Financial Data and Key Metrics Changes - 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 [11] - For the second quarter of 2024, total revenues were $50.5 million, a 10% increase compared to $46.1 million for the second quarter of 2023 [16] - The company reported a net loss of $8.7 million for the first half of 2024 compared to net income of $4.8 million for the same period in 2023 [14] - Operating expenses for the first six months of 2024 were $117.3 million, an increase from $109.4 million in the same period in 2023 [15] Business Line Data and Key Metrics Changes - Fanapt 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 [12] - HETLIOZ 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 [13] - PONVORY net product sales were $15.4 million for the first six months of 2024, representing the second full quarter of revenue recognition following its acquisition [14] - For the second quarter of 2024, Fanapt net product sales were $23.2 million, a 4% decrease compared to $24.1 million in the second quarter of 2023 [17] - HETLIOZ 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 [18] - PONVORY 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 [18] Market Data and Key Metrics Changes - The company has expanded its sales force by three times to enhance its market presence and reach [22] - The number of Fanapt prescriber awareness programs scheduled for the third quarter of 2024 is more than three times larger than in the second quarter of 2024 [22] Company Strategy and Development Direction - The company is focusing on expanding its commercial organization to maximize the commercial value of Fanapt following its FDA approval for bipolar I disorder [5] - Plans are in place to initiate clinical programs for PONVORY in psoriasis and ulcerative colitis, aiming to diversify treatment options [7] - The company expects to reach full operational capacity for its marketing campaign by the fourth quarter of 2024 [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the prospects of revenue growth from the psychiatry franchise, particularly with the launch of Fanapt and PONVORY [6] - The company anticipates that HETLIOZ net product sales will likely decline significantly due to ongoing generic competition in the US [23] - Management remains confident in the approval process for Tradipitant, despite challenges faced with the FDA [10] Other Important Information - The company recorded cash, cash equivalents, and marketable securities of $387.7 million as of June 30, 2024, a slight decrease from previous periods [16] - The company reinstated financial guidance, expecting total net product sales from Fanapt, HETLIOZ, and PONVORY to be between $180 million and $210 million for 2024 [23] Q&A Session Summary Question: Feedback on prescriber perspective for Fanapt after label expansion - Management noted significant unmet medical needs in the market and positive early signs of new patient starts based on IQVIA data [25][27] Question: Response to potential new entrants in psychosis treatment - Management welcomed new entrants and emphasized the differentiating tolerability profile of Fanapt [29] Question: Commercial opportunities for Tradipitant in gastroparesis vs. motion sickness - Management highlighted the significant unmet medical need for gastroparesis and expressed confidence in the launch strategy for both indications [31][32] Question: Revenue guidance assumptions for PONVORY and Fanapt - Management indicated that the trajectory of launches would determine the revenue outcomes, with potential for higher sales if results are seen quickly [36] Question: Cash flow expectations heading into 2025 - Management discussed the potential for slight cash flow positivity if revenue growth is realized, while also considering ongoing investments [37] Question: Launch strategy for Tradipitant if approved - Management detailed a well-prepared launch plan, emphasizing relationships with key opinion leaders and understanding the target population [38]

Conference Call and Webcast to Follow Vanda will host a conference call at 4:30 PM ET on Wednesday, July 31, 2024, during which management will discuss the second quarter 2024 financial results and other corporate activities. To participate in the conference call, please dial 1-800-715-9871 (domestic) or 1-646-307-1963 (international) and use passcode 1278669. A replay of the call will be available on Wednesday, July 31, 2024, beginning at 8:30 PM ET and will be accessible until Wednesday, August 7, 2024, a ...

Vanda brought this suit in December 2022, alleging patent infringement against Teva and Apotex (the "Defendants"). The Defendants moved for judgment on the pleadings in April 2023. On June 27, 2024, the Court denied the motions. The Court concluded that the issues of patentability were not the same as those resolved in prior patent-infringement litigation between the parties. It further concluded that the Defendants raised issues that require claim construction and fact development before the Court can reso ...

