 paces highly significant effects were seen in each of these parameters.
Improvements were also seen across the other core symptoms of gusto produces as well. This work was recently presented at the American College of Gastroenterology confidence and received a presidential posted award.
But a dividend efficacy is also appreciated the patient or participating in an expanded access program some already for over a year.
To the dividend in motion sickness on to depict and we're also progressing with the clinical program in motion sickness with a <unk> with those side currently ongoing and expected to be completed in the first half of 2023.
Headley as enrollment is ongoing in the clinical development program. So <unk> for the treatment of delayed sleep phase disorder and for sleep disturbances in autism spectrum disorder.
Additionally, we're preparing for the submission of a supplemental NDA preset list in the treatment of insomnia.
This submission will include the results of three adequate and well controlled studies.
One four week study in people with primary insomnia, and two tenths insomnia studies induced by phase advance obviously playing cycle.
These type of this show that settlers as effective in improving slip ons had difficulty in people with primary insomnia with the effect observed as early as the first night of treatment.
This supplemental NDA of calculus for insomnia is planned to be submitted to the FDA this quarter.
<unk> 227 in Colorado.
Recently announced that the FDA is granted orphan drug designation for Vps 227 for the treatment of color cause I already made some major public health challenge and recognized unmet medical need despite decades long public health efforts.
Excited about the potential of APR 22723 patients that suffer from color.
We expect to submit an investigational new drug application to the FDA for a V. P. R 227.
In 2000 2003.
Finally, we recently announced the research and development agreement with all the paths of career to jointly develop a set of <unk> nuclear tides or aso's based on all the palaces proprietary modified tied nucleic acids.
This evolving discovery and development platform is intended to support vendors development Yvonne.
Was it good nucleotide based criticism medicine therapeutics.
Steve Williams, our general Counsel will now discuss highlights of our legal regulatory activities Tim.
Thank you my house.
I would 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 is serving a family of heavy those patents against several generic drug manufacturers.
Patents in this litigation has expertise ranging from 2030 325 2035, so positive victory on any single patent extends heavily as 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 will turn for a moment to our ongoing regulatory litigation.
We continue to challenge regulators will we believe those regulators have ignored or violated law in a manner that harms our business or impacts our ability to help patients. The Prime example of this is our lawsuit against CMS violent April of this year.
At the end of 2021, CNS 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 had been in place for over 10 years.
Rather than getting greater authority from Congress to expand its rebate powers CMS simply changed its longstanding interpretations of the law and issued a new rule.
This new rule now subjects novel product formulations too expensive rebate requirements that has an immediate financial consequences for innovators like Amanda.
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 ruling court, but we hope to be the first to prevail in striking it down.
This is just one example of our efforts to advance standards business by holding regulators accountable to the law.
Our other efforts are fully described in our public disclosures and publicly available court papers.
With that I'll turn it back to the house.
Thank you very much then.
I will turn out to Kevin to discuss our commercial progress and financial results.
Thank you <unk>.
I will begin by summarizing our financial results for the first nine months of 2022 before turning to discuss the third quarter of 2022.
Total revenues for the first nine months of 2022 were $189 $9 million, a 5% decrease compared to $207 million for the same period in 2021.
Net product sales of $119 $6 million, where the primary contributor and driver of our revenues for the first nine months of 2022, and so on 8% decrease compared to the same period in 2021.
The first nine months of 2022 reflect the continued reimbursement charges for prescriptions for patients with 924.
Turning now to <unk>.
Net product sales of $73 million for the first nine months of 2022 reflect a 1% decrease compared to the same period in 2021.
For the first nine months of 2022 being recorded a net loss of 600000 compared to net income of $26 $1 million for the same period in 2021 the.
The net loss for the first nine months of 2022, including 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 nine months of 2022 were $192 million compared to 167 $1 million for the first nine 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 and consideration for entering into the previously announced only pass agreement.
The increase in SG&A expenses was driven primarily by higher cost associated with legal support related to ongoing litigation sales activities commercial support and other corporate activities.
Venus cash cash equivalents of 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 31, 2021.
Turning now to our quarterly results.
Total revenues for the third quarter of 2022 were $65.3 million, a 7% decrease compared to $71 million for the third quarter of 2021.
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.
Consistent with the first nine months of 2022 net sales for the period reflect the continued reimbursement challenges for prescriptions for patients with non 24.
Turning to Fanapt.
So now that product sales for the third quarter of 2022 or $24 million, a 2% decrease compared to $24 $5 million for the third quarter of 2021 <unk>.
<unk> prescriptions for the third quarter of 2022 as reported by it could be a exponent decreased by approximately 2% compared to the second quarter of 2022.
For the third quarter of 2022 vendor recorded net income of $3.3 million compared to net income of $7 $8 million for the third quarter of 2021.
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 or $61.4 million compared to $59.3 million for the third quarter of 2021, the $2 $1 million increase was driven primarily by higher earned you your 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 Porphin apt entered impotent and the $3 million upfront fee expense in the third quarter of 2022 in consideration of the previously described slowly past agreements.
The decrease in SG&A expenses was driven primarily by a decrease in DTC awareness spending partially offset by an increase in salesforce expenditures.
Operating expenses for the third quarter of 2022 were essentially flat as compared to 69 million for the second quarter of 2022 and again in the third quarter operating expenses included the $3 million upfront fee associated with the <unk> agreement.
Venus cash balance as of September 30th 2022, again was $454 $8 million, representing an increase of $13.9 million or 3% as compared to June 30th 2022.
<unk> provide an update to its prior 2022 guidance.
And to expect to achieve the following financial objectives in 2022 net.
Net product sales from both have the ocean fanapt of between 240 and $270 million. This compares to prior guidance of between 240 and $280 million.
Het net product sales of between 150 and $170 million <unk>.
This compares to prior guidance of between 150 and $180 million.
Net product sales of between 90 and $100 million.
And year end, 2022, cash or greater than $450 million. This comparison prior guidance of greater than $440 million.
With that I will now turn the call back to my House.
Thank you very much Kevin and Tim.
At this point, we'd be happy to answer any questions you may have.
Okay.
As a reminder.
If you would like to ask a question.
Quest Star followed by the number one on your telephone keypad.
Yeah first question today comes from the line of Chris Howerton with Jeffries.
Your line is now open.
Hi. This is <unk> can you go over what led to your decision to file.
<unk> you know.
Have you discussed your application with the FDA and will you be using the 2008 study or is there some new data that you are submitting.
Ooh.
First of all.
Just to clarify we have not filed yet the San da how do we plan to file this quarter.
And yes, the chronic insomnia for weeks, Saudi is the 2008 study and two additional.
Status in that.
That will support this application.
Tens in some municipalities buffets advance that we have reported in the <unk>.
Past.
Gotcha. Thank you.
There are no further questions at this time I would now like to turn the call back over to Xander 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.