Vanda Pharmaceuticals Inc.

Good afternoon and welcome to the Quarter 1 2025 Vanda Pharmaceuticals Incorporated Earnings Conference Call. I am Franz and I'll be the operator assisting you today. 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 1 on your telephone keyboard. And if you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Kevin Moran, Vanda Chief Financial Officer. Please go ahead.

Thank you, Francis. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' first quarter 2025 performance. Our first quarter 2025 results were released this afternoon and are available on the SEC's Edgar system online. and on our website, www.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. Mahalis Plain-Moropoulos, our President, Chief Executive Officer, and Chairman of the Board, and Tim Williams, our General Counsel. Following my introductory remarks, Mahalis 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 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 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 Polymeropoulos.

Mahalis Polymeropoulos Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss BANDA's first quarter 2025 results. Vanda has entered a new growth phase with multiple commercialized products and a rich, innovative pipeline. FNAP commercial growth has accelerated, reaching multi-year highs, with weekly prescriptions surpassing 2,000 at the end of April, as an increasing number of prescribers are adding FNAP to their therapeutic armamentarium. Our recent new drug application filings for Tredipitant and Bisanti are a testament to our productive research and development pipeline. The addition of Imsidolimab alongside Ponvori establishes an anti-inflammatory front size that we believe has significant growth potential. These accomplishments have been possible because of our talented employees who for the first time surpassed 400 in number, a 22-year high. Some of the key operational highlights starting with commercial activities. On FNAFT, FNAFT was approved in the second quarter of 2024 for the acute treatment of bipolar I disorder. Vanda initiated the commercial launch of FNAFT at this indication in the third quarter of 2024. In the first quarter of 2025, as compared to the first quarter of 2024, total prescriptions increased by approximately 14% and FNAP net product sales increased by 14%. Additionally, new patient starts as reflected by new-to-brand prescriptions increased by nearly three-fold in the same period of time. FNAP total prescriptions for the week of April 25 reached the milestone of 2,000, making FNAP one of the fastest-growing atypical antipsychotics. Dana has also announced an expansion of its psychiatrist sales force to approximately 300 representatives. On Hetlios, through the first quarter of 2025, Hetlios continues to retain the largest portion of market share despite generic competition for over two years. On Ponesimod, when they initiate the commercial launch of Polvorii for the treatment of relapsing forms of multiple sclerosis, in the third quarter of 2024. In April 2025, new patient prescriptions reached a new record high since the initiation of Vanda's commercial launch. Vanda has reinforced the Ponvori sales leadership team and announced an expansion of its Ponvori sales force to approximately 40 representatives. I will turn to regulatory and clinical development highlights. Predefinite new drug application for motion sickness accepted for filing by the U.S. Food and Drug Administration with a Prescription Drug User Fee Act target action date of December 30, 2025. FNAP marketing authorization applications for bipolar 1 disorder and schizophrenia were submitted to the European Medicine Agency in the fourth quarter of 2024. Behatlius marking the authorization application in Smith-McGinnis submitted to the EMA in Q4 of 2024. Bisanti, new drug application for bipolar one disorder in schizophrenia accepted for filing by the FDA with a PDUFA target action date of February 21, 2026. MC-dolimel biologic license application for the treatment of generalized postular psoriasis is expected to be submitted to the FDA in 2025. Some clinical highlights on FNAPT. First, on schizophrenia, a Phase III program for the long-acting injectable formulation of FNAPT for the treatment of schizophrenia relapse prevention is ongoing. Hypertensive, that's a program we first discussed in the prior quarter. Panda has initiated a study for Phenapt long-acting injectable as a once a month injectable for uncontrolled hypertension and plans to begin enrolling patients soon. Bisanti, Melissa Peridot. The new drug application for Bisanti for the acute treatment of bipolar disorder and the treatment of schizophrenia was accepted for filing by the FDA with a PDUFA target action date of February 21, 2026. Exclusivity for Bisanti, including pending patent applications, could extend into the 2040s. Bisanti is a new chemical entity which was initially identified as an active metabolite of alloperidone. PANDER discovered that nulsaperidone, when administered orally, quickly interconverts to alloperidone. In clinical studies, Nilsaperidone and Avoperidone have been shown to be bioequivalent at both low and high doses, administered both in single and multiple dose patterns. The results of these clinical studies will be presented in late May at the 2025 American Society of Clinical Psychopharmacology Annual Meeting in Scottsdale, Arizona. The Bisanti Phase III clinical study for use as a once-daily adjunctive treatment for major depressive disorder is ongoing. Results are expected in 2026. Hetlios clinical programs in pediatric insomnia and delayed sleep phase disorders are ongoing. The VANDAS marketing application authorization for Hetlios and Hetlios-LQ for Smith-Mageni syndrome in Europe, with the European Medicines Agency. An investigational new drug application, 4.40, has been submitted and accepted by the FDA in the fourth quarter of 2024 for the treatment of psoriasis and ulcerative colitis. For the treatment of motion sickness, the NDA was accepted for filing by the FDA with the PDUFA target action date December 30, 2025. In the fourth quarter of 2024, Vanda initiated a clinical study to study drug dividend in the prevention of vomiting induced by a GLP-1 analogue, that's Wegovy semaglutide. Results are expected in the third quarter of 2025. Imcidolimab, in February 2025, Vanda announced it entered into an exclusive global license agreement with Anaptis for the development and commercialization of Imcidolimab. That's the IL-36R antagonist map. A BLA for generalized porcelain psoriasis is expected to be submitted to the FDA in 2025. And some highlights of the early stage programs, VQW765, the alpha-7-ecotinic acetylcholine receptor, partial agonist, is currently in clinical development for the treatment of acute performance anxiety in social situations. Vanda expects to initiate phase three program in 2025. The investigation of new drug application for VCA894A in the treatment of sarcoma tooth disease axonal type 2S and inherited peripheral neuropathy for which there is no available treatment was accepted by the FDA in 2024. Previously in 2023, VCA894A was granted orphan drug designation for the same indication. The phase one clinical study for VCA894A is expected to enroll the patient by mid-2025. With that, I'll turn now to Kevin to discuss our financial results.