PART I – FINANCIAL INFORMATION [ITEM 1 Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201%20Financial%20Statements%20%28Unaudited%29) Presents Vanda Pharmaceuticals Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, comprehensive income, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of Vanda Pharmaceuticals Inc.'s financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $125,158 | $135,821 | | Marketable securities | $268,984 | $252,443 | | Total current assets | $439,425 | $432,946 | | Total assets | $652,682 | $648,440 | | Total current liabilities | $93,342 | $87,697 | | Total liabilities | $108,687 | $103,530 | | Total stockholders' equity | $543,995 | $544,910 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Vanda Pharmaceuticals Inc.'s financial performance over specific periods, including revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (in thousands, except per share) | (in thousands, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net product sales | $47,462 | $62,498 | | Total revenues | $47,462 | $62,498 | | Total operating expenses | $56,697 | $60,494 | | Income (loss) from operations | $(9,235) | $2,004 | | Net income (loss) | $(4,146) | $3,252 | | Basic EPS | $(0.07) | $0.06 | | Diluted EPS | $(0.07) | $0.06 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Presents Vanda Pharmaceuticals Inc.'s total comprehensive income or loss, encompassing net income and other comprehensive income or loss items Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $(4,146) | $3,252 | | Other comprehensive income (loss), net of tax | $(353) | $938 | | Comprehensive income (loss) | $(4,499) | $4,190 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Outlines changes in Vanda Pharmaceuticals Inc.'s stockholders' equity, reflecting impacts from net income, stock-based compensation, and other comprehensive loss Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands) | (in thousands) | Balances at Dec 31, 2023 | Balances at March 31, 2024 | | :--- | :--- | :--- | | Total Stockholders' Equity | $544,910 | $543,995 | | Stock-based compensation expense | — | $3,584 | | Net loss | — | $(4,146) | | Other comprehensive loss, net of tax | — | $(353) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes Vanda Pharmaceuticals Inc.'s cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,569 | $31,803 | | Net cash provided by (used in) investing activities | $(18,218) | $187,294 | | Net change in cash, cash equivalents and restricted cash | $(10,663) | $219,142 | | Cash, cash equivalents and restricted cash, End of period | $125,627 | $354,640 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, acquisitions, and legal matters [1. Business Organization and Presentation](index=11&type=section&id=1.%20Business%20Organization%20and%20Presentation) Describes Vanda Pharmaceuticals Inc.'s core business, strategic focus, and commercial and development product portfolios - Vanda Pharmaceuticals Inc. is a global biopharmaceutical company focused on developing and commercializing innovative therapies for high unmet medical needs[28](index=28&type=chunk) - The commercial portfolio includes **Fanapt®** (schizophrenia, bipolar I disorder), **HETLIOZ®** (Non-24, SMS), and **PONVORY®** (relapsing multiple sclerosis)[29](index=29&type=chunk) - The development pipeline includes Milsaperidone, Fanapt® LAI, HETLIOZ® for new indications (jet lag, insomnia, DSPD, pediatric Non-24), PONVORY® for psoriasis and ulcerative colitis, Tradipitant for gastroparesis, motion sickness, and atopic dermatitis, CFTR activators/inhibitors, VTR-297, VQW-765, and ASO molecules[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and policies applied in preparing the financial statements, including revenue recognition and inventory valuation - No material changes to significant accounting policies previously disclosed in the Annual Report[31](index=31&type=chunk) Net Product Sales by Product (in thousands) | Product | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Fanapt® | $20,579 | $22,882 | | HETLIOZ® | $20,053 | $39,616 | | PONVORY® | $6,830 | — | | Total net product sales | $47,462 | $62,498 | - HETLIOZ® net product sales decreased significantly due to lower unit sales following elevated inventory stocking at specialty pharmacies in Q1 2023 and continued generic competition in the U.S. Sales for Q1 2024 again reflected increased inventory stocking[35](index=35&type=chunk) - Five major customers accounted for **72% of total revenues** and **71% of total accounts receivable** for the three months ended March 31, 2024[37](index=37&type=chunk) [3. PONVORY Acquisition](index=13&type=section&id=3.