Q1 2023 Vanda Pharmaceuticals Inc. Earnings Call

Good afternoon, My name is David and I'll be your conference operator today at this time I would like to welcome everyone to the Q1 2023, Vanda Pharmaceuticals, Inc. Earnings Conference call. Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.

If you'd like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad, if you'd like to withdraw your question Press Star one once again I'd now like to turn the call over to Vanda Pharmaceuticals, Chief Financial Officer, Kevin Moran you May begin your conference.

Thank you David Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals first quarter 2023 performance.

Our first quarter 2023 results were released this afternoon and are available on the SEC's Edgar system and on our website www dot manner 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. Mahalo, Cymer Atlas, our President Chief Executive Officer, and Chairman of the Board and Tim Williams, Our General Counsel.

Following my introductory remarks I'll 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 most recent annual report on Form 10-K as updated by our subsequent quarterly reports on Form 10-Q current reports on form 8-K, and other filings with the SEC.

<unk>, 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.

That said I would now like to turn the call over to our CEO Dr. Mark <unk>.

Thank you very much Kevin and good afternoon, everyone.

Thank you for joining us to discuss <unk> first quarter 2022 results.

I will first discuss key highlights from our clinical programs and then I will ask our general counsel.

Mr. Tim Williams.

Provide a brief update on litigation matters before turning the call over to Kevin to discuss our commercial progress and financial results.

First quarter it has been both busy and challenging.

The at risk launch of genetic testing Melton had a significant impact on the performance of Hercules and the services to our patients as well as on our operations as a whole.

We expect the challenges to continue and we await the decision when their patent litigation from the Federal Circuit Court of Appeals.

Nonetheless, we're committed to serving our patients and prescribers for <unk> 50, a M prove catalyst indications.

This quarter has been exceptionally busy all the research and development front.

Following the highly positive results for Fanapt in bipolar one disorder, we're working on the submission of a supplemental NDA for the addition of the bipolar indication to the Fanapt label.

We believe that expansion of the Fanapt label will potentially allows us access to a large commercial opportunity is the number of patients with bipolar disorder far exceed that for patients with schizophrenia.

Fortunately as we expect to request a label expansion to include the treatment of patients with insomnia, we experienced difficulties falling asleep.

In supporting these application, we're including three studies, including a four week study in patients with insomnia in two tests in seven years that as well.

We believe that Hercules has it potentially compelling profile for taking patients with this type of insomnia and could represent a significant clinical advance as well as a significant commercial opportunity.

In addition to these two supplemental NDA as we're preparing the submission of a new drug application for to the extent it even goes through paces and supported this application will be submitted to the F. D. A results of three clinical studies that we believe demonstrate substantial evidence of efficacy.

After they've done in this indication as well as the safety database to support the Tolerability of this drug.

The expanded access program is ongoing with multiple patients treated for at least six months and the longest phases base and more than two years.

We expect to complete our submission in the coming months.

In addition to the three planned regulatory submissions, we're expecting the results of our pivotal motion sickness study with a dividend by mid 2023.

Besides these late stage advances, we're also proceeding with early stage programs, including this idea of social performance anxiety with Vicki <unk> 051.

And we are focused in the short term three regulatory filings.

We're also diligently pursuing a broader regulatory strategy aimed at increased transparency and accountability of a regulatory agency that is designed to facilitate and not engage innovation in the service of People's happiness.

With that I will turn over the call to our General Counsel, Tim Williams Tim.

Thank you Paula.

I'll provide a brief recap of our ongoing litigation efforts all of which are currently matters of public record starting with our actions regarding <unk> intellectual property and generic competition.

And our <unk> Ando litigation the Federal Circuit held an oral argument in March reviewing the Delaware District Court's ruling.

As miles mentioned, we're awaiting the federal circuit's decision.

In the meantime, we continue to pursue multiple causes of action involving the manufacturers of generic Tessa melting, including Teva and ametek's.

The first of these is a patent infringement suit currently pending in Delaware relating to our <unk> method of treatment patent that was not part of our 2022 trial.

<unk> is a citizen's petition and related lawsuit challenging the fda's approval of Teva generic Tazemetostat, which does not contain brown label, representing a safety risk to those patients who have come to rely on the braille packaging included with <unk> since its launch in 2014.

Third we have sued Teva for violations of Atlanta Map Act based on problematic aspects of Teva is at risk launch of generic tenant melting.

And fourth we have filed a citizens petition with the F. D. A challenging the approval of Teva generic CASM LTE based on inadequate bioequivalence testing.

I'll shift now to our other regulatory litigation efforts.

We continue to pursue a variety of regulatory actions in an effort to hold regulators, particularly the FDA accountable to the law.

For example, we recently discovered what we believe to be a systematic improper misuse of our confidential information by the FDA to assist generic manufacturers in their anda approvals of both <unk> and Fanapt.

We filed a complaint earlier this week in the court of federal claims seeking monetary recovery for damages caused by this misconduct.

Separately over the last year, we filed six foyer lawsuits against the FDA. These.

These suits arise from FOIA requests made to the F. D. A many of which have gone unacknowledged or unanswered for longer than a year.

One of these cases the D. C District Court recently ruled in our favor and ordered the F. D. A to provide us with the medical and statistical reviews of our unapproved NDA for <unk> and jet lag.

This was a significant victory for the principle of transparency and FDA decision, making and we intend to continue demanding this type of transparency from the F. D. A.

Finally, we are continuing our other ongoing cases against the regulators.

First is our case against the F D. A for improper denial of our fast track designation for <unk> dividend in Gastroparesis.

Second is our case against the F D. A compelling it to meet the timing requirements of the food drug and cosmetic act with respect to an administrative hearing for the denial of our jet lag S. NDA for heavy OS.

Last we have appealed to the fourth circuit court of Appeals the recent adverse ruling in our lawsuit against CMS challenging the line extension rule.

We intend to continue holding regulator to carnival civil law and to protect the interest of vanda shareholders and the patients we serve.

With that I'll turn it back to your models.

You very much Tim.

I will ask Kevin to discuss our commercial progress and financial results Kevin.

The house.

I'll begin by summarizing our first quarter 2023 financial results total revenues for the first quarter of 2023, $62 5 million, a 4% increase compared to $60 2 million for the first quarter of 2022.

<unk> net product sales were $39 6 million for the first quarter of 2023, 7% increase compared to $37 million in the first quarter of 2022.

The at risk launch of a generic version of <unk> had a significant impact on <unk> performance. During the first quarter of 2023, <unk> net product sales for the first quarter of 2023 reflect higher unit sales as compared to recent periods. The higher unit sales during the first quarter of 2023 resulted in a significant increase.

Some inventory stocking at specialty pharmacy customers.

<unk> net product sales will likely decline in future periods potentially significantly related to the Atlas at risk launch of a generic version of <unk> in the U S, including the reduction of the elevated inventory levels at specialty pharmacy customers at March 31 2023.

Turning to Fanapt.

<unk> net product sales were $22 9 million for the first quarter of 2023, a 1% decrease compared to $23 2 million in the first quarter of 2022.

Net product sales in the first quarter of 2023 decreased by 6% as compared to $24 4 million in the fourth quarter of 2022.

<unk> prescriptions in the first quarter of 2023 as reported by equity exponent decreased by approximately 1% compared to the fourth quarter of 2022.

For the first quarter of 2023, Vanda recorded net income of $3 3 million compared to a net loss of $6 4 million for the first quarter of 2022.

Net income for the first quarter of 2023 included an income tax provision of $2 3 million as compared to an income tax benefit of $1 1 million for the same period in 2022.

Operating expenses in the first quarter of 2023 were $60 5 million compared to $67 9 million in the first quarter of 2022 to.

The $7 4 million decrease was primarily driven by lower SG&A expenses related to spending on marketing activities and support of our commercial products in ongoing litigation and lower R&D expenses related to the late stage Fanapt development program, partially offset by expenses related to the late stage <unk> development program and our <unk>.

At least stage ASO program.

Operating expenses in the first quarter of 2023 increased by $2 6 million as compared to $57 9 million in the fourth quarter of 2022.

This increase was primarily driven by higher SG&A expenses related to ongoing litigation and other corporate expenses, partially offset by lower spending on marketing activities in support of our commercial products and lower cost of goods sold due to the decrease in the royalty rate owed to BMS on <unk> net product sales from 10% to 5%.

Which was effective in December of 2022.

We ended cash cash equivalents and marketable securities referred to as cash as of March 31, 2023 were $501 5 million, representing an increase of $66 3 million or 15% compared to March 31, 2022, and an increase of $34 6 million or 10%.

As compared to December 31, 2022.

Given uncertainty surrounding the U S market for <unk> for the treatment of non 24 as a result of the ongoing patent litigation and the at risk launch of a generic version of heavier Vanda is unable to provide 2023 financial guidance at this time.

And it will continue to evaluate its ability to provide financial guidance as the year progresses.

With that I'll now turn the call back to my house. Thank.

Thank you very much Kevin at this point, we'll be happy to answer any questions you may have.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.

Yeah.

Showing no questions I'll now turn the call back over to Vanda management for any additional or closing remarks.

Alright, Thank you very much and thank you all for joining.

This concludes today's conference call you may now disconnect.

Okay.

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Sure.

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