Thank you, Mahlos. I will begin by summarizing our first quarter 2025 financial results. Total revenues for the first quarter of 2025 were $50 million, a 5% increase compared to $47.5 million for the first quarter of 2024. The increase as compared to the first quarter of 2024 was primarily due to growth in FNAP revenue as a result of the bipolar commercial launch. Let me now break this down by product. FNAP net product sales were $23.5 million for the first quarter of 2025, a 14% increase compared to $20.6 million in the first quarter of 2024. The increase in FNAP revenue between the first quarter of 2025 and the first quarter of 2024 was primarily attributable to an increase in volume, which was driven by increased total prescriptions, or TRXs, as reported by Equivia Exponent. FNAP total prescriptions in the first quarter of 2025 increased by approximately 14% compared to the first quarter of 2024, and FNAP new patient starts in the first quarter of 2025, as reflected by new-to-brand prescriptions, or NBRX, increased by nearly threefold compared to the first quarter of 2024. Turning now to Hetlios, Hetlios' net product sales were $20.9 million for the first quarter of 2025, a 4% increase compared to $20.1 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 price net of deductions partially offset by a decrease in volume. Of note, through the first quarter of 2025, Hetlios continues to retain the largest portion of market share despite generic competition for over two years now. Headless net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. Going forward, headless net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers, or may be variable depending on when specialty pharmacy customers need to purchase again. Further, headless net product sales may decline in future periods, potentially significantly related to continued generic competition in the U.S., Additionally, the company constrained Hetlios net product sales for the first quarter of 2025 and for the years ended December 31st, 2024 and 2023 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 related to inventory stocking by specialty pharmacy customers are resolved. And finally, turning to Pompori. Pomvori net product sales were $5.6 million for the first quarter of 2025, a decrease of 18% compared to $6.8 million for the first quarter of 2024. The decrease in net product sales as compared to the first quarter of 2024 was attributable to a decrease in volume. As a reminder, Pomvori net product sales for the three-month ended December 31, 2024 included approximately $3 million of variable consideration that is subject to dispute but that the company believes is not probable significant revenue reversal. As a reminder, we completed the acquisition of the U.S. and Canadian rights to Pompori in December of 2023 and initiated the commercial launch of Pompori in the third quarter of 2024. As such, this represents the second full quarter of Pompori revenue recognition since the initiation of commercial launch activities. And significant progress in diversifying our product mix with innovative and value-generating products. For the first quarter of 2025, Vanda recorded a net loss of $29.5 million compared to a net loss of $4.1 million for the first quarter of 2024. The net loss in the first quarter of 2025 reflects expenses associated with the payment of $15 million related to the exclusive global license agreement with Enaptis for the development and commercialization of Insidolimab and increased commercial activities associated with the commercial launches of Phenapt and Pompori. From an income tax perspective, the net loss for the first quarter of 2025 included an income tax benefit of $7.9 million as compared to an income tax benefit of $0.5 million for the first quarter of 2024. Of other note on the tax side, the company assesses the need for evaluation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence. The company generated a pre-tax loss for the quarter ended March 31st, 2025. If the company continues to generate pre-tax losses and or if the company's projections indicate pre-tax losses in future periods, the conclusion about the appropriateness of the valuation allowance could change in the future. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change. Turning now to operating expenses. Operating expenses in the first quarter of 2025 were $91.1 million compared to $56.7 million in the first quarter of 2024. The $34.4 million increase was primarily driven by higher R&D expenses associated with the payment of $15 million related to the exclusive global license agreement with Anaptis for Imsidolimab, higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fnapt in bipolar 1 disorder and Ponvori in multiple sclerosis, and higher expenses associated with legal and other corporate activities. During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Phenaptin Bipolar I Disorder and Pombori and Multiple Sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may continue to increase in future periods as a result of the continued ongoing commercial efforts around Phenaptin Bipolar I Disorder and Pombori and Multiple Sclerosis. Venus Cash, cash equivalent to marketable securities, referred to as cash as of March 31, 2025, was $340.9 million, representing a decrease of $33.7 million compared to December 31, 2024. The decrease to cash reflects the payment of $15 million during the first quarter of 2025 related to the exclusive