%20PONVORY%20Acquisition) Details the acquisition of U.S. and Canadian rights to PONVORY® from Actelion Pharmaceuticals Ltd. and its accounting treatment - On December 7, 2023, Vanda acquired the U.S. and Canadian rights to **PONVORY®** from Actelion Pharmaceuticals Ltd. (Janssen) for a total consideration of **$104.9 million**[40](index=40&type=chunk) - The acquisition was accounted for as an asset acquisition, with the entire **$104.9 million** allocated to the acquired intangible asset for **PONVORY®** product rights[40](index=40&type=chunk) [4. Marketable Securities](index=14&type=section&id=4.%20Marketable%20Securities) Provides a breakdown of Vanda Pharmaceuticals Inc.'s available-for-sale marketable securities by category and their fair market values Available-for-Sale Marketable Securities (in thousands) | Category | March 31, 2024 Fair Market Value | December 31, 2023 Fair Market Value | | :--- | :--- | :--- | | U.S. Treasury and government agencies | $167,456 | $185,115 | | Corporate debt | $101,528 | $67,328 | | Total marketable securities | $268,984 | $252,443 | [5. Fair Value Measurements](index=14&type=section&id=5.%20Fair%20Value%20Measurements) Explains the company's fair value hierarchy and presents assets measured at fair value, including U.S. Treasury, government agencies, and corporate debt - The company uses a three-tier fair value hierarchy (**Level 1, Level 2, Level 3**) for measuring fair value[42](index=42&type=chunk)[43](index=43&type=chunk) Assets Measured at Fair Value (in thousands) | Category | March 31, 2024 Total Fair Value | Level 1 | Level 2 | | :--- | :--- | :--- | :--- | | U.S. Treasury and government agencies | $167,456 | $167,456 | $— | | Corporate debt | $139,899 | $— | $139,899 | | Total assets measured at fair value | $307,355 | $167,456 | $139,899 | - Total assets measured at fair value include **$38.4 million** and **$63.8 million** in cash equivalents as of March 31, 2024, and December 31, 2023, respectively[44](index=44&type=chunk) [6. Inventory](index=15&type=section&id=6.%20Inventory) Details the breakdown of Vanda Pharmaceuticals Inc.'s inventory into current and non-current categories, including specific product inventories Inventory Breakdown (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total inventory, current | $1,505 | $1,357 | | Total inventory, non-current | $8,411 | $8,848 | | Total inventory | $9,916 | $10,205 | | Fanapt® product | $2,700 | $3,000 | | HETLIOZ® product | $7,300 | $7,200 | [7. Intangible Assets](index=15&type=section&id=7.%20Intangible%20Assets) Discusses the company's intangible assets, including their estimated useful lives, carrying amounts, and amortization expenses - The estimated useful life for the **PONVORY®** intangible asset was changed from **2035 to 2042** during the first quarter of 2024[48](index=48&type=chunk) Amortizing Intangible Assets (in thousands) | Asset | Estimated Useful Life | Gross Carrying Amount (March 31, 2024) | Net Carrying Amount (March 31, 2024) | | :--- | :--- | :--- | :--- | | HETLIOZ® | 2035 | $33,000 | $16,697 | | PONVORY® | 2042 | $104,894 | $102,654 | | Total | | $137,894 | $119,351 | Intangible Asset Amortization Expense (in thousands) | Period | Amortization Expense | | :--- | :--- | | Three Months Ended March 31, 2024 | $2,018 | | Three Months Ended March 31, 2023 | $379 | [8. Accounts Payable and Accrued Liabilities](index=16&type=section&id=8.%20Accounts%20Payable%20and%20Accrued%20Liabilities) Presents a breakdown of Vanda Pharmaceuticals Inc.'s accounts payable and accrued liabilities by category, including R&D and professional fees Accounts Payable and Accrued Liabilities (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Research and development expenses | $15,008 | $15,691 | | Consulting and other professional fees | $11,398 | $4,404 | | Compensation and employee benefits | $2,378 | $6,413 | | Total accounts payable and accrued liabilities | $37,773 | $38,460 | [9. Commitments and Contingencies](index=16&type=section&id=9.%20Commitments%20and%20Contingencies) Outlines Vanda Pharmaceuticals Inc.'s various license agreements with royalty and milestone payment obligations, and other non-cancellable purchase commitments - The company has various license agreements with royalty and milestone payment obligations for its products, including **Fanapt®**, **HETLIOZ®**, **Tradipitant**, CFTR activators/inhibitors, and VQW-765[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - For **HETLIOZ®**, the U.S. royalty on net sales to BMS will end in **April 2024**[53](index=53&type=chunk) - Remaining milestone obligations for **Tradipitant** include **$10.0 million** for U.S. marketing approval, **$5.0 million** for E.U. approval, and up to **$80.0 million** for sales milestones[53](index=53&type=chunk) - Non-cancellable purchase commitments for agreements longer than one year are not material[57](index=57&type=chunk) [10. Accumulated Other Comprehensive Loss](index=18&type=section&id=10.