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spk05: Thank you for standing by. My name is Meg and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Vanda Pharmaceuticals Inc 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 star followed by the number one on your telephone keypad. If you would like to redraw your question, press star one again. Thank you. I would now like to turn the conference over to Mr. Kevin Moran, Vanda's Chief Financial Officer. You may begin.
spk06: Thank you, Meg. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals second quarter 2024 performance. Our second quarter 2024 results were released this afternoon and are available on the SEC's Edgar system and on our website. .vandafarma.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. Mahalas Polymeropoulos, our President, Chief Executive Officer and Chairman of the Board, and Tim Williams, our General Counsel. Following my introductory remarks, Mahalas will update you on our ongoing activities. I will then comment on our financial results before we open 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 10K, as updated by our subsequent quarterly reports on Form 10Q, 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. Mahales Palamiropoulos.
spk12: Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss VANDER's second quarter, 2024 results. The beginning of the quarter was marked with a significant milestone of the FDA approval of FNAPT for the treatment of bipolar one disorder. This approval expands the commercial potential of FNAPT and lays down the foundation for our psychiatry portfolio. As a result of this development, we focused our operational efforts in expanding and strengthening our commercial organization to better position us to maximize the commercial value of the asset. In a short period of time, we have increased by three times the size of our sales force, significantly expanded our FNAPT speakers program, and began engaging with prescribers. In addition, we're building our marketing campaign, and we expect to reach full operational capacity in the fourth quarter of this year. In addition to these commercial efforts, the clinical development of the psychiatry portfolio is advancing with a new drug application filing expected in early 2025 for Milsa Peridon, an active metabolite of FNAPT for the treatment of bipolar disorder and schizophrenia. We're also preparing to initiate the clinical program in major depression with Milsa Peridon in the fourth quarter of this year. The long acting injectable program of Alloperidon is continuing with the expected initiation of the phase three study for the maintenance of treatment schizophrenia later this year. We're excited with the prospects of our psychiatry franchise that we expect to provide significant value to patients and provide Vanda with significant revenue growth well into the future. With the acquisition of Ponvori from Janssen and the full transfer of ownership to Vanda, we have also focused in building a commercial organization to promote Ponvori in the treatment of multiple sclerosis. We're now close to completing the hiring of a new specialty sales force and initiating patient support and marketing activities in the near future. We believe that Ponvori provides a useful and competitive option among the disease modifying treatment modalities for patients with multiple sclerosis. We're confident that increasing awareness among prescribers and patients will be able to further drive utilization and allow for a return to revenue growth in the near future. We're also working towards initiating clinical programs in psoriasis and ulcerative colitis where Ponvori can become a significant treatment option as a once a day oral medication with quick onset of action as well as quick reversibility of its immune regulatory effect. Our third commercial product, Hetlio's oral capsules for non-24 hour sleep-wake disorder continues to face revenue erosion due to the introduction of genetic products. Nonetheless, patient loyalty to our quality product has allowed us to maintain a significant market share in this patient population. Hetlio's LQ approved for children with Smith-Magegne syndrome is not affected by genetics competition and continues to serve the Smith-Magegne syndrome community. We have recently applied for marketing authorization in the EMA for both Hetlio's and Hetlio's LQ for Smith-Magegne syndrome. Hetlio's is currently approved for non-24 in the European Union and is actively commercialized in Germany. Hetlio's is not facing genetic competition in the EU at this time. In addition to our commercial efforts, Hetlio's is under development for delayed sleep-wake phase disorder and Hetlio's LQ is under development for the treatment of pediatric insomnia. Both disorders have currently no FDA approved treatments and represent a significant unmet medical need. I will turn to our portfolio of assets under development and offer some highlights. The new drug application for the dependent for the treatment of symptoms of gastroparesis remains under review by the FDA with a PDIFTA target action date of September 18, 2024. We continue to believe that the evidence provided in the NDA, including from qualified experts, constitutes both substantial evidence of efficacy and sufficient safety information to support the approval of tradeptan to treat the symptoms of gastroparesis. We believe that the agency should convene an advisory committee to assist in reviewing this application with experts in the field, given the novelty of the mechanism of action pursued for this indication and the lack of approval of any drug in this indication in over 40 years. However, despite our repeated request for an advisory committee meeting to consider the NDA, the FDA has yet to grant one. In the late cycle meeting held in June, the FDA stated that it would take into consideration our request for an advisory committee meeting. We have followed up with this request several times, but have yet to receive a response. On May 31st, we received a discipline review letter in which, among other comments, the FDA provided a preliminary notice that they had identified deficiencies that preclude discussion of labeling and post-marketing requirements and commitments, but that their comments do not reflect a final decision on the information reviewed and should not be construed to do so. We requested clarification from the FDA as to whether we should expect labeling communication prior to the PDUFA date, but the FDA has yet to respond. Nonetheless, we remain confident in the body of evidence we have presented and we await clarity on next steps by the FDA. Onto the dip again, in the second quarter, we reported on positive results for our second phase III study in motion sickness, completing therefore our clinical efficacy package with two positive phase III studies and a support in positive phase II study. The studies were conducted under real-world conditions in the coastal water of the United States. We plan to seek FDA approval for a third dip in the prevention of vomiting in motion sickness later this year. With that, I'll turn now the call back to Kevin Moran to discuss our financial results. Kevin.
