Vanda Pharmaceuticals Inc.

time, your lines will again be placed on hold. Thank you for your patience. Thank you. Thank you. Good day and thank you for standing by. Welcome to the Q1 2021 Evander Pharmaceuticals, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Great. Thanks, Ashley. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' first quarter 2021 performance. Our first quarter 2021 results were released this afternoon and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today's call is Dr. Mahalis Polymeropoulos, our president and CEO. Following my introductory remarks, Mahalis will update you on our ongoing activities. I will then comment on our financial results before opening the lines for your questions. Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances, and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, risk factors, and management's discussion and analysis of financial condition and results of operations sections of our annual report on Form 10-K for the fiscal year ended December 31, 2020, as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8K and other filings with the SEC, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events, or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Dr. Mahalis Pai-Moravlos.

Thank you very much, Kevin. Good afternoon, everyone. Following a challenging year as the world faced the COVID-19 pandemic, Vanda entered 2021 with our focus on value creation from both our pipeline and the continuous value creation from our commercial products. The potential future value creation and innovation in our pipeline can be seen intradipendent for the treatment of gastroparesis, with results from our ongoing phase III study expected later this year and then anticipated launch in 2022. The emerging DSPD, delayed sleep phase disorder program, in head use, which we believe can advance quickly. And finally, our late-stage FNAP evaluations in bipolar disorder, a long-acting injectable formulation, and in Parkinson's disease psychosis. In the first quarter, we also launched HETLIOS and HETLIOS-LQ for Smith-McGain syndrome nighttime sleep disturbances, and we're excited about its anticipated contribution to our value creation story. On commercial performance, we see continued growth year over year. In the first quarter, of 2021. Total net product revenue for Hetlios and Fanapt was 62.7 million, an 8% increase compared to the first quarter of 2020. Net product revenue on Hetlios saw an 11% increase in the first quarter of 2021 compared to the first quarter of 2020. And net product revenue for Fanapt saw a 3% increase compared to the first quarter of 2020. While during the first quarter of every year, patients navigate insurance changes which can temporarily impact patients on therapy, we are pleased with the performance on both HETLIOS and FENAPT despite these challenges. I will later discuss our late-stage lifecycle management programs, which can present us with a number of additional revenue growth opportunities in the near term. I will now turn to the Smith-McGain syndrome nighttime sleep disturbances approval by the FDA and launch of the product. In December, the FDA approved the oral capsule formulation of Hetlius and the new liquid formulation, Hetlius LQ, for the treatment of nighttime sleep disturbances in adults and children with Smith-McGain syndrome, respectively. is a neurodevelopmental disorder caused by genetic mutation of chromosome 17, which is a microdeletion in about 90% of the patients and a point mutation in the RAI gene, which is included in this microdeletion region in the remaining 10% of the patients. SMS affects 1 in 15 to 25,000 births with an estimated US prevalence of approximately 15,000 patients. The most common and most disruptive clinical expression of SMS is a sleep disorder that impacts the function of patients and consequently their families. During the first quarter of 2021, we launched HETLIOS and HETLIOS-LQ for SMS. As part of the early launch, we have reached out to our existing database of SMS patients, family members, and caregivers and in collaboration with the patient advocacy organization PRISMS, expanded our outreach to a broader group of patients and their families. While we're still in the beginning stage of the commercial launch of the HETLIOS capsule and the HETLIOS LQ liquid formulations, we're encouraged by the early results. We continue to connect with new SMS families, and these families are now at different stages of discussing the treatment option with their physicians. At the same time, already more than 50 patients have already received prescriptions and are navigating the insurance approval process. We're in the midst of finalizing the second phase of our commercial launch, which will reach out to a larger number of diagnosed and undiagnosed individuals. While it is difficult at this time to estimate an exact growth trajectory for the adoption of hetliums by SMS patients, we're excited about the emerging opportunity as we continue to deploy a number of strategies to reach and inform the community of approximately 15,000 SMS patients in the U.S. Given the genetic testing available for SMS, a significant number of patients are already diagnosed, and these are expected to be the first to come to treatment. It is estimated that between 80 to 100% of patients with SMS suffer from nighttime sleep disturbances for which hetlios is the only approved treatment. We expect that the number of SMS patients on treatment with hetlios will continue to increase throughout the year and that greater awareness will lead to adoption. As we resume an activity in most of our clinical programs, I would like to highlight our progress in some key clinical programs. First of all, we're excited about the upcoming completion of the gastroparesis study leading to an expected NDA filing either later this year or early next. The phase three study in gastroparesis is ongoing with 85% of the study now enrolled. On track to complete enrollment over the summer, and report results later in 2021. Following the results of the study, we plan to meet with the FDA for a pre-MDA meeting. Depending on the timing of that meeting, our MDA filing may occur at the end of 2021 or early 2022. As we have previously communicated, we believe that the current Phase III study can be the last effective study required for MDA filing. As a reminder, The ongoing phase three study aims to enroll a total of 200 patients with gastroparesis with either idiopathic or diabetic etiology. The study is a 12-week double-blind placebo-controlled study, which will measure the effect of tradipidant in improving the symptoms of gastroparesis. This phase three study follows the successful completion of the four-week phase two randomized study in the same population. The results of that study were published in the journal Gastroenterology in January of 2021. Several study participants have requested to continue treatment with tradipitin post completion of the clinical study through an expanded access program. We have worked in collaboration with these patients, their doctors, and the FDA to ensure they can receive further treatment with tradipitin. These patients have been approved for up to six months of expanded access treatment of tradipitin with one patient already approved for up to 12 months of expanded access treatment. Patients with gastroparesis suffer from chronic, severe, and debilitating nausea as well as other GI symptoms. Many patients with gastroparesis also experience vomiting, which can lead to weight loss, and in severe cases, hospitalizations due to nutritional deficiencies. The debilitating nausea and other GI symptoms makes it difficult for patients with gastroparesis to function day to day. Gastroparesis is a severe, unmet medical condition with only one approved treatment option in the last 40 years. As a testament to the significant and net need for this disorder, the response to our television campaign for recruitment in the Phase 3 study has been overwhelming, with thousands of patients already expressing interest since late December. Our estimates for the opportunity for a gastroparesis therapy are based on several key assumptions. One, the estimated prevalence of gastroparesis in the U.S. is about 6 million patients, the majority of whom remain undiagnosed. Second, at present there are more than 600,000 patients estimated to have a confirmed diagnosis of gastroparesis. And finally, based on IQVIA data, there are 300,000 prescriptions of oral metoclopramide per month in the United States. Metoclopramide is currently the only FDA approved treatment for gastroparesis approved in 1979. And due to its potential of severe side effects, it carries a black box warning and limitations of use of no more than three months. Given the highly limited treatment options, we believe that a new therapy could achieve significant market share. We're excited about traditional gastroparesis as this phase three program represents a transformational opportunity for Vanda to address an important unmet medical need and create a substantial revenue opportunity. I will now turn to Hetlios. The emerging clinical program for Hetlios is in delayed sleep phase disorder or DSPD. It is progressing quickly and represents what we believe to be an important value creation opportunity for Vanda with a high probability of technical success. DSPD is likely the most prevalent circadian rhythm sleep disorder affecting approximately 1% of the population and 7% to 10% of patients with disorders of initiating or maintaining sleep. The defining feature of individuals with DSPD is delayed sleep onset. Individuals with DSPD habitually go to bed and wake up significantly later than the typical or desired times and have an inability to fall asleep at an appropriate time. In addition to the delayed sleep onset, patients with DSPD suffer from insufficient sleep and daytime impairment. Their delayed bedtime combined with conventional schoolwork start times that require early waking can cause significant reductions in total sleep time for DSPD patients. Circadian desynchronization in DSPD is similar to that of jet lag, where individuals may have low energy in the daytime because they attempt to stay awake while the propensity for sleep is high. Comorbid depression is common among patients with DSPD, and a delayed circadian preference has been described in adults with bipolar I disorder, in some cases correlating with higher relapse rates. The prevalence of delayed sleep-awake phase disorder is highest in adolescents and young adults, with rates estimated between 3.3% and 4.6%, and some as high as 7%. The prevalence of DSPD in adults is lower, with estimates between 0.2% and 1.7%. DSPD is less prevalent in adults, likely due to the changes in a person's circadian timing as they get older. DSPD is the most common circadian rhythm sleep disorder. In a study of patients seen for circadian rhythm sleep disorders, 83% were diagnosed with DSPD. In the same study, 90% of those patients diagnosed with DSPD reported an onset of their symptoms during childhood or adolescence. Taken together, the consensus in the literature is that the prevalence of adults with DSPD is about 1% of US population or over 3 million people. DSPD represents a large commercial opportunity for Vanda with prevalence assessments varying across different groups. We believe a circadian regulator like Hetlios has a significant probability of technical success in treating patients with delayed sleep phase disorder. We also believe that Hetlios could have a significant benefit over classic insomnia drugs to treat this condition by addressing the underlying cause and aligning the internal clock and therefore improving sleep at the appropriate time. Classic insomnia drugs provide a small sleep benefit with a number of side effects while not addressing the underlying issue of a misaligned circadian clock. The DSPD study is expected to begin randomizing patients imminently in a number of clinical sites across the United States. Finally, on FNAPT. The ongoing clinical development programs for FNAPT, including bipolar disorder, Parkinson's disease psychosis, and the long-acting injectable formulation schizophrenia, are also in various stages of preparation and execution. The four-week Phase III study of bipolar I disorder includes sites in both the United States and Europe. The study recently began randomizing patients in the U.S., and we plan to begin randomizing patients in Europe later this summer. On Parkinson's disease psychosis, we're applying two studies, a Phase II open-label study of two cohorts, followed by a larger randomized placebo-controlled Phase III study. Both studies are designed to evaluate the efficacy of FNAPT in the treatment of psychosis in Parkinson's disease. 20 to 40% of people with Parkinson's disease are reported to experience varying degrees of psychosis. There are almost a million people in the U.S. with Parkinson's disease. With only one other approved treatment for Parkinson's disease psychosis and the significant burden the condition has on the patients and their caregivers, this remains an important unmet medical need The phase two cohort open label study of 24 patients has received approval to proceed by the FDA and is expected to commence soon. The pharmacokinetic study of the FANAT long-acting infectable is ongoing, and we're in the process of understanding and optimizing the dosing and administration. Upon completion of this repeat dose PK study, we're applying the phase three study of the long-acting infectable for acute schizophrenia treatment. In addition to our FNAP programs, the investigation new drug for P88, the active metabolite of alloperidone, recently received clearance from the FDA to proceed. We plan to begin a bioequivalent study of FNAP and P88 in healthy volunteers in the near term. We believe that P88 has the potential to improve on the clinical profile of alloperidone and create sustained long-term value in Vanda's treatment portfolio for psychiatric disorders. In conclusion, the first quarter of 2021 was a strong quarter for Vanda, and we're optimistic that the positive momentum will continue for the rest of 2021. The approval of HETLIOS for nighttime sleep disturbances in Smith-Mageni syndrome patients provides an opportunity to continue our innovative and successful approach to identifying and treating patients with orphan disorders. We also continue to look forward to the results of our Tridyptan gastroparesis study and the number of lifecycle management programs in our pipeline that are poised to continue that as value creation well into the future. I will now turn the call back to Kevin to discuss our financial results for the first quarter, and after that, I would be happy to address any questions you may have. Kevin?