%20Accumulated%20Other%20Comprehensive%20Loss) Details the components of Vanda Pharmaceuticals Inc.'s accumulated other comprehensive loss, including foreign currency translation and unrealized losses Accumulated Other Comprehensive Loss (in thousands) | Component | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Foreign currency translation | $2 | $21 | | Unrealized loss on marketable securities | $(385) | $(51) | | Accumulated other comprehensive loss | $(383) | $(30) | [11. Stock-Based Compensation](index=18&type=section&id=11.%20Stock-Based%20Compensation) Discusses unrecognized compensation costs related to unvested stock options and RSUs, and presents the stock-based compensation expense - As of March 31, 2024, **$5.0 million** of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of **1.0 years**[61](index=61&type=chunk) - As of March 31, 2024, **$17.6 million** of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of **1.8 years**[65](index=65&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Research and development | $864 | $1,066 | | Selling, general and administrative | $2,720 | $3,285 | | Total stock-based compensation expense | $3,584 | $4,351 | [12. Income Taxes](index=20&type=section&id=12.%20Income%20Taxes) Presents the income tax provision or benefit for Vanda Pharmaceuticals Inc., driven by the estimated effective tax rate and discrete expenses Income Tax Provision (Benefit) (in thousands) | Period | Income Tax | | :--- | :--- | | Three Months Ended March 31, 2024 | $(518) (benefit) | | Three Months Ended March 31, 2023 | $2,276 (provision) | [13. Earnings per Share](index=20&type=section&id=13.%20Earnings%20per%20Share) Details Vanda Pharmaceuticals Inc.'s basic and diluted earnings per share, including the impact of anti-dilutive securities Net Income (Loss) Per Share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $(4,146) | $3,252 | | Basic EPS | $(0.07) | $0.06 | | Diluted EPS | $(0.07) | $0.06 | | Antidilutive securities excluded | 7,029,644 | 6,133,050 | - The net loss for Q1 2024 resulted in potentially dilutive securities having an anti-dilutive effect, making basic and diluted loss per share equivalent[71](index=71&type=chunk) [14. Legal Matters](index=20&type=section&id=14.%20Legal%20Matters) Summarizes Vanda Pharmaceuticals Inc.'s ongoing legal proceedings, including patent litigation, FDA challenges, and stockholder lawsuits - The U.S. Supreme Court denied Vanda's petition to review the Federal Circuit's decision in **HETLIOZ®** ANDA litigation, affirming the invalidity of certain patents against Teva and Apotex[73](index=73&type=chunk) - A lawsuit against Teva and Apotex asserting infringement of U.S. Patent No. 11,285,129 for **HETLIOZ®** is pending in the Delaware District Court[74](index=74&type=chunk) - Vanda filed lawsuits against the FDA challenging the approval of Teva's and MSN's generic **HETLIOZ®** versions, alleging non-compliance with labeling requirements (Braille) and faulty bioequivalence studies[74](index=74&type=chunk)[75](index=75&type=chunk) - A lawsuit was filed against MSN, Impax, and Amneal alleging false advertising and fraudulent inducement of a license agreement related to their generic **HETLIOZ®** launch[76](index=76&type=chunk) - Vanda has multiple pending FOIA lawsuits against the FDA to compel the production of records related to sNDA denials for **HETLIOZ®** (jet lag, insomnia) and information on **tradipitant** and **Fanapt®**[77](index=77&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - A lawsuit against CMS challenging its 'line extension' rule was ruled against Vanda by the Fourth Circuit in **April 2024**[77](index=77&type=chunk) - A stockholder lawsuit was filed in Delaware challenging the board's institution of the Rights Agreement, with the court denying the plaintiff's request to enjoin the Annual Meeting[81](index=81&type=chunk) [15. Subsequent Events](index=23&type=section&id=15.