spk06: Thank you, Miles. I'll begin by summarizing our financial results for the first six months of 2024 before turning to discuss the second quarter of 2024. Total revenues for the first six months of 2024 were 97.9 million, a 10% decrease compared to 108.6 million for the same period in 2023. This decrease was primarily due to the launch of generic versions of Hetlios, which we've discussed in some detail, partially offset by the introduction of Ponvori revenue following our acquisition of the product in December of 2023. FNAP net product sales were 43.7 million for the first six months of 2024, a 7% decrease compared to 47 million in the same period in 2023. This decrease to net product sales relative to the first six months of 2023 was attributable to a decrease in volume. Turning to Hetlios. Hetlios net product sales were 38.8 million for the first six months of 2024, a 37% decrease compared to 61.6 million in the same period in 2023. The decrease to net product sales relative to the first six months of 2023 was attributable to a decrease in volume, partially offset by an increase in price net of deductions. 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 of inventory stocking at specialty pharmacy customers at March 31st, 2023. During the remainder of 2023, although there was continued de-stocking at specialty pharmacy customers, inventory levels at December 31st, 2023 remained elevated relative to inventory levels prior to the entrance of generic competition and continued to remain elevated at March 31st, 2024 and June 30th, 2024. Going forward, Hetlios net product sales may reflect lower unit sales as a result of the reduction of elevated inventory levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, Hetlios net product sales will likely decline in future periods, potentially significantly related to continued generic competition in the US. And finally, turning to Ponvori. Ponvori net product sales were 15.4 million for the first six months of 2024. As a reminder, we completed the acquisition of the US and Canadian rights to Ponvori in December of 2023. As such, this represents the second full quarter of Ponvori revenue recognition at Vanda and a positive step in diversifying our product mix with innovative and value generating products. For the first six months of 2024, Vanda recorded a net loss of 8.7 million compared to net income of 4.8 million for the same period in 2023. The net loss for the first six months of 2024 included an income tax benefit of 1.5 million as compared to an income tax provision of 3.3 million for the same period in 2023. Operating expenses for the first six months of 2024 were 117.3 million compared to 109.4 million for the same period in 2023. The 7.9 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Phenapton Bipolar Disorder and Ponvori and Multiple Sclerosis and legal and other corporate activities as well as higher intangible asset amortization expense due to the amortization recorded on the Ponvori intangible asset. During the first half of 2024, we commenced a host of activities in anticipation of our commercial launches of Phenapton Ponvori, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may increase in future periods as a result of the ongoing commercial launches of Phenapton and Ponvori, which were initiated in the third quarter of 2024. Vanda's cash, cash equivalents and marketable securities referred to as cash as of June 30, 2024 were 387.7 million, representing a decrease of 0.6 million compared to December 31st, 2023 and a decrease of 6.5 million compared to March 31st, 2024. The change in cash during the second quarter of 2024 as compared to the first quarter of 2024 was driven by the timing of cash in from customers for revenue and related payments of rebates to payers as compared to recent prior periods. Turning now to our quarterly results. Total revenues for the second quarter of 2024 were 50.5 million, a 10% increase compared to 46.1 million for the second quarter of 2023 and a 6% increase compared to 47.5 million in the first quarter of 2024. The increases compared to the second quarter of 2023 was primarily due to the introduction of Ponvori revenue following our acquisition of the product in December 2023, partially offset by decreased Hetlius revenue due to the launch of generic versions of Hetlius. Phenapnet product sales were 23.2 million for the second quarter of 2024, a 4% decrease compared to 24.1 million in the second quarter of 2023. Phenapnet product sales in the second quarter of 2024 increased by 12% as compared to 20.6 million in the first quarter of 2024. The increase in net product sales relative to the first quarter of 2024 was attributable to an increase in volume. Phenap prescriptions in the second quarter of 2024 as reported by Equivia Exponent increased by approximately 2% compared to the first quarter of 2024. Turning to Hetlius. Hetlius net product sales were 18.7 million for the second quarter of 2024, a 15% decrease compared to 22 million in the second quarter of 2023. The decrease to net product sales relative to the second quarter of 2023 was attributable to a decrease in price net deductions. Hetlius net product sales in the second quarter decreased by 7% as compared to 20.1 million in the first quarter of 2024. The decrease in net product sales relative to the first quarter of 2024 was attributable to a decrease in volume, partially offset by an increase in price net of deductions. And finally, turning to POMBORI. POMBORI net product sales were $8.6 million for the second quarter of 2024, an increase of 26% compared to $6.8 million in the first quarter of 2024. The increase in net product sales was attributable to an increase in price net of deductions, partially offset by a decrease in volume. As a reminder, we completed the acquisition of the U.S. and Canadian rights to POMBORI in December of 2023. For the second quarter of 2024, VANDA recorded a net loss of $4.5 million compared to net income of $1.5 million for the second quarter of 2023. The net loss for the second quarter of 2024 included an income tax benefit of $1 million as compared to an income tax provision of $1.1 million for the second quarter of 2023. Operating expenses in the second quarter of 2024 were $60.6 million compared to $48.9 in the second quarter of 2023. The $11.7 million increase was primarily driven by higher SGE&A expenses related to spending on VANDA's commercial products as a result of the commercial launches of FNAF and POMBORI and legal and other corporate activities. Operating expenses in the second quarter of 2024 increased by $3.9 million as compared to $56.7 million in the first quarter of 2024. This increase was primarily driven by higher SGE&A expenses related to spending on VANDA's commercial products as a result of the commercial launches of FNAF and POMBORI and legal and other corporate activities, partially offset by a decrease in R&D spend related to lower expenses on the Tridipidate Development Program. During the first half of 2024, we commenced a host of activities in anticipation of our commercial launches of FNAF and bipolar disorder and POMBORI and multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. SGE&A expenses may increase in future periods as a result of the ongoing commercial launches of FNAF and POMBORI, which again were initiated in the third quarter of 2024. With regards to the launches of FNAF and bipolar disorder and POMBORI and multiple sclerosis, as I mentioned, the launches were initiated in the third quarter and we expect our full commercial infrastructure to be in place by the end of this year with the impact of these commercial efforts expected to begin to impact revenue later this year. We have already seen tremendous progress on our commercial activities. As Mahalas mentioned, our overall sales force size as of today is approximately three times larger as compared to the end of the first quarter of 2024. The number of FNAF prescriber awareness programs scheduled to be completed in the third quarter of 2024 is more than three times larger than the number of programs completed in the second quarter of 2024. The expansion has allowed us to significantly increase our reach and frequency with prescribers and early indicators of new FNAF starts per equipia data appear positive. Turning now to our financial guidance. VANDA reinstates financial guidance and expects to achieve the following financial objectives in 2024. Total net product sales from FNAF, Hetlios and POMBORI of between $180 million and $210 million. Year-end 2024 cash of between $360 million and $390 million. To note, Hetlios net product sales will likely decline in future periods potentially significantly related to the continued generic competition in the U.S. Additionally, the company constrained Hetlios net product sales for the year-end of December 31, 2023 and the first six months of 2024 to an amount not probable of significant revenue reversal. As a result, Hetlios net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration are resolved. With that, I'll now turn the call back to Mahalas.
spk10: Thank you very much, Kevin. At this point, we will be happy to answer your questions.
spk05: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to redraw your question, simply press star 1 again. If you are called upon to ask a question and you're listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Charles Duncan with Cancer Fitzgerald. Please go ahead.
spk09: Hi, Mahalas and team. Congrats on good quarter progress and really appreciate you reinstating the financial guidance for the second half of the year and all the color that you provided in the remarks. Had a couple of questions. Then I'll hop back in the queue. But with regard to FNAP, I know that the launch just started this year or this quarter. But I guess I'm wondering, is there any feedback that you can share with regard to prescriber perspective following the recent label expansion? I think Kevin alluded to this recently in terms of new patient starts. But any perspectives that you can give with regard to prescribing for FNAP with that new label?
spk12: Yes, maybe I'll start and I have Kevin follow up on that. Thank you very much for joining, Charles. First of all, something environmental about this market, it is that despite the fact that there are a number of antipsychotics approved for this type of indication, there's still a significant and met medical need for people who don't respond well or do not tolerate well other drugs. And hence, this market is promotionally sensitive. But there is competition in the market for share of voice and therefore it requires significant investment which we began making to increase awareness. It is important to note that while schizophrenia is a very significant indication, the bipolar space of indications with bipolar disorder is actually far more frequent and encountered in prescriber offices outside necessarily of psychiatry. And therefore, it presents a much larger opportunity. We are receiving, of course, anecdotal evidence of excitement of learning more about the data, very significant participation of prescribers and new prescribers into our speakers program. And what we noted is the early signs based on IQVIA data, we are referring to the trend on the NVRX which is a metric of new starts, not refills but new starts. And there, we see positive results compared to prior quarters and positive results compared to last year as a whole. It is early and as you know, it takes some time to get the sales force out, create the awareness, get the new starts, get the refills. But typically, NVRXs are followed by NRXs and TRXs. But we want to make sure that everybody understands this is the quarter we are going to be first with the full sales force out. Our expansion continues and our full marketing operations are not going to be in full swing but in the fourth quarter of next year. So we are enthusiastic about the prospects of revenue growth but we want to caution that it may take a few months before we get the clear signs of the effect of our efforts.
spk09: That makes good sense to us. And then I wondered if you could provide a perspective on the possibility that there could be another new entrant in terms of
spk07: class
spk09: to psychosis treatment and that is with the muscarinic modulators with the possible approval of the candidate called CARXT this fall. I'm sure you are prepared for that but what would be the response from your side? Do you believe that the label is sufficiently differentiated and FNAP stands on its own to continue to gain share?
spk12: Of course we are looking at the competitive space and we are becoming more and more familiar with this new class of drugs. First of all, I would say it is terrific that after many years folks are working on new mechanisms of action to address the medical needs. First, I would say we welcome more enthusiasm in the space and more attention to treat these difficult disorders and I think a success of that drug will underscore the remaining medical need in the space. In terms of differentiation, we have to wait and see the profile but I would say strong factor in differentiating FNAP not only from new entrants but also the drugs in the market is the tolerability profile that is well understood. It is not a new entrant. The drug has been in the market for about 15 years since the first approval so there is a lot of familiarity. We are looking at FNAP as a well-known friend that now has a new utility. For new entrants, we welcome them all and we welcome more education of psychiatrists and other specialties around these markets and drugs.
spk09: One last question in terms of the pipeline with Tridipetan. When you think about gastroparesis versus motion sickness, do you think gastroparesis is a nice to have or a need to have in terms of your view of where Vanda can be in a year with regard to commercial opportunities or is motion sickness perhaps a little bit more consistent with some of your marketing efforts thus far? You mentioned filing later on this year. Does that depend on what the agency has provided you or will provide you with regard to a response on gastroparesis? Thank you.
spk12: I will take separately the two parts of the question. We believe that Tridipetan has a useful effect in treating symptoms of gastroparesis which is a significant and medical need and the testimony of that does not come just from our clinical trial results. All of them have been published but also by what is personally exciting to me, the dozens of patients who have come over the years to request and be granted expanded access. We just celebrated our first patient four years on the drug with her testimony of the drug changing her life. If you see it from the patient need, I think it is very important that Tridipetan makes it the armamentarium of drugs for gastroparesis. Given the diversification of revenue that the company has and the deep and diversified pipeline, we can tolerate a delay in approval which I guess that is the signal we can interpret now. When it comes to motion sickness, the motion sickness filing and motion sickness approval, it is unlikely it depends on anything we learn from the FDA. The FDA will likely point to their questions around the strength of efficacy and they will point back to long-term preclinical safety additional data they may need. However, when it comes to motion sickness, there is no question about efficacy that the drug prevents vomiting in the setting of motion sickness. That is something that we have extensively discussed and agreed upon with the FDA in end of phase two and pre-MDA meetings. When it comes to safety, we think we are going to have a very confidential and not chronic use of these drugs. We feel very confident that our package will be complete.
spk09: Very helpful. I will have more questions in the queue but maybe I will give someone else a shot.
spk03: Thanks. Again, if you would
spk04: like to ask a question, press star
spk05: one on your telephone
spk04: keypad.
spk05: Your next question comes from the line of Andrew Chai from Jefferies. Please go ahead.
spk02: Hi. Good afternoon. Thanks for taking my questions. The revenue guidance range is pretty wide, $30 million range despite us being two quarters in. What is your revenue guidance assuming for the type of quarterly sales growth for both Ponvori and FNAP in second half 2024? What gets you to
spk06: the point? As we mentioned with the launch of FNAP and Ponvori happening in the third quarter and as you mentioned two quarters in, the trajectory of the launches and how quickly we begin to see results, if we start to see results fairly quickly, we think we could end up at the top end of the range. Whereas if it takes a little bit longer time for those results to translate into revenue, it could come later in the year and therefore be closer to the middle of the range or somewhere else in the range.
spk02: I see. In terms of the cash guidance, it seems like there will be some expected cash burn year over year exiting 2024. As we exit 2024 and head into 2025, do you think you can be cash flow positive or should we be expecting increased investments in the launches and pipeline growth to more than offset the revenues you bring in?
spk06: First on the cash guidance for this is our communicated guidance that will end the year between 360 and 390. The high end of that range would be slight cash flow positive, very slight. The bottom end of the range would be a burn in the neighborhood of 25 to 30 million. Therefore the midpoint is obviously a smaller number than that. If we end up at the top point of our revenue range, then we could even see to be right around the cash break even number or maybe a little bit better, a little bit worse. That is just for the trajectory of this year. Obviously we have not provided guidance for next year so you can only speak to in the context of what we have communicated. But if we begin to see revenue growth as we hope for and anticipate on these two products and we continue to make the investments that we have articulated, next year we could see revenue growth that could necessitate additional investments or we could see it be efficiently converted into positive VPS.
spk02: Thanks. For TriVitant, let's just say it was approved later in September. Can you guys talk about your launch strategy?
spk11: Yes, absolutely. We actually have had quite a bit
spk12: of time to work our launch plan and we feel well prepared. Of course we depend on the labeling with the messaging. We understand well the target population. We have cultivated extensive relationships with key opinion leaders. We understand the size of the sales force. We understand the effort and size of the speakers program. Of course we have early plans of what a direct to consumer campaign can do in this case.
spk02: The last question is sales force is 3X larger than earlier in the year. How many sales reps did you have earlier in the year? So we can do the math here.
spk06: Yes, the sales reps in the early part of the year were in the neighborhood of about 50 and so with it being three times larger we are a little north of 150.
spk13: Perfect. Okay, thank you. Congrats on the quarter.
spk01: Thanks, Andrew. Thanks, Andrew.
spk04: Okay, thank you. Again, if you would like to ask a question press star one on your telephone keypad. We have no more questions, don't you? I will now turn the conference back over to Vanda Management
spk05: for closing remarks. Please go ahead.
spk10: Thank
spk12: you very much for joining on our second quarter 2024 call
spk11: and we hope to see you again soon.
spk04: This concludes the conference call. You may now disconnect.
spk00: you you you you you you you you
spk05: you you you Thank you for standing by. My name is Meg and I will be your conference operator today. At this time I would like to welcome everyone to the Q2 2024 Vanda Pharmaceuticals Inc 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 star followed by the number one on your telephone keypad. If you would like to redraw your question press star one again. Thank you. I would now like to turn the conference over to Mr. Kevin Moran, Vanda's Chief Financial Officer. You may begin.
spk06: Thank you Meg. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals second quarter 2024 performance. Our second quarter 2024 results were released this afternoon and are available on the SEC's Edgar system and on our website .vandafarma.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. Mahalas Polymeropoulos, our President, Chief Executive Officer and Chairman of the Board and Tim Williams, our General Counsel. Following my introductory remarks Mahalas will update you on our ongoing activities. I will then comment on our financial results before we open the lines for 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 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 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. Mahalas Palamouropoulos.
spk12: Thank you very much Kevin and good afternoon everyone. Thank you for joining us to discuss VANDER's second quarter 2024 results. The beginning of the quarter was marked with a significant milestone of the FDA approval of FNAPT for the treatment of bipolar 1 disorder. This approval expands the commercial potential of FNAPT and lays down the foundation for our psychiatry portfolio. As a result of this development we focused our operational efforts in expanding and strengthening our commercial organization to better position us to maximize the commercial value of the asset. In a short period of time we have increased by three times the size of our sales force, significantly expanded our FNAPT speakers program and began engaging with prescribers. In addition we're building our marketing campaign and we expect to reach full operational capacity in the fourth quarter of this year. In addition to these commercial efforts the clinical development of the psychiatry portfolio is advancing with a new drug application filing expected in early 2025 for Milsa Peridon an active metabolite of FNAPT for the treatment of bipolar disorder and schizophrenia. We're also preparing to initiate the clinical program in major depression with Milsa Peridon in the fourth quarter of this year. The long-acting injectable program of Alloperidon is continuing with the expected initiation of the phase three study for the maintenance of treatment schizophrenia later this year. We're excited with the prospects of our psychiatry franchise that we expect to provide significant value to patients and provide Vanda with significant revenue growth well into the future. With the acquisition of Ponvori from Janssen and the full transfer of ownership to Vanda we have also focused in building a commercial organization to promote Ponvori in the treatment of multiple sclerosis. We're now close to completing the hiring of a new specialty sales force and initiating patient support and marketing activities in the near future. We believe that Ponvori provides a useful and competitive option among the disease modifying treatment modalities for patients with multiple sclerosis. We're confident that increasing awareness among prescribers and patients will be able to further drive utilization and allow for a return to revenue growth in the near future. We're also working towards initiating clinical programs in psoriasis and ulcerative colitis where Ponvori can become a significant treatment option as a once a day oral medication with quick onset of action as well as quick reversibility of its immune regulatory effect. Our third commercial product Hetlio's oral capsules for non-24 hour sleep-wake disorder continues to face revenue erosion due to the introduction of genetic products. Nonetheless, patient loyalty to our quality product has allowed us to maintain a significant market share in this patient population. Hetlio's LQ approved for children with Smith-Magheny syndrome is not affected by genetics competition and continues to serve the Smith-Magheny syndrome community. We have recently applied for marketing authorization in the EMA for both Hetlio's and Hetlio's LQ for Smith-Magheny syndrome. Hetlio's is currently approved for non-24 in the European Union and is actively commercialized in Germany. Hetlio's is not facing genetic competition in the EU at this time. In addition to our commercial efforts, Hetlio's is under development for delayed sleep-wake phase disorder and Hetlio's LQ is under development for the treatment of pediatric insomnia. Both disorders have currently no FDA approved treatments and represent a significant and mathematical need. I will turn to our portfolio of assets under development and offer some highlights. The new drug application for the dependent for the treatment of symptoms of gastroparesis remains under review by the FDA with a Pinduva target action date of September 18, 2024. We continue to believe that the evidence provided in the NDA, including from qualified experts, constitutes both substantial evidence of efficacy and sufficient safety information to support the approval of tradeptant to treat the symptoms of gastroparesis. We believe that the should convene an advisory committee to assist in reviewing this application with experts in the field given the novelty of the mechanism of action pursued for this indication and the lack of approval of any drug in this indication in over 40 years. However, despite our repeated request for an advisory committee meeting to consider the NDA, the FDA has yet to grant one. In a late cycle meeting held in June, the FDA stated that it would take into consideration our request for an advisory committee meeting. We have followed up with this request several times but have yet to receive a response. On May 31st, we received a discipline review letter in which, among other comments, the FDA provided a preliminary notice that they had identified deficiencies that preclude discussion of labeling and post-marketing requirements and commitments, but that their comments do not reflect a final decision on the information reviewed and should not be construed to do so. We requested clarification from the FDA as to whether we should expect labeling communication prior to the PDUFA date, but the FDA has yet to respond. Nonetheless, we remain confident in the body of evidence we have presented and we await clarity on next steps by the FDA. Onto the diptyin again, in the second quarter, we reported on positive results for our Phase II, Phase III study in motion sickness, completing therefore our clinical efficacy package with two positive Phase III studies and a supporting positive Phase II study. The studies were conducted under real-world conditions in the coastal water of the United States. We plan to seek FDA approval for a diptyin in the prevention of vomiting in motion sickness later this year. With that, I'll turn now the call back to Kevin Moran to discuss our financial results. Kevin?
spk06: Thank you, Miles. I'll begin by summarizing our financial results for the first six months of 2024 before turning to discuss the second quarter of 2024. Total revenues for the first six months of 2024 were $97.9 million, a 10% decrease compared to $108.6 million for the same period in 2023. This decrease was primarily due to the launch of generic versions of Hetlios, which we have discussed in some detail, partially offset by the introduction of Ponvori revenue following our acquisition of the product in December of 2023. FNAP net product sales were $43.7 million for the first six months of 2024, a 7% decrease compared to $47 million in the same period in 2023. This decrease to net product sales relative to the first six months of 2023 was attributable to a decrease in volume. Turning to Hetlios. Hetlios net product sales were $38.8 million for the first six months of 2024, a 37% decrease compared to $61.6 million in the same period in 2023. The decrease to net product sales relative to the first six months of 2023 was attributable to a decrease in volume partially offset by an increase in price net of reductions. 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 of inventory stocking at specialty pharmacy customers at March 31, 2023. During the remainder of 2023, although there was continued de-stocking at specialty pharmacy customers, inventory levels at December 31, 2023 remained elevated relative to inventory levels prior to the entrance of generic competition and continued to remain elevated at March 31, 2024 and June 30, 2024. Going forward, Hetlios net product sales may reflect lower unit sales as a result of the reduction of elevated inventory levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, Hetlios net product sales will likely decline in future periods potentially significantly related to continued generic competition in the U.S. And finally turning to Ponvori. Ponvori net product sales were 15.4 million for the first six months of 2024. As a reminder, we completed the acquisition of the U.S. and Canadian rights to Ponvori in December of 2023. As such, this represents the second full quarter of Ponvori revenue recognition at Vanda and a positive step in diversifying our product mix with innovative and value generating products. For the first six months of 2024, Vanda recorded a net loss of 8.7 million compared to net income of 4.8 million for the same period in 2023. The net loss for the first six months of 2024 included an income tax benefit of 1.5 million as compared to an income tax provision of 3.3 million for the same period in 2023. Operating expenses for the first six months of 2024 were 117.3 million compared to 109.4 million for the same period in 2023. The 7.9 million increase was primarily driven by higher SGA expenses related to spending on Vanda's commercial products as a result of the commercial launches of Phenaptin Bipolar Disorder and Ponvori and Multiple Sclerosis and legal and other corporate activities as well as higher intangible asset amortization expense due to the amortization recorded on the Ponvori intangible asset. During the first half of 2024, we commenced a host of activities in anticipation of our commercial launches of Phenaptin and Ponvori including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may increase in future periods as a result of the ongoing commercial launches of Phenaptin and Ponvori which were initiated in the third quarter of 2024. Vanda's cash, cash equivalents and marketable securities referred to as cash as of June 30, 2024 were 387.7 million representing a decrease of 0.6 million compared to December 31, 2023 and a decrease of 6.5 million compared to March 31, 2024. The change in cash during the second quarter of 2024 as compared to the first quarter of 2024 was driven by the timing of cash in from customers for revenue and related payments of rebates to payers as compared to recent prior periods. Turning now to our quarterly results. Total revenues for the second quarter of 2024 were 50.5 million, a 10% increase compared to 46.1 million for the second quarter of 2023 and a 6% increase compared to 47.5 million in the first quarter of 2024. The increases compared to the second quarter of 2023 was primarily due to introduction of Ponvori revenue following our acquisition of the product in December 2023, partially offset by decreased HETLIAS revenue due to the launch of generic versions of HETLIAS. Phenaptin net product sales were 23.2 million for the second quarter of 2024, a 4% decrease compared to 24.1 million in the second quarter of 2023. Phenaptin net product sales in the second quarter of 2024 increased by 12% as compared to 20.6 million in the first quarter of 2024. The increase to net product sales relative to the first quarter of 2024 was attributable to an increase in volume. Phenaptin prescriptions in the second quarter of 2024, as reported by Equivia Exponent, increased by approximately 2% compared to the first quarter of 2024. Turning to HETLIAS. HETLIAS net product sales were 18.7 million for the second quarter of 2024, a 15% decrease compared to 22 million in the second quarter of 2023. The decrease to net product sales relative to the second quarter of 2023 was attributable to a decrease in price net of deductions. HETLIAS net product sales in the second quarter decreased by 7% as compared to 20.1 million in the first quarter of 2024. The decrease in net product sales relative to the first quarter of 2024 was attributable to a decrease in volume, partially offset by an increase in price net of deductions. And finally, turning to Pombori. Pombori net product sales were 8.6 million for second quarter of 2024, an increase of 26% compared to 6.8 million in the first quarter of 2024. The increase in net product sales was attributable to an increase in price net of deductions, partially offset by a decrease in volume. As a reminder, we completed the acquisition of the U.S. and Canadian rights to Pombori in December of 2023. For the second quarter of 2024, VANDA recorded a net loss of 4.5 million compared to net income of 1.5 million for the second quarter of 2023. The net loss for the second quarter of 2024 included an income tax benefit of 1 million as compared to an income tax provision of 1.1 million for the second quarter of 2023. Operating expenses in the second quarter of 2024 were 60.6 million compared to 48.9 million in the second quarter of 2023. The 11.7 million increase was primarily driven by higher S&G expenses related to spending on VANDA's commercial products as a result of the commercial launches of FNAPT and Pombori and legal and other corporate activities. Operating expenses in the second quarter of 2024 increased by 3.9 million as compared to 56.7 million in the first quarter of 2024. This increase was primarily driven by higher S&G expenses related to spending on VANDA's commercial products as a result of the commercial launches of FNAPT and Pombori and legal and other corporate activities, partially offset by a decrease in R&D spend related to lower expenses on the tri-dependent development program. During the first half of 2024, we commenced a host of activities in anticipation of our commercial launches of FNAPT and bipolar disorder and Pombori and multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. S&G expenses may increase in future periods as a result of the ongoing commercial launches of FNAPT and Pombori, which again were initiated in the third quarter of 2024. With regards to the launches of FNAPT and bipolar disorder and Pombori and multiple sclerosis, as I mentioned, the launches were initiated in the third quarter and we expect our full commercial infrastructure to be in place by the end of this year with the impact of these commercial efforts expected to begin to impact revenue later this year. We have already seen tremendous progress on our commercial activities. As Mahalas mentioned, our overall sales force size as of today is approximately three times larger as compared to the end of the first quarter of 2024. The number of FNAPT prescriber awareness programs scheduled to be completed in the third quarter of 2024 is more than three times larger than the number of programs completed in the second quarter of 2024. The expansion has allowed us to significantly increase our reach and frequency with prescribers and early indicators of new FNAPT starts per equipia data appear positive. Turning now to our financial guidance. VANDA reinstates financial guidance and expects to achieve the following financial objectives in 2024. Total net product sales from FNAPT, Hetlios and Pombori of between $180 million and $210 million. Year end 2024 cash of between $360 million and $390 million. To note, Hetlios net product sales will likely decline in future periods, potentially significantly related to the continued generic competition in the U.S. Additionally, the company constrained Hetlios net product sales for the year end of December 31, 2023 and the first six months of 2024 to an amount not probable of significant revenue reversal. As a result, Hetlios net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration are resolved. With that, I'll now turn the call back to Mahalas.
spk10: Thank you very much, Kevin. At this point, we will be happy to answer your questions.
spk05: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to redraw your question, simply press star one again. If you are called upon to ask a question and you're listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from the line of Charles Duncan with Canter Fitzgerald. Please go ahead.
spk09: Hi. Hi, Mahalas and team. Congrats on a good quarter progress and really appreciate you reinstating the financial guidance for the second half of the year and all the color that you provided in
spk08: the remarks.
spk09: I have a couple of questions. FNAP and then I'll hop back in the queue. But with regard to FNAP, I know that the launch just started this year or this quarter, but I guess I'm wondering, is there any feedback that you can share with regard to prescriber perspective following the recent label expansion? I think Kevin alluded to this recently in terms of new patient starts, but any perspectives that you can give with regard to prescribing for FNAP with that new label?
spk12: Yes, maybe I'll start and I have, Kevin, follow up on that. Thank you very much for joining, Charles. First of all, something environmental about this market, it is that despite the fact that there are a number of antipsychotics approved for this type of indication, there's still a significant medical need for people who don't respond well or do not tolerate well other drugs. And hence, this market is promotionally sensitive. But there is competition in the market for share of voice and therefore it requires significant investment which we began making to increase awareness. It is important to note that while schizophrenia is a very significant indication, the bipolar space of indications with bipolar one disorder is actually far more frequent and encountered in prescriber offices outside necessarily of psychiatry. And therefore, it presents a much larger opportunity. We are receiving, of course, anecdotal evidence of excitement of learning more about the data, very significant participation of prescribers and new prescribers into our speakers program. And what we noted is the early signs based on IQVIA data, we are referring to the trend on the NBRX which, as you know, it is a metric of new starts, not refills but new starts. And there, we see positive results compared to prior quarters and positive results compared to last year as a whole. It is early and as you know, it takes some time to get the sales force out, create the awareness, get the new starts, get the refills. But typically, NBRXs are followed by NRXs and TRXs. But we want to make sure that everybody understands this is the quarter we're going to be first with the full sales force out. Our expansion continues and our full marketing operations are not going to be in full swing but in the fourth quarter of next year. So we're enthusiastic about the prospects of revenue growth but we want to caution that it may take a few months before we get the clear signs of the effect of our efforts.
spk09: That makes good sense to us. And then I wondered if you could provide a perspective on the possibility that there could be another new entrant in terms of
spk07: class
spk09: to psychosis treatment and that is with the muscarinic modulators with the possible approval of the candidate called CAR-XT this fall. I'm sure you're prepared for that but what would be the response from your messaging in the face of that increased competition or do you believe that the label is sufficiently differentiated and FNAP stands on its own to continue to gain share?
spk12: Yeah of course we're looking at the competitive space and we're becoming more and more familiar with this new class of drugs and first of all I would say it is terrific that you know after many years folks are working on new mechanisms of action to address the medical needs. So first I would say we welcome more enthusiasm in the space and more attention to treat these difficult disorders and I think a success of that drug will underscore the remaining of that medical need in the space. In terms of differentiation we have to wait and see the profile but I would say a strong factor in differentiating FNAP not only from new entrants but also the drugs in the market is the tolerability profile that is well understood. It is not a new entrant. The drug has been in the market for about 15 years since the first approval so there's a lot of experience and familiarity. So we're looking at FNAP as a well-known friend that now has a new utility and for new entrants we welcome them all and we welcome more education of psychiatrists and other specialties around these markets and drugs.
spk09: And then one last question in terms of the pipeline with regard to Triadipitan. When you think about gastroparesis versus motion sickness, do you think gastroparesis is a nice to have or a need to have in terms of your kind of view of where Vanda can be in a year with regard to commercial opportunities or is motion sickness perhaps a little bit more consistent with some of marketing efforts thus far? You mentioned filing later on this year. Does that depend on what the agency has provided you or will provide you with regard to a response on gastroparesis? Thank you.
spk12: Yeah, I'll take separately the two parts of the question. We believe that Triadipitan has a significant and medical need and the testimony of that does not come just from our clinical trial results. All of them have been published but also by what is personally exciting to me, the dozens of patients who have come over the years to request and be granted expanded access. We just celebrated our first patient four years on the drug with her testimony of the drug changing her life. So if you see it from the patient need, I think it is very important that Triadipitan makes it to the armamentarium of drugs for gastroparesis. But given the diversification of revenue that the company has and the deep and diversified pipeline, we can tolerate a delay in approval which I guess that is the signal we can interpret now. When it comes to motion sickness, the motion sickness filing and motion sickness approval, it is unlikely depends on anything we know from the FDA. The FDA will likely point to their questions around the strength of efficacy and they will point back to long-term preclinical safety additional data they may need. However, when it comes to motion sickness, there is no question about efficacy that the drug prevents in the setting of motion sickness. That is something that we have extensively discussed and agreed upon with the FDA in end of phase two and pre-MDA meetings. When it comes to safety, we think we are going to have a complete package both preclinical and clinical given the incidental in not chronic use of these drugs. So we feel very confident that our package will be complete.
spk09: Very helpful. I will have more questions in the queue but maybe give someone else a shot.
spk04: Again, if you would like to ask a question, press star 1 on your telephone keypad.
spk05: Your next question comes from the line of Andrew Chai from Jefferies. Please go ahead.
spk02: Hi. Thanks. Good afternoon. Thanks for taking my questions. The revenue guidance range is pretty wide, $30 million range despite us being two quarters in. So what exactly is your revenue guidance assuming for the type of quarterly sales growth for both Pombori and FNAPT in second half 2024? What gets you to the high end of the guidance? Thanks.
spk10: I will let Kevin take that.
spk06: Hey, Andrew. As we mentioned, obviously with the launch of FNAPT and Pombori happening now in the third quarter and as you mentioned two quarters in, the trajectory of the launches and how quickly we begin to see results, if we start to see results, fairly quickly we think we could end up at the top end of the range whereas if it takes a little bit longer time for those results to translate into revenue, it could come later in the year and therefore be closer to the middle of the range or somewhere else in the range.
spk02: I see. In terms of the cash guidance, seems like there will be some expected cash burn year over year exiting 2024. But as we exit 2024 and head into 2025, do you think you can be cashflow positive or should we be expecting increased investments in the launches and pipeline growth to more than offset the revenues you bring in?
spk06: Yeah. First on the cash guidance for this year is our communicated guidance that will end the year between 360 and 390. The high end of that range would be slight cashflow positive, very slight. The bottom end of the range would be a burn in the neighborhood of 25 to 30 million. Therefore, the midpoint is obviously a smaller number than that. If we end up at the top point of our revenue range, then we could even see to be right around the cash break even number or maybe a little bit better, a little bit worse. That's just for the trajectory of this year. Obviously, we haven't provided guidance for next year so you can only speak to in the context of what we've communicated. But if we begin to see revenue growth as we hope for and anticipate on these two products and we continue to make the investments that we've articulated, next year we could see revenue growth that could necessitate additional investments or we could see it be efficiently converted into positive EPS.
spk02: Thanks. For Trivotent, let's just say it was approved later in September. Can you guys talk about your launch strategy?
spk11: Yes, absolutely. We actually have had
spk12: quite a bit of time to work our launch plan and we feel well prepared. Of course, we depend on the labeling with the messaging. We understand well the target population. We have cultivated extensive relationships with key opinion leaders. We understand the size of the sales force. We understand the effort and size of speakers program. Of course, we have early plans of what a direct to consumer campaign can do in this indication.
spk02: I see. The last question is sales force is 3X larger than earlier in the year. How many sales reps did you have earlier in the year? So we can do the math here.
spk06: Yes, the sales reps in the early part of the year were in the neighborhood of about 50. And so with it being 3X larger, we're a little north of 150.
spk13: Perfect. Okay. Thank you. Congrats on the quarter.
spk01: Thanks, Andrew.
spk04: Again, if you would like to ask a question, press star one on your telephone keypad. Okay. We have no more questions until I will now turn the conference back over to Vanda management for
spk05: closing remarks. Please go ahead.
spk12: Thank you very much for joining
spk11: on our second quarter, 2024 call and we hope to
spk12: see you again soon.
spk05: This concludes the conference call. You may now disconnect.
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