global license agreement with Anaptis for Insidolamon. With regards to launches of Phenaptin Bipolar 1 disorder and Pomporia multiple sclerosis, As I mentioned, launches were initiated in 2024 and we expect to continue the build-out of our full commercial infrastructure with the impact of these commercial efforts expected to contribute to revenue growth in 2025 and beyond. We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong market response to our commercial launch of FNAP for bipolar I disorder, including new patient starts as reflected by NBRX, increasing by nearly three-fold in the first quarter of 2025 as compared to the first quarter of 2024. In the first quarter of 2025, as compared to the first quarter of 2024, total prescriptions, or TRXs, increased by approximately 14%. As Mahalas mentioned, of particular note, for the week of April 25, 2025, FNAP reached the milestone of 2,000 weekly TRXs, making FNAP one of the fastest-growing atypical antipsychotics in the market on a 13-week to 13-week basis. Our FNAP sales force continues to expand. As of the end of the first quarter of 2024, our sales force numbered approximately 50 representatives. Currently, we have approximately 250 representatives, and we have now initiated another phase of expansion, which is expected to grow our sales force to approximately 300 representatives by the middle of this year. These expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, face-to-face calls in April of 2025 were 43% higher than the monthly average of face-to-face calls in the first quarter of 2025. Again, face-to-face calls in April of 2025 were 73% higher than the monthly average of face-to-face calls in the fourth quarter of 2024, and face-to-face calls in April of 2025 were more than 500% higher than the monthly average of face-to-face calls in the first quarter of 2024. In addition to our FNAP sales force, we have established a specialty sales force to market Pombori to neurology prescribers around the country. We are currently in the process of growing the sales force to 40 representatives by the middle of this year and have recently reinforced the Pombori sales leadership team. Of particular note, in April 2025, new patient prescriptions grew to a record high since the initiation of Vanda's commercial launch. We have now completed over 1,100 FNAT prescriber awareness programs, and the number of programs completed in the first quarter of 2025 was 29% higher than the number of programs completed in the fourth quarter of 2024. PONFORI prescriber awareness programs continue to expand, with 38% more programs completed in the first quarter of 2025 as compared to the fourth quarter of 2024. Before turning to our financial guidance, I would like to remind folks that with FNAP, Tetlios, and Pompuri already commercially available, the Trifidin NDA for motion sickness accepted for filing by the FDA, the Milsa Peridone, or hopefully to be known under the brand name Basanti, NDA for bipolar I disorder and schizophrenia accepted for filing by the FDA, and a BLA for insidolamab expected to be submitted later this year, Vanda could have six products commercially available in 2026. Turning now to our financial guidance. Vanda is reiterating its 2025 total revenues guidance and updating its 2025 financial guidance to include year-end 2025 cash. Vanda expects to achieve the following financial objectives in 2025. Total revenues from FNAPT, Hetlios, and Pombori of between $210 and $250 million. Year-end 2025 cash of $280 to $320 million. This revenue range would imply revenue growth in 2025 of between 6% and 26% as compared to full-year 2024 revenue. It is worth commenting that the quarterization of revenue in the remainder of 2025 will be impacted by several items, including the Medicare benefit redesign portion of the Inflation Reduction Act, which went into effect at the beginning of this year. The implementation of the benefit redesign is expected to negatively impact gross to net for the Medicare payer segment of our products, more significantly on FNAP and Helios. Note that this change is not linked specifically to Vanda, but is an industry-wide change which will have varying impacts on pharmaceutical companies. With FNAP and POMBORI both in the early stages of commercial launch, FNAP for bipolar I disorder and POMBORI for multiple sclerosis, revenue for the year is likely to be back-weighted as these products continue to grow. Our expectation is that FNAPT will grow on a quarterly basis with the trajectory accelerating as we move later into the year. This growth will potentially be offset by variability and or a decline in HEDLIA's revenue. The year end 2025 cash guidance reflects the impact of the conditional investments that Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and potentially outsized commercial investments, which could continue to increase depending on the success of these commercial strategies. From a quarterization perspective, the cash burn could be higher in earlier periods as we make these conditional investments that will result in increased revenue in future periods. The potential market opportunity for our growing psychiatry portfolio is significant and necessitates the increased investments we are currently making to enhance the commercial profile of FNAFT, bring Basanti and FNAFT's LAI to market, and expand the Basanti label to include major depressive disorder. With that, I'll now turn the call back to Mahalo. Thank you.

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

Thank you. And we will now begin the question and answer session. If you 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 withdraw your question, simply press star 1 again. If you are called upon to ask your question and are 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 Andrew Tsai from Jefferies. Please go ahead.

Hey, thanks. Good afternoon. Thanks for taking my questions. I appreciate the updates. I wanted to stick on the theme of pipeline today. So notice that the phase three MDD data for milfoperidone or Basanti could read out in 2026. So I'm just curious what kind of placebo adjusted change on Madras or Hamdi would you want to see for a competitive profile?

Yeah, thank you, Andrew. We have not pre-specified a margin. Of course, There are a number of antidepressant drugs, and the variability on Hamdi-sponsored madras does not necessarily mean a drug is better than another, because you do know the tremendous degree of variability in major depression studies. But the primary endpoint will be change from baseline as compared to placebo.

And secondly, you're starting a social anxiety study phase three for 765. Any color around the study design and how you power that study? And when could we get data for that?

Yeah. I'm not going to be able to answer this time the question about when to get data. The study is set to begin sometime later this year, likely in Q3. In terms of design, I would refer you to the design of the study that we've conducted before, and it is soon to be published. The paper has been accepted. And it is a classic design that you may have seen with others who develop similar drugs using the TRIER test in TRIER-naive patients.

Great. And my last question is on tradipitin for gastroparesis. It sounds like you do have correspondences with the FDA lately. What is your latest strategy and messaging around why this should be approved, and when can we hear next steps? And then lastly, last to that is, in the best-case scenario, do you refile the drug for review again, or is the FDA going to make another PDUFA-type decision later this year when you meet with them? Thank you.

Yeah, thanks, Andrew. So it is still the same review cycle that we got the complete response letter in September of last year. And as specified within the statute, we were given the opportunity for a hearing. That process, unfortunately, is very complex because an opportunity for a hearing by the FDA does not mean you get a hearing. it means that they're going to think about whether CIDR, the review division, will propose to the commissioner whether to have a hearing or not. And then the commissioner will decide whether to have a hearing, and if yes, the commissioner will conduct the hearing. You know, it sounds complicated. It is. It shouldn't be. And also, it is not a path commonly taken. In fact, to our knowledge, The FDA has held no hearings for a long period of time for the approval of new drugs. So new filing is not required. We have requested to begin this process. Hopefully we're going to hear soon and answer whether CEDAR will propose to the commissioner to have a hearing or not. and then the commissioner will take that advice and make a decision.

Thank you very much.

Thanks, Andrew.

And your next question comes from Charles Duncan from Cantor Fitzgerald. Please go ahead.

Okay. Thanks, Kevin or Mahalas and team. Congrats on a Nice FNAP number. I had a couple of questions on that and then for the pipeline. With regard to FNAP, I've actually noticed a direct-to-consumer campaign while catching the Stanley Cup playoffs, and I'm wondering if you could give us a sense of First of all, how long that will run, and kind of how do you measure a return on the investment? Are you gaining traction with that, and is it primarily for bipolar or schizophrenia patients? I imagine the former.

Yes. Indeed, this quarter, I mean the first quarter, we initiated a direct-to-consumer campaign, that addresses bipolar disorder in one commercial and punvori in a second one. And we also have made a concerted effort to increase the awareness of the Vanda brand that helps a lot with recognition by prescribers, patients, key opinion leaders. We've been receiving very good feedback. And it is validating what people in this field already know, that this is a promotionally sensitive market, especially bipolar disorder, and therefore direct-to-consumer awareness campaigns are fruitful.

It would seem to be the case with the new brand of key performance metrics, so congrats on that. Second question is on Bisanti and the upcoming ASCP presentation. I guess I'm wondering, what would you focus attention to on that? I don't believe we've seen any data yet on Bisanti or Milsiparadone. So what is it that you anticipate being able to take away from that presentation with regard to, you know, the, you know, call it bioequivalence?

Yeah, so as we described earlier, the discovery that Vanda made as we're studying this active metabolite of alloperidone, milsoperidone, we realized that surprisingly, we know almost no other example of a drug that behaves like that. There is a quick interconversion in the body so that milciperidone is metabolized to iloperidone and vice versa. So we tested this hypothesis and eventually conducted these two critical studies that are really the core of the submission of this new drug application. We've discussed this with the FDA, and these are the studies that will be published at the Scottsdale Conference. So in the studies, you're gonna see two designs. One of them is a single acute dose crossover study. And the second one is multiple doses to steady state to the maximum dose, and then a crossover study. So with this, we complete the packets that not only confirms that the two products are bioequivalent with each other at the low dose, but also it confirms that at the high dose, they are bioequivalent as well, which indirectly suggests also linearity.

Very helpful. Looking forward to that presentation. Last question is more strategy. And that is, I'm intrigued with the EMEA filings for both FNAPT as well as HETLIOS. And I guess I'm kind of wondering, how do you see the market opportunity in Europe for the antipsychotic, you know, market and I'll call it unmet need and your ability to market the drug over there, and have you received 120-day questions? It's probably right on the edge, but have those come in yet?

So, I would like to say the last first. Yes, as you know, with the timing, the D120 questions have arrived, and we're just actively working through them right now. Now, in terms of the expectation of market and market response in Europe. As you know already, the pricing and reimbursement in Europe is very tough for antipsychotics. However, there is a good appetite for the long-acting injectables, but you can't get there without having first the approval in the indication with the oral. So we see this as a two-step. Now, in terms of capabilities, I remind you that we have had a presence, a strong presence in Germany with our own marketing and sales force, for non-24 for the last 10 years. So we have actually quite good understanding of Germany dynamics, although actually we interact with other countries as well. But, of course, Germany is the focus, given the more favorable reimbursement environment there.

Got it. Very good. Thanks for the guidance as well. I'll hop back in the queue.

Thank you, Charles.

And your next question comes from Raghuram Selvaraju from H.C. Wayne White. Please go ahead.

Good afternoon. This is Dan Alparam. Congrats on the earnings meeting. Thanks for taking our question. So what is likely to be the total market opportunity for Byzantium, major depressive disorder, and do you think it would compete directly against Caplito as successful? And I'd like to ask a follow-up if I could.

Definitely, it is in the same space. And the designs of this study and the completed studies are very close to each other. So it is about resistance, treatment-resistant depression, and then adjunct treatment with Bisanti. Also to point out is that we're testing a one dose a day. And I remind you that for bipolar and schizophrenia acute indications, we have used twice a day dosing. So the population will be very similar to that of Kaplida. And the once a day convenient dosing will be there as well. Of course, we think there may be advantages to the FNAP profile over Caplida and other competitors, especially on the tolerability regarding akathisia that you see with drugs like Brailler or peripheral neuropathy that you may see with Caplida.

Thank you. And then for the follow-up, when might the lipid ester formulations of Byzantium to the clinic as long-acting injectable formulation? Thank you.

Thanks. The first long-acting injectable, which is now initiating the Phase III study, is the Phenapt long-acting injectable. The nilsiperidone Byzantium long-acting injectable is still in the formulation phase. But as we noted in the prior release, the fact that Bisanti has a terminal hydroxyl group, it makes it amenable to development of lipid esters. And as you know, various lengths of these lipid esters have translated to various types length and duration of the drug in the blood where you can make doses once a month, maybe three months, and we've seen with other drugs six months.

Thank you so much.

Sure, thanks.

There are no further questions at this time. I would now like to turn the call back over to Vanda Management for the closing remarks. Please go ahead.

Yes, thank you all for joining us and we'll see you at a future call.