%20Subsequent%20Events) Reports on significant events occurring after the reporting period, including the adoption of a Rights Agreement by Vanda's board of directors - On **April 17, 2024**, Vanda's board of directors adopted a Rights Agreement (poison pill) to deter any person or group from acquiring **10% or more** of common stock without prior board approval[82](index=82&type=chunk)[83](index=83&type=chunk) - The Rights Agreement has a one-year term, expiring on **April 16, 2025**[141](index=141&type=chunk) [ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on Vanda's financial condition and results of operations, including commercial portfolio, development pipeline, and critical accounting policies [Overview](index=25&type=section&id=Overview) Introduces Vanda Pharmaceuticals as a global biopharmaceutical company focused on innovative therapies for unmet medical needs, leveraging genetics and genomics - Vanda Pharmaceuticals is a global biopharmaceutical company focused on developing and commercializing innovative therapies for high unmet medical needs, leveraging genetics and genomics[86](index=86&type=chunk)[87](index=87&type=chunk) - The commercial portfolio includes **Fanapt®** (schizophrenia, bipolar I disorder), **HETLIOZ®** (Non-24, SMS), and **PONVORY®** (relapsing multiple sclerosis), with a robust development pipeline[88](index=88&type=chunk)[90](index=90&type=chunk) [Operational Highlights](index=25&type=section&id=Operational%20Highlights) Summarizes key operational achievements and advancements across Vanda's psychiatry portfolio, HETLIOZ®, PONVORY®, Tradipitant, and early-stage development programs [Psychiatry Portfolio](index=25&type=section&id=Psychiatry%20Portfolio) Highlights advancements in Fanapt® for bipolar I disorder, milsaperidone NDA plans, and the Fanapt® long-acting injectable formulation program - **Fanapt®** was approved by the FDA in **April 2024** as a first-line treatment for acute bipolar I disorder in adults, significantly expanding the addressable patient population with patent exclusivity expected through **late 2027**[90](index=90&type=chunk) - An NDA for milsaperidone (active metabolite of **Fanapt®**) in schizophrenia and acute bipolar I disorder is expected to be submitted to the FDA in **early 2025**, with potential exclusivity into the **2040s**[90](index=90&type=chunk) - A Phase III program for the **Fanapt®** long-acting injectable (LAI) formulation is expected to be initiated by the **end of 2024**, with potential market entry after **2026** and exclusivity into the **2040s**[90](index=90&type=chunk) [HETLIOZ®](index=26&type=section&id=HETLIOZ) Discusses plans for HETLIOZ® LQ in pediatric insomnia, the FDA's Complete Response Letter for insomnia sNDA, and the Supreme Court's decision on patent litigation - Vanda plans to initiate a **HETLIOZ®** LQ program in pediatric insomnia, a condition with no currently approved treatments, potentially expanding the addressable patient population and extending market exclusivity into the **2040s**[91](index=91&type=chunk) - The FDA issued a Complete Response Letter (CRL) for the **HETLIOZ®** sNDA in insomnia, which Vanda is currently reviewing[91](index=91&type=chunk) - The U.S. Supreme Court denied Vanda's petition to review the Federal Circuit's decision in **HETLIOZ®** ANDA litigation, affirming the invalidity of certain patents[91](index=91&type=chunk) [PONVORY®](index=26&type=section&id=PONVORY) Outlines the commercial launch of PONVORY® for multiple sclerosis, and plans for Phase III studies in psoriasis and ulcerative colitis - Vanda expects to complete the transition of **PONVORY®** from Janssen and commercially launch the product for multiple sclerosis in the **third quarter of 2024**, with exclusivity expected into the **2040s**[92](index=92&type=chunk) - Vanda plans to file an IND application and initiate a Phase III study for **PONVORY®** in the treatment of psoriasis by the **end of 2024**, aiming to be the first oral S1P analog approved for this indication[92](index=92&type=chunk) - Vanda also expects to file an IND application and initiate a Phase III study for **PONVORY®** in the treatment of ulcerative colitis by the **end of 2024**[92](index=92&type=chunk) [Tradipitant](index=26&type=section&id=Tradipitant) Provides updates on the NDA review for tradipitant for gastroparesis and the progress of the Phase III clinical study in motion sickness - The NDA for **tradipitant** for gastroparesis is under FDA review with a PDUFA target action date of **September 18, 2024**[93](index=93&type=chunk) - The second Phase III clinical study of **tradipitant** in motion sickness is fully enrolled, with results expected in **Q2 2024** and an NDA submission anticipated in **Q4 2024**[93](index=93&type=chunk) [Early-Stage Programs](index=26&type=section&id=Early-Stage%20Programs) Reports on the progress of early-stage development programs, including VSJ-110 for dry eye, VCA-894A for CMT2S, and VTR-297 for onychomycosis - The Phase II study of VSJ-110 for dry eye is ongoing and **more than 50% enrolled**[94](index=94&type=chunk) - Patient enrollment for the Phase I clinical study of VCA-894A for Charcot-Marie-Tooth disease, type 2S (CMT2S), is expected in **mid-2024**[100](index=100&type=chunk) - A Phase I clinical study of VTR-297 for onychomycosis was initiated in **April 2024**[100](index=100&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses key accounting policies and estimates, including revenue recognition, research and development expenses, and intangible asset amortization and impairment - There have been no significant changes to the critical accounting policies, estimates, assumptions, and judgments from those described in the Annual Report[98](index=98&type=chunk) - Revenue from net product sales is recognized when control is transferred to the customer, net of various allowances (discounts, rebates, chargebacks, co-pay assistance, returns)[99](index=99&type=chunk)[101](index=101&type=chunk) - Variable consideration for **HETLIOZ®** net product sales was constrained in **Q1 2024** and **2023** due to uncertainties related to payor utilization, patient demand, and chargeback/rebate amounts, including Medicaid, and elevated inventory levels at specialty pharmacy customers[101](index=101&type=chunk) - Research and development expenses are expensed as incurred for products in the development stage, including manufacturing costs and milestone payments prior to regulatory approval[109](index=109&type=chunk) - Intangible assets are amortized on a straight-line basis over their estimated useful economic life; impairment reviews are performed when circumstances indicate carrying value may not be recoverable, with the **HETLIOZ®** asset group deemed recoverable despite patent litigation[111](index=111&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Analyzes Vanda's financial performance for the three months ended March 31, 2024, compared to 2023, covering revenues, expenses, and income taxes [Revenues](index=31&type=section&id=Revenues) Analyzes Vanda's total net product sales, including Fanapt®, HETLIOZ®, and PONVORY®, and the factors influencing their changes Total Revenues (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Net Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Total net product sales | $47,462 | $62,498 | $(15,036) | (24)% | | Fanapt® net product sales | $20,579 | $22,882 | $(2,303) | (10)% | | HETLIOZ® net product sales | $20,053 | $39,616 | $(19,563) | (49)% | | PONVORY® net product sales | $6,830 | — | $6,830 | N/A | - The decrease in **Fanapt®** net product sales was primarily attributable to a decrease in volume[116](index=116&type=chunk) - The significant decrease in **HETLIOZ®** net product sales was due to decreased volume, partially offset by an increase in price net of deductions, and was impacted by generic competition and inventory stocking dynamics[116](index=116&type=chunk) [Cost of goods sold](index=31&type=section&id=Cost%20of%20goods%20sold) Examines the cost of goods sold, highlighting the impact of sales volume and changes in third-party royalty costs for HETLIOZ® Cost of Goods Sold (in thousands) | Period | Cost of Goods Sold | | :--- | :--- | | Three Months Ended March 31, 2024 | $3,440 | | Three Months Ended March 31, 2023 | $4,774 | | Net Change | $(1,334) | | Percent Change | (28)% | - The decrease in cost of goods sold was primarily due to lower sales volume[116](index=116&type=chunk) - Third-party royalty costs on **HETLIOZ®** net product sales in the U.S. decreased from **10% to 5%** in **December 2022** and are expected to end in **Q2 2024**[116](index=116&type=chunk) [Research and development expenses](index=31&type=section&id=Research%20and%20development%20expenses) Analyzes changes in research and development expenses, attributing increases primarily to the CFTR development program Research and Development Expenses (in thousands) | Period | R&D Expenses | | :--- | :--- | | Three Months Ended March 31, 2024 | $21,154 | | Three Months Ended March 31, 2023 | $19,237 | | Net Change | $1,917 | | Percent Change | 10% | - The increase in R&D expenses was primarily due to an increase in expenses associated with the CFTR development program[116](index=116&type=chunk) Direct Project Costs (in thousands) | Project | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Tradipitant | $8,469 | $8,339 | | CFTR | $2,357 | $378 | | