Q4 2023 Vanda Pharmaceuticals Inc Earnings Call
Speaker Change: [music].
Okay.
Operator: Good afternoon. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 Vanda Pharmaceuticals Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Jamie: Good afternoon, My name is Jamie and I will be your conference operator today at this time I would like to welcome everyone to the Q4 'twenty twenty-three Vanda Pharmaceuticals, Inc earnings Conference call.
Jamie: All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would like now to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Mr. Moran, you may begin your conference. Thank you, Jeanne.
Jamie: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad if.
Speaker Change: If you would like to withdraw your question Press Star one again.
Speaker Change: I would like now to turn the call over to Kevin Moran Sandoz, Chief Financial Officer, Mr. Martin You May begin your conference.
Speaker Change: Thank you Jamie good afternoon, and thank you for joining us to discuss Vanda pharmaceuticals fourth quarter and full year of 2023 performance, our fourth quarter and full year 2023 results were released this afternoon and are available on the Sec's Edgar system and on our website Www Dot Vanda pharma dot com.
Kevin Moran: Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' fourth quarter and full year 2023 performance. Our fourth quarter and full year 2023 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.
Speaker Change: In addition, we are providing live and archived versions of this conference call on our website joining.
Kevin Moran: Joining me on today's call is Dr. Mihael Polymeropoulos, our President, Chief Executive Officer, and Chairman of the Board, and Tim Williams, our General Counsel. Following my introductory remarks, Dr. Polymeropoulos 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 uncertainty. 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, which are available We encourage all investors to read these reports and our other filings.
Speaker Change: Joining me on today's call is Dr. Mahalo, Cymer uplifts, our president and Chief Executive Officer, and Chairman of the Board and Tim Williams, Our General Counsel.
Speaker Change: Following my introductory remarks, my also update you on our ongoing activities I will then comment on our financial results before opening the lines for your questions before.
Speaker Change: 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 or 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.
Speaker Change: And managements 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, which are available on the Sec's Edgar system and on our website we incur.
Speaker Change: Average all investors to read these reports and our other filings.
Kevin Moran: 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. Mihalos Polymeropoulos. Thank you very much, Kevin. And good afternoon, everyone.
Speaker Change: 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. Mahalo Cymer Atlas.
Speaker Change: Thank you very much Kevin and good afternoon, everyone.
Mihael Hristos Polymeropoulos: Thank you for joining us to discuss Vanda's fourth quarter and full year 2023 results. I will briefly discuss key updates, and then I will ask our General Counsel, Tim Williams, to provide a brief update on litigation matters before turning the call over to Kevin Moran to discuss our financial results. We have significantly advanced our development pipeline now with three PDUFA action dates in 2024, including our Supplemental New Drug Application, or SNDA, for bipolar disorder in adults, with a PDUFA date in April of 2024, and our New Drug Application, or NDA, for gastroparesis, with a PDUFA date in September 2024. On our supplemental NDA for Hetlios in the treatment of insomnia, as we previously communicated this week, our SNDA was accepted for filing and is under review by the FDA with a PDUFA target action date of March 4, 2024.
Speaker Change: Thank you for joining us to discuss vanda fourth quarter and full year 2023 results.
Speaker Change: I will briefly discuss key updates and then I will ask our general counsel, Tim Williams to provide a brief update on litigation matters before turning the call over to Kevin Moran to discuss our financial results.
Timothy Williams: We have significantly advanced our development pipeline now with three different action dates in 2024, including our supplemental new drug application or S. N D E for bipolar one disorder in adults with a <unk> date in.
Timothy Williams: April of 2024, and our new drug application or NDA for Gastroparesis with a <unk> date in September 2024.
Timothy Williams: On our supplemental NDA for <unk> in the treatment of insomnia as we've previously communicated this week.
Timothy Williams: S. NDA was accepted for filing and is under review by the FDA, we have to do for target action date of March four 2024.
Mihael Hristos Polymeropoulos: Earlier this week, we announced that we had received a notification from the FDA stating that the FDA had identified deficiencies that preclude discussion of labeling and post-marketing requirements and commitments for this time. However, no deficiencies were disclosed by the FDA in the notification, and the FDA stated that the notification does not reflect a final decision on the information under review. However, frequently, such a communication from the FDA is followed by a complete response letter.
Timothy Williams: Earlier this week, we announced that we had received a notification from the FDA, stating that the FDA had identified deficiencies that preclude discussion of labeling and post marketing requirements and commitments at this time.
Timothy Williams: No deficiencies were disclosed by the FCA and did not vacation and the FTE safety that the notification does not reflect a final decision on the information on the review.
Timothy Williams: However, frequently such a communication from the FDA is followed by a complete response letter.
Mihael Hristos Polymeropoulos: Subsequent to that development, on February 6, 2024, Vanda filed suit in the U.S. District Court for the District of Columbia, challenging the FDA's conduct in reviewing the insomnia SMDA. Vanda is asking the D.C. District Court to compel the FDA to adhere to a legally mandated 180-day review period for SMDAs and to declare as unlawful and void the regulations the FDA relies upon to issue a On FANAPT for Bipolar I Disorder, as previously discussed in December of 2022, we announced positive results in our phase three clinical study of FANAPT in acute manic and mixed episodes with Bipolar I Disorder in adults.
Timothy Williams: Subsequent to that development on February 6024, Vanda filed suit in the U S District Court put additional Columbia challenging the Fta's comtech in reviewing the insomnia Cynthia Vanda is asking the D. C District court to compel the F D a to adhere to the legally mandated.
Timothy Williams: Third 80 day review period for this NDA and to be clear as a lawful and avoid the regulations. The FDA relies upon to issue a complete response letters.
Timothy Williams: Well, if a duct for bipolar one disorder as previously discussed in December of 2022, we announced positive results in our phase II clinical study of Fanapt in a cute man you can mixed episodes with bipolar one disorder in adults.
Mihael Hristos Polymeropoulos: Our Supplemental NDA for FANAPT in Bipolar 1 Disorder in Adults has been accepted for filing by the FDA, and the target action date has been set as April 2, 2024. We believe that this potential label expansion represents a significant opportunity for the FANAP franchise, given the high prevalence of bipolar disorder in the United States. The estimated prevalence of bipolar disorder in the U.S. adult population is multiple times higher than the estimated prevalence of schizophrenia.
Timothy Williams: Our supplemental NDA for Fanapt in bipolar one disorder in adults has been accepted for filing by the FDA and the target action date has been set is April 2024.
Timothy Williams: We believe there is potential label expansion represents a significant opportunity for the <unk> franchise, given the high prevalence of bipolar disorder in the United States. The estimated prevalence of bipolar disorder in the U S. Adult population is multiple times larger than we estimated.
Timothy Williams: The prevalence of schizophrenia.
Mihael Hristos Polymeropoulos: Additionally, on tradipotent, for patients with gastroparesis, our new drug application has also been accepted for filing by the FDA, and the target action date has been set as September 18, 2024. The FDA package is supported by the results from Clinical Ethical Studies 2301 and 3301, which we believe demonstrate substantial evidence of efficacy of tradipotent in this indication, as well as a safety database to support the tolerability of this drug. The expanded access program continues, with multiple patients having been treated for at least six months and the longest treated patient for more than three years.
Timothy Williams: Additionally, entre dividend for patients with Gastroparesis, our new drug application has also been accepted for filing by the FDA at the time.
Timothy Williams: Good action date has been set as September 18 2024.
Timothy Williams: The FDA package supported by the results from clinical efficacy studies to three one and 3301, which we believe demonstrate substantial evidence of efficacy after the dividend in this indication as well as his safety database to support the tolerability of the drug.
Timothy Williams: The expanded access program continues with multiple patients have been treated for at least six months and the longest dated basin for more than three years.
Timothy Williams: We're pleased with our revenue performance despite the challenges of the at risk launches of generic products.
Mihael Hristos Polymeropoulos: We're pleased with our revenue performance, despite the challenges of the at-risk launches of generic catalyst products. Over the course of this year, we have taken a number of actions intended to position the commercial business for continued success, both with respect to existing products and indications, as well as potential future products and indications. These include preparations for the potential near-term expansion of the FANAP franchise if we receive FDA approval for Bipolar I disorder in adults during the fourth quarter of 2023. We completed a transformative acquisition as we obtained the U.S. and Canadian rights to Ponvore, Ponacimont, from Actelium Pharmaceuticals Limited, a Johnson & Johnson company, for $100 million. Polvori is a once-a-day, oral-selected sphingosine 1-phosphate receptor 1 modulator approved by the FDA and Health Canada to treat adults with relapsing forms of multiple sclerosis. Additionally, Ponvori is a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders ranging from psoriasis to ulcerative colitis.
Timothy Williams: Over the course of this year, we have taken a number of actions intended to position the commercial business for continued success, both with respect to existing products and indications as well as potential future projects and indications.
Timothy Williams: These include preparations for the potential near term expansion of the finance franchise. If we received FDA approval for bipolar one disorder that dogs.
Timothy Williams: During the fourth quarter of 2023.
Timothy Williams: We completed a transformative acquisition as we obtain the U S and Canadian rights to put a void for us demand from Actelion Pharmaceuticals Limited a Johnson <unk> Johnson company.
Timothy Williams: For $100 million you guys toddlers.
Timothy Williams: But avoiding is a once a day oral selective sphingosine one phosphate receptor modulator approved by the FDA and health, Canada to treat adults with relapsed from forms of multiple sclerosis.
Timothy Williams: Additionally, putting voya as a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders, ranging from psoriasis to ulcerative colitis.
Mihael Hristos Polymeropoulos: Most recently, the U.S. Patent and Trademark Office issued a Notice of Allowance for Poonvori Patent Application 17- 962968, which when issued, is anticipated to expire on October 10, 2042. On the clinical side, as previously reported, in May of last year, we announced positive results from the first phase three study of tradipidine in the treatment of motion sickness. Subsequent to that, we initiated a second phase three study, which is now already 50% enrolled.
Timothy Williams: Most recently the U S patent and trademark office issued a notice of allowance for <unk> patent application 17.
Timothy Williams: 96 to 96, eight which when issued is anticipated to expire on October 10 2042.
Timothy Williams: On the clinical side as previously reported in May of last year, We announced positive results from the first phase III study of <unk> in the treatment of motion sickness.
Timothy Williams: And subsequent to that we initiated a second phase III study, which is already 50% enrolled we plan to pursue FDA approval of <unk> for motion sickness upon completion of the clinical development program.
Timothy Williams: We plan to pursue FDA approval of tradiptin for motion sickness upon completion of the clinical development program. And outside of this update on the Tradipter Motion Sickness Program, we continue to progress our robust clinical development pipeline, which includes multiple products across a wide range of therapeutic areas. With that, I will now ask Tim Williams, our General Counsel, to provide a brief update on litigation matters. Thank you, Miles.
Timothy Williams: And I would tell you that this update of the depth of our motion sickness program will continue to progress our robust clinical development pipeline, which includes multiple products across a wide range.
Timothy Williams: Therapeutic areas.
Timothy Williams: With that I will now ask people Williams <unk> General counsel to provide a brief update on litigation ladders Tim.
Timothy Williams: Thank you Melissa.
Timothy Williams: I'll provide a few litigation updates, starting with our Hetlios patent and the litigation. We filed a petition for a writ of certiorari with the Supreme Court in January, asking the court to hear our case and clarify important aspects of patent obviousness law for the benefit of lower courts, including the Federal Circuit. The defendants, Teva and Apotex, have waived their opportunity to respond to our petition, and today the petition was distributed to chambers at the Supreme Court for consideration.
Timothy Williams: I'll provide a few litigation updates starting with our <unk> and litigation.
Timothy Williams: We filed a petition with the Supreme Court in January asking the court to hear our case and clarify the important aspects of patent obviousness law for the benefit of lower courts, including the federal circuit, the defendants turbot and ametek's have waived their opportunity to respond to our petition and today the petition was distributed.
To chambers at the Supreme Court for consideration, we await their review.
Timothy Williams: We await their review. Next, I'll provide an update on our case pending in the U.S. Court of Federal Claims. In May of 2023, we sued the U.S. government for the uncompensated taking of our trade secrets and confidential information. This suit alleges a pattern of FDA reviewers improperly disclosing proprietary information to generic companies as part of the review of generic versions of FNAP and Hetlios.
Timothy Williams: Next I'll provide an update of our case pending in the U S Court of federal claims.
Timothy Williams: In May of 2023, we see the U S government for uncompensated, taking of our trade secrets and confidential information.
Timothy Williams: This suit alleges a pattern of FDA reviewers and properly disclosing proprietary information to generic companies as part of the review of generic versions of Fanapt and <unk>.
Timothy Williams: The U S government moved to dismiss the case.
Timothy Williams: After a January hearing on the matter, the court denied the government's motion to dismiss, allowing us to proceed with fact discovery, which will include document production and depositions of FDA personnel involved in these matters. We've also had positive developments in our cases challenging other agency actions by the FDA. In September of 2022, we sued to compel the FDA to adhere to the procedural and timing requirements of the Food Drug and Cosmetic Act with respect to our jet lag SNDA for Hetlio. In January, the court ruled in our favor by finding that the FDA violated the Food Drug and Cosmetic Act and ordering the FDA to take action on our hearing requests by March 5th, more than four months earlier than it had originally proposed to the court. The court found the FDA's conduct to be both unlawful and unreasonable.
Timothy Williams: After a January hearing on the matter the court denied the government's motion to dismiss allowing US to proceed with fact discovery, which will include document production and depositions of FDA personnel involved in these matters.
Timothy Williams: We've also had positive developments in our cases challenging other agency actions with the FDA.
Timothy Williams: In September of 2022, we sued to compel the FDA to adhere to the procedural and timing requirements of the food drug cosmetic Act with respect to our Jetlag S. NDA for heavy OS.
Timothy Williams: In January the court ruled in our favor by finding that the FDA violated the food drug cosmetic act and ordering the FDA to take action on our hearing request by March 5th.
Timothy Williams: More than four months earlier than FDA had originally proposed to the court.
Timothy Williams: The court found the fda's conduct to be both unlawful an unreasonable.
Timothy Williams: Specifically, the judge noted that the law requires hearings to commence within 300 days after an SNDA is submitted by a sponsor. Yet, our SNDA for jet lag has been pending for over 2,000 days, and it has been over 500 days since we requested a hearing. As I mentioned, the judge has demanded that FDA act on our hearing request by March 5th, and we await FDA's action by that date. Just yesterday, we filed an additional suit challenging FDA's unlawful conduct in reviewing our Insomnia SNDA for Hetlios. As disclosed earlier this week, we received a notification from the FDA stating that it had identified deficiencies that preclude discussion of labeling, even though no deficiencies were identified. This communication arrived more than 270 days after our submission, which is well beyond the 180 days prescribed by the statute. Further, by sending us this letter rather than taking the specific actions prescribed in the Food Drug and Cosmetic Act, we believe the FDA is seeking to avoid final action that can be reviewed by a court of law.
Timothy Williams: Specifically the judge noted that the law requires hearing six months within 300 days after an SBA as submitted by a sponsor yet our SBA for jet lag has been pending for over 2000 days and it has been over 500 days since we've requested a hearing.
Timothy Williams: As I mentioned and the judge has demanded the FDA accident or hearing request by March 5th and we await fda's action by that date.
Timothy Williams: Just yesterday, we filed an additional suit challenging fda's unlawful conduct and reviewing our insomnia F&B eight for <unk>.
Timothy Williams: As disclosed earlier this week, we received a notification from the FDA, stating that it had identified deficiencies that preclude discussion of labeling even though no deficiencies were identified.
Timothy Williams: This communication arrived more than 270 days after our submission which is well beyond the 180 days prescribed by the statute.
Timothy Williams: Further by sending us this letter rather than taking the specific actions prescribed in the food drug cosmetic Act. We believe the FDA is seeking to avoid final actions that can be reviewed by a court of law.
Timothy Williams: In our suit filed last night, we are asking the court to compel the FDA to adhere to the legally mandated 180-day review period and to declare as unlawful and void the regulations the FDA relies upon to avoid judicially reviewable final decisions. We continue to pursue additional litigation related to our Hetlios patents, generic competitors, interactions with regulators, and various Freedom of Information Acts. Details of all of our cases can be found in our disclosures and in publicly available court records.
Timothy Williams: In our suit filed last night, we are asking the court to compel the FDA to adhere to the legally mandated mandated a 180 day review period.
Timothy Williams: And to declare as unlawful avoid the regulations the FDA relies upon to avoid judicially renewable final decisions.
Timothy Williams: We continue to pursue additional litigation related to our <unk> patents generic competitors interactions with regulators and various freedom of information Act disputes.
Timothy Williams: Sales of all of our cases can be found in our disclosures and in publicly available Court records.
Kevin Moran: Thank you. Thank you very much, Tim. I will now turn the call over to Kevin Moran, our Chief Financial Officer, to discuss our financial results. Kevin?
Becky models. Thank.
Becky: Thank you very much Tim I will now turn.
The call to Kevin Moran, our Chief financial Officer to discuss our financial results Kevin.
Kevin Moran: Thank you, Myles. And as Myles mentioned, I'll begin by highlighting the acquisition of the U.S. and Canadian rights to Panvori from Actillion Pharmaceuticals Limited or Janssen, a Johnson & Johnson company, for $100 million that was completed in December of 2023 and where the transition is ongoing. Thymvoria is a once-daily oral-selective S1P1R modulator approved by the FDA and Health Canada to treat adults with relapsing forms of multiple sclerosis. During this transition period, Janssen will continue to operate the business pursuant to a customary transition agreement while Vanda and Janssen transition regulatory and supply responsibility for Pimple Ray to Vanda. This acquisition represents a significant milestone for Vanda, expanding our commercial portfolio, diversifying our sources of revenue, and providing Vanda with the opportunity to develop a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders, ranging from psoriasis to ulcerative colitis.
Kevin Moran: Thank you boss and as miles mentioned I'll begin by highlighting the acquisition of the U S and Canadian rights to <unk> from Actelion Pharmaceuticals limited or Janssen, a Johnson <unk> Johnson company for $100 million that was completed in December of 2023, and where the transition is ongoing.
Kevin Moran: <unk> is a once daily oral selective <unk> modulator approved by the FDA and health, Canada to treat adults with relapsed and forms of multiple sclerosis.
Kevin Moran: During this transition period Janssen will continue to operate the business pursuant to our customary transition agreement, while vanda and Janssen transition regulatory and supply responsibility for them already to vanda.
Kevin Moran: This acquisition represents a significant milestone for vanda expanding our commercial portfolio diversifying our sources of revenue and providing van to the opportunity to develop a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders, ranging from psoriasis to ulcerative colitis.
Kevin Moran: Turning now to our financial results I will first discuss the results for the full year 2023 before turning to discuss the fourth quarter of 2023.
Kevin Moran: Total revenues for the full year, 2023, or $192 6 million or 24% decrease compared to $254 4 million for the same period in 2022.
Kevin Moran: Turning now to our financial results, I'll first discuss the results for the full year 2023 before turning to discuss the fourth quarter of 2023. Total revenues for the full year 2023 were $192.6 million, a 24% decrease compared to $254.4 million for the same period in 2022. Hetlio's net product sales were $100.2 million for the full year 2023 and saw a 37% decrease compared to $159.7 million for the same period in 2022. The at-risk launch of generic versions of Hetlios had a significant impact on Hetlios' performance during 2023. The decrease in net product sales was attributable to a decrease in price, net of deductions, and a decrease in volume. However, our Hetlios net product sales for the first quarter of 2023 reflected higher unit sales as compared to recent prior periods and has resulted in a significant increase in inventory stocking at specialty pharmacy customers throughout 2023. Turning now to Snap.
Kevin Moran: <unk> net product sales were $100 2 million for the full year 2023, and saw a 37% decrease compared to $159 7 million for the same period in 2022.
Kevin Moran: The at risk launch of generic versions of heavier had a significant impact on <unk> performance. During 2023. The decrease in net product sales was attributable to a decrease in price net of deductions and a decrease in volume our heaviest net product sales for the first quarter of 2023 reflected higher unit sales as compared to recent prior periods and as a <unk>.
Kevin Moran: As noted in a significant increase of inventory stocking at specialty pharmacy customers throughout 2023.
Kevin Moran: Turning now to snap.
Kevin Moran: Net product sales of $90 9 million for the full year 2023 reflect a 4% decrease compared to $94 7 million for the same period in 2022.
Kevin Moran: <unk> net product sales were $1 6 million for the full year 2023. These net product sales reflect the revenue generated during the period between the product acquisition date of December seven 2023, and the year end on December 31 2023.
Kevin Moran: For the full year 2023, Vanda recorded net income of $2 5 million compared to net income of $6 3 million for the same period in 2022.
Kevin Moran: Net income for the full year 2023 included an income tax provision of $3 8 million as compared to an income tax provision of $5 million for the same period in 2022.
Kevin Moran: Operating expenses for the full year 2023 were $206 6 million compared to $248 1 million for the same period in 2022.
Kevin Moran: FNAP net product sales of 90.9 million for the full year 2023 reflect a 4% decrease compared to 94.7 million for the same period in 2022. PNVORI net product sales were $1.6 million for the full year 2023. These net product sales reflect the revenue generated during the period between the product acquisition date of December 7, 2023, and the year end on December 31, 2023. For the full year 2023, Vanda recorded net income of $2.5 million compared to net income of $6.3 million for the same period in 2022. Net income for the full year 2023 included an income tax provision of $3.8 million as compared to an income tax provision of $5 million for the same period in 2022. Operating expenses for the full year 2023 were $206.6 million compared to $248.1 million for the same period in 2022.
Kevin Moran: The $41 $5 million decrease was primarily driven by lower R&D expenses, lower SG&A expenses and lower cost of goods sold the decrease in R&D expenses was primarily driven by decreases related to our late stage for in App development program, partially offset by increases related to our true dividend and <unk> <unk> also referred to it.
Kevin Moran: TD eight development programs the.
Kevin Moran: The decrease in SG&A expenses was primarily driven by lower expenses associated with marketing sales and commercial support activities for our commercial products.
Kevin Moran: The lower cost of goods sold is due to lower heavy U S. Net product sales and the decrease in the royalty rate owed to BMS on heavier net product sales from 10%, 5% effective in December 2022.
Kevin Moran: <unk> cash cash equivalents and marketable securities referred to as cash as of December 31, 2023 was $388 3 million, representing a decrease of $101 6 million compared to cash as of September 32023.
Kevin Moran: And a decrease of $78 6 million compared to December 31, 2022.
Kevin Moran: The change in cash during both the fourth quarter of 2023 and the full year of 2023 reflects the completed acquisition of <unk> from Janssen for $100 million.
Kevin Moran: Turning now to our quarterly results total revenues for the fourth quarter of 2023 were $45 3, million% to 30% decrease compared to $64 5 million for the fourth quarter of 2022.
Kevin Moran: The $41.5 million decrease was primarily driven by lower R&D expenses, lower SG&A expenses, and lower cost of goods sold. The decrease in R&D expenses was primarily driven by decreases related to our late-stage FNAP development program, partially offset by increases related to our tridipidine and VHX896, also referred to as PD-8 development programs. The decrease in SG&A expenses was primarily driven by lower expenses associated with marketing, sales, and commercial support activities for a commercial product.
Kevin Moran: Total revenues for the fourth quarter of 2023 increased by 17% as compared to $38 8 million in the third quarter of 2023.
Kevin Moran: <unk> net product sales were $21 1 million for the fourth quarter of 2023, or 47% decrease compared to $40 1 million in the fourth quarter of 2022.
Kevin Moran: <unk> net product sales in the fourth quarter increased by 20% as compared to $17 5 million in the third quarter of 2023.
Kevin Moran: The at risk launch of a generic version of heavier <unk> continued to have a significant impact on <unk> performance during the fourth quarter of 2023. The decrease in net product sales relative to the fourth quarter of 2022 was attributable to a decrease in volume.
Kevin Moran: The lower cost of goods sold is due to lower Hetlios Net Product sales and a decrease in the royalty rate owed to BMS on Hetlios Net Product sales from 10% to 5% effective in December 2022. Vanda's cash, cash equivalents, and marketable securities, referred to as cash, as of December 31st, 2023, was $388.3 million, representing a decrease of $101.6 million compared to cash as of September 30th, 2023 and a decrease of $78.6 million compared to December 31st, 2022. The change in cash during both the fourth quarter of 2023 and the full year of 2023 reflect the completed acquisition of Convoree from Janssen for $100 million. Turning now to our quarterly results. Total revenues for the fourth quarter of 2023 were $45.3 million, a 30% decrease compared to $64.5 million for the fourth quarter of 2022.
Kevin Moran: Our <unk> net product sales as reported for the first quarter of 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the first quarter of 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers throughout 2023.
Kevin Moran: <unk> net product sales during the fourth quarter of 2023 reflect lower unit sales as compared to the fourth quarter of 2022, which was partially attributable to the continued reduction of the elevated inventory levels at specialty pharmacy customers from the end of the first quarter of 2023.
Turning now to Fanapt.
Kevin Moran: Fanapt net product sales were $22 6 million for the fourth quarter of 2023% to 7% decrease compared to $24 4 million in the fourth quarter of 2022.
Kevin Moran: Fanapt net product sales in the fourth quarter of 2023 increased by 6% as compared to $21 3 million in the third quarter of 2023.
Kevin Moran: Fanapt prescriptions in the fourth quarter of 2023 as reported by <unk> decreased by approximately 3% compared to the third quarter of 2023.
Kevin Moran: <unk> net product sales of $1 6 million for the fourth quarter of 2023 again. These net product sales reflect the revenue generated during the period between the product acquisition date of December seven 2023 and year end on December 31 2023.
Kevin Moran: Total revenues for the fourth quarter of 2023 increased by 17% as compared to $38.8 million in the third quarter of 2023. Hetlio's net product sales were $21.1 million for the fourth quarter of 2023, a 47% decrease compared to $40.1 million in the fourth quarter of 2022. Hetlios net product sales in the fourth quarter increased by 20% as compared to 17.5 million in the third quarter of 2023. The at-risk launch of a generic version of Hetlios continued to have a significant impact on Hetlios' performance during the fourth quarter of 2023. The decrease in net product sales relative to the fourth quarter of 2022 was attributable to a decrease in volume.
Kevin Moran: For the fourth quarter of 2023, Vanda reported net loss of $2 4 million compared to net income of $6 9 million for the fourth quarter of 2022 and net income of 100000 in the third quarter of 2023.
Kevin Moran: The net loss for the fourth quarter of 2023 included an income tax provision of $1 7 million as compared to an income tax provision of $2 8 million for the same period in 2022, and an income tax benefit of <unk> 3 million in the third quarter of 2023.
Kevin Moran: Operating expenses in the fourth quarter of 2023 were $52 4 million compared to $57 9 million in the fourth quarter of 2022.
Kevin Moran: The $5 5 million decrease was primarily driven by lower SG&A expenses related to spending on sales activities for our commercial products and legal expenses and lower cost of goods sold due to lower heavy U S. Net product sales and the decrease in the royalty rate owed to BMS on U S. Net product sales from 10% to 5% effective in December 2022.
Kevin Moran: Our Hetlios net product sales as reported for the first quarter of 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the first quarter of 2023 resulted in a significant increase in inventory stocking at specialty pharmacy customers throughout 2023. Hetley Ocenet product sales during the fourth quarter of 2023 reflect lower unit sales as compared to the fourth quarter of 2022, which was partially attributable to the continued reduction of the elevated inventory levels at specialty pharmacy customers from the end of the first quarter of 2023. Turning now to FNAF.
Kevin Moran: Partially offset by higher R&D expenses related to our <unk> program, including the NDA filing fee and the milestone payment made upon acceptance of the NDA for filing and manufacturing expenses associated with our <unk> program.
Kevin Moran: Operating expenses in the fourth quarter of 2023 increased by $7 6 million as compared to $44 8 million in the third quarter of 2023.
Kevin Moran: This increase was primarily driven by one time expenses, including $2 4 million of expense recorded for the <unk> NDA filing fee.
Kevin Moran: $2 million for the associated NDA milestone payment to Eli Lilly and $3 million of VHS, even six manufacturing costs.
Kevin Moran: 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 generic versions of <unk>. We ended unable to provide 2024 financial guidance. At this time, we will continue to evaluate its ability to provide financial guidance in future periods.
Kevin Moran: FNAP net product sales were $22.6 million for the fourth quarter of 2023, a 7% decrease compared to $24.4 million in the fourth quarter of 2022. FNAP net product sales in the fourth quarter of 2023 increased by 6% as compared to $21.3 million in the third quarter of 2023. FNAP prescriptions in the fourth quarter of 2023, as reported by Equibia Exponent, decreased by approximately 3% compared to the third quarter of 2023.
Kevin Moran: <unk> net product sales will likely decline in future periods potentially significantly related to the at risk launch of generic versions of heavier in the U S. <unk>.
Kevin Moran: Additionally, the company constrained heaviest net product sales for the full year 2023 to an amount not probable of significant revenue reversal as a result, <unk> net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration are resolved.
Kevin Moran: With that I'll now turn the call back to Myles. Thank.
Myles: Thank you very much Kevin at this point, we will be happy to answer any questions you may have.
Kevin Moran: Convory net product sales were $1.6 million for the fourth quarter of 2023. Again, these net product sales reflect the revenue generated during the period between the product acquisition date of December 7, 2023, and year end on December 31, 2020. For the fourth quarter of 2023, Vanda recorded a net loss of $2.4 million, compared to net income of $6.9 million for the fourth quarter of 2022 and net income of $100,000 in the third quarter of 2023. The net loss for the fourth quarter of 2023 included an income tax provision of $0.7 million as compared to an income tax provision of $2.8 million for the same period in 2022 and an income tax benefit of $0.3 million in the third Operating expenses in the fourth quarter of 2023 were $52.4 million, compared to $57.9 million in the fourth quarter of 2022.
Myles: Again, if you would like to ask a question press star followed by the number one on your telephone keypad.
Speaker Change: We will now pause to compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: And your question comes from Andrew Tsai with Jefferies. Your.
Andrew Tsai: Your line is open.
Andrew Tsai: Hey, good afternoon, thanks for taking my questions and congratulations on.
Andrew Tsai: The acquisition of <unk>.
Andrew Tsai: So maybe a couple of questions on that asset first what do you guys think you can do that J&J might not have been able to do in terms of driving sales growth upon Lori and then secondly.
Andrew Tsai: Why is this.
Andrew Tsai: <unk> differentiated from the other multiple sclerosis drugs out there what's the appeal here.
Speaker Change: Thank you very much angio.
Speaker Change: First of all to give the background here for everyone.
Speaker Change: <unk> belongs in the class of sphingosine one phosphate.
Speaker Change: Postpaid.
Speaker Change: Receptor analogues.
Speaker Change: <unk> mechanism of action is by.
Speaker Change: Sequestering or preventing the egress of lymphocytes from painful in lymph nodes. So that they can have wide applications in disorders.
Speaker Change: Where you have.
Speaker Change: The immune attack.
Kevin Moran: The $5.5 million decrease was primarily driven by lower SG&A expenses related to spending on sales activities for our commercial products and legal expenses, as well as lower cost of goods sold due to lower Hetlios Net Product Sales and the decrease in the royalty rate owed to BMS on Hetlios Net Product Sales from 10% to 5% effective in December 2022. Partially offset by higher R&D expenses related to our tridipinant program, including the NDA filing fee and the milestone payment made upon acceptance of the NDA for filing, and manufacturing expenses associated with our VHX 896 program. Operating expenses in the fourth quarter of 2023 increased by $7.6 million as compared to $44.8 million in the third quarter of 2023.
Speaker Change: On a system or Oregon, or the body in the case of multiple sclerosis. This central nervous.
Speaker Change: System.
Speaker Change: As you also know this class of drugs.
Speaker Change: It has several members it started some years ago with <unk>.
Speaker Change: Golly mode.
Speaker Change: <unk> now generic.
Speaker Change: And he has expanded with additional members in the class.
Speaker Change: We believe that.
Speaker Change: <unk> mud.
Speaker Change: Due to its receptor specificity.
Speaker Change: And quick visibility of effect can play a critical role for.
Speaker Change: <unk> for the treatment of multiple sclerosis for remaining groups of patients.
Speaker Change: Firstly <unk>.
Speaker Change: Those that require a specificity avoiding.
Speaker Change: Side effects and.
Quick very stability.
Speaker Change: It has been clear.
Speaker Change: That this drug may be attractive, especially to women of childbearing age.
Yes.
Speaker Change: They contemplate family planning.
Speaker Change: In that.
Speaker Change: To drive.
Speaker Change: We'll come out of.
Speaker Change: Circulation within a short periods of time in a matter of days.
Kevin Moran: This increase is primarily driven by one-time expenses, including $2.4 million of expense recorded for the tridipinant NDA filing fee, $2 million for the associated NDA milestone payment to Eli Lilly, and $3 million of VHX 896 manufacturing costs. Given uncertainty surrounding the U.S. market for Hetlios for the treatment of NON24 as a result of the ongoing Hetlios patent litigation and the at-risk launch of generic versions of Hetlios, Vanda is unable to provide 2024 financial guidance at this time. However, Vanda will continue to evaluate its ability to provide financial guidance in future periods.
Speaker Change: And the same is true about the recovery of the lymphocyte so directly to your question.
Speaker Change: The increased specificity and quick reverse stability.
Speaker Change: Both in amount and lymphocyte count make this drug differentiated and attractive.
Speaker Change: Second part of your question was.
Speaker Change: What can we do different from J&J.
Speaker Change: And the simple answer is we plan to marketed.
Speaker Change: J&J for.
Speaker Change: Their own business reasons.
Speaker Change: Had decided to remove their market in support of the project.
Speaker Change: Well they were in the process of identifying a patent.
Mihael Hristos Polymeropoulos: Hetlios net product sales will likely decline in future periods, potentially significantly, related to the at-risk launch of generic versions of Hetlios in the U.S. Additionally, the company constrained Hetlios Net Product Sales for the full year 2023 to an amount not probable of a significant revenue reversal. As a result, Hetlios Net Product Sales could experience variability in future periods as the With that, I'll now turn the call back to Mollis. Thank you very much, Kevin. At this point, we will be happy to answer any questions you may have. Again, if you would like to ask a question, press the star followed by the number one on your telephone keypad.
Speaker Change: A partner to divest it too.
Speaker Change: So we believe there is significant opportunity.
Speaker Change: Both.
Speaker Change: With <unk>.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: Most can cirrhosis centers.
Speaker Change: And consumers.
To be able to increase the awareness of the existence.
Speaker Change: This potentially quite useful project.
Speaker Change: And beyond that.
Speaker Change: As we have learned.
Speaker Change: This type of mechanism of action can be useful in an array of autoimmune disorders.
Speaker Change: In proud advice of course are the.
Operator: We will now pause to compile the Q&A roster, and your question comes from Andrew Difei with Jeff. Your line is open.
Speaker Change: Examples of.
Speaker Change: The effect in ulcerative colitis.
Speaker Change: And the BMS compound has been successfully address that.
Speaker Change: As well as.
Andrew Difei: Hey, good afternoon. Thanks for taking my questions and big congratulations on the acquisition of Ponvore. So maybe a couple of questions on that asset. First, what do you guys think you can do that J&J might not have been able to do in terms of driving sales growth for Ponvore? And then, secondly, why is this differentiated from the other multiple sclerosis drugs out there? What's the appeal here?
Speaker Change: Pfizer's compound interestingly not approved for multiple sclerosis, and not pursue it.
Speaker Change: <unk> actually directly.
Speaker Change: Been approved now for ulcerative colitis.
Speaker Change: And we think our drug.
Speaker Change: <unk> is well positioned from the mechanism of action.
With very key similarities to the receptor binding.
Speaker Change: Fact that both the BMS compound and the Pfizer compound to have both of them successful in ulcerative colitis.
Mihael Hristos Polymeropoulos: Thank you very much, Andrew. First of all, to give the background here for everyone, Punvori, punesimal, belongs in the class of sphingosine-1p-first fate receptor analogs. And their mechanism of action is by sequestering or preventing the egress of lymphocytes from peripheral lymph nodes so that they can have wide applications in disorders where you have an autoimmune attack on a system or organ of the body. In the case of multiple sclerosis, this is the central nervous system.
Give us reason to believe that could be successful in that indication.
Speaker Change: In addition.
Speaker Change: Chilean at J&J company had conducted.
Speaker Change: Hey.
Speaker Change: Phase two legs.
Speaker Change: Study in psoriasis, which was successful.
Speaker Change: And we are evaluating out a path to.
Speaker Change: To continue the development.
Speaker Change: In that indication.
Speaker Change: As well.
Speaker Change: And as I said the opportunities.
Mihael Hristos Polymeropoulos: As you also know, this class of drugs has several members. It started some years ago with fingolimod, or gilenya, now generic, and has expanded with additional members in the class. We believe that Pronecimod, due to its receptor specificity and quick reversibility of effect, can play a critical role in the treatment of multiple sclerosis for many groups of patients, especially for those that require specificity to avoid side effects and quick reversibility. It has been clear that this drug may be attractive, especially to women of childbearing age, as they contemplate family planning, in that the drug will come out of the circulation within a short period of time, in a matter of days, and the same is true about the recovery of the lymphocytes.
Speaker Change: Around the <unk> de Oro.
Speaker Change: Shingles in one for state analog like convoy are just beginning to be realized and likely.
Speaker Change: There will be light.
Speaker Change: We are developing our plans now we're in the middle so the transition.
Speaker Change: Period, it will be able to talk more about these plans in the future.
Thanks, that's very helpful. Thank you for the color.
And then shifting gears to the headlines for insomnia news.
Speaker Change: Would be the realistic scenario here.
Speaker Change: Do you start hiring a sales force or do you wait until approval how does this all work out thank you.
Speaker Change: Andrew Let me clarify are you asking about the <unk> or the bipolar and Fanapt.
Mihael Hristos Polymeropoulos: So directly to your question, the increased specificity and quick reversibility, both in amount and lymphocyte counts, make this drug differentiated and attractive. The second part of your question was, what can we do different from J&J? And the simple answer is, we plan to market it. J&J, for their own business reasons, had decided to remove their marketing support for the product while they were in the process of identifying a patent, and a partner to sell it.
Hello, Ashwin insomnia.
Speaker Change: Yes.
Ashwin: Have you seen in Sanya.
Ashwin: Of course, we think given the.
Ashwin: Negative laggard by the FDA of.
Ashwin: Deficiencies, although not named preclude label negotiations, we think the most historical likely outcome is that it will be followed by a complete response letter.
We cannot imagine where the deficiencies are for these melatonin agonist now marketed for 10 years in <unk>.
Mihael Hristos Polymeropoulos: So we believe there is a significant opportunity, both with neurologists and multiple sclerosis centers and consumers, to be able to increase the awareness of the existence of this potentially quite useful product. And beyond that, as we have learned, this type of mechanism of action can be useful in an array of autoimmune disorders. In front of us, of course, are the examples of the effect in ulcerative colitis, and the BMS compound has been successfully addressed in that, as well as Pfizer's compound, interestingly not approved for multiple sclerosis, did not pursue it, but has been approved now for ulcerative colitis. And we think our drug, PUNVORI, is well positioned from the mechanism of action with very key similarities to the receptor binding effects that both the In addition, Actelion, a J&J company, conducted a phase two large study in psoriasis, which was successful.
Ashwin: If you can discern the indications and with the file.
Ashwin: <unk>.
Ashwin: Clearly unambiguously supports the effects of the drug and sleep onset in Sanya.
Speaker Change: We are not.
Speaker Change: Expanding the sales force and we're not planning any immediate marketing plans there.
Got it and then maybe just speaking of.
Speaker Change: <unk> for bipolar then.
Speaker Change:
Speaker Change: Or as well as for dividend for Gastroparesis. My final question is.
Speaker Change: Is your confidence in those applications the same despite the.
The insomnia development and second to that is are you.
Speaker Change: Hiring ahead of the.
Speaker Change: Potential Purdue that decisions. Thank you.
Speaker Change: Yes.
Speaker Change: So just to talk about confidence.
Speaker Change: Of course, we're optimistic because we believe in the science and the robustness of our.
Speaker Change: Packages that we have already communicated with you all.
Mihael Hristos Polymeropoulos: And we are evaluating now a path to continue the development of that indication as well. And as I said, the opportunities around the once-day oral sphingosine 1-phosphate analog like PUNVOI are just beginning to be realized, and I expect them to be wide. We're developing our plans now. We're in the midst of the transition period. And we'll be able to talk more about these plans in the future. Thanks, that's very helpful. Thank you for the color. And then, shifting gears to the Hetlios for Insomnia news. What would be the realistic scenario here?
Speaker Change: But of course.
Speaker Change: The experience with the agencies that we are prepared for and predictable results.
Speaker Change: And having said that.
Speaker Change: We are cautiously working towards being ready to expand the already existing.
Speaker Change: <unk> dot.
Speaker Change: Sales force and I will let Kevin.
Speaker Change: Tom.
Kevin Moran: Give you a little more color of how we think about cadence of operational expenses there.
Speaker Change: And the same thing holds true.
Mihael Hristos Polymeropoulos: Do you start hiring a sales force, or do you wait until approval? How does this all work out? Thank you. Andrew, let me clarify. Are you asking about insomnia in hetaliers or the bipolar and fanatic? Helios for insomnia.
Speaker Change: Further dividend Gastroparesis.
Speaker Change: We have done.
Speaker Change: Work prelaunch.
Speaker Change: To understand the market and develop a.
Speaker Change: Our commercial plan, but of course were quite a few months away.
Mihael Hristos Polymeropoulos: Yeah, for headloss and insomnia, of course. We think given the negative letter by the FDA of deficiencies, although not named, preclude labor negotiations. We think the most likely outcome is that it will be followed by a complete response letter. We cannot, you know, imagine what the deficiencies are for this melatonin agonist now marketed for 10 years in circadian disorder indications and with a dossier that clearly and ambiguously supports the effect of the drug in sleep onset insomnia. We are not expanding the headless sales force, and we're not planning any immediate marketing plans there. I got it. And then maybe just speaking of FNAP for bipolar disorder, then... or as well as tradipidine for gastroparesis.
Speaker Change: From an agency action in September of 2018.
Speaker Change: And yet again, there we're proceeding very cautiously with the expenditures ahead of that decision, but I will let Kevin give you more comfort yes. Thanks.
Kevin Moran: Thanks, Andrew on the on the finance side specifically.
Kevin Moran: Charles mentioned, we have a very well established commercial infrastructure, given <unk> history on the market and as well as heavy doses history on the market and the supporting activities and infrastructure associated with those.
Kevin Moran: That being said, we've certainly taken actions to be prepared to expand quickly on positive news. So I would expect from a cadence perspective that there'll be some preparation costs that we've.
Mihael Hristos Polymeropoulos: My final question is, is your confidence in those applications the same despite the insomnia development? And second to that is, are you, you know, hiring ahead of potential PDUVA decisions? Thank you. Yeah, so just to talk about confidence. Of course, we're optimistic because we believe in science and the robustness of our packages that we have already communicated with you all. But, of course, our experience with the agency shows that we are prepared for unpredictable results.
Kevin Moran: Began to execute against the first quarter, but more so it would be upon a positive development that we would see a kind of a cadence change.
Speaker Change: Okay very good. Thank you. Thank you all for the development.
Thank you very much Andrew Thank you.
Speaker Change: There are no further questions at this time I will now turn the call back over to Vanda management for closing remarks.
Speaker Change: Thank you very much all for joining us on this call. Thank you.
Speaker Change: Sure.
Speaker Change: This concludes today's call you may now disconnect.
Mihael Hristos Polymeropoulos: And having said that, we're cautiously working towards being ready to expand the already existing FANAPTA sales force. And I will let Kevin give you a little more color of how we think about the cadence of operational expenses there. And the same thing holds true for Tradipta and Gastroparesis.
Speaker Change: Okay.
Speaker Change: [music].
Mihael Hristos Polymeropoulos: We have done work pre-launch to understand the market and develop a commercial plan. But, of course, we're quite a few months away from agency action in September of 2018. And yet again, there, we're proceeding very cautiously with the expenditures ahead of that decision. I will let Kevin give you more coverage. Yep, and thanks, Andrew. On the FNAP side, specifically, as Miles mentioned, we have a very well-established commercial infrastructure given FNAP's history on the market, as well as Hetlios' history on the market, and the supporting activities and infrastructure associated with those. That being said, we've certainly taken actions to be prepared to expand quickly on positive news. So I'd expect from a cadence perspective that there'll be some preparation costs that we began to execute against in the first quarter, but more so it would be upon a positive development that we would see a kind of cadence change.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Kevin Moran: Okay, very good. Thank you. Thank you all for the development. Thank you very much, Andrew. There are no further questions at this time. I will now turn the call back over to Vanda Management for closing remarks. Thank you very much to all for joining us on this call. Thank you. This concludes today's call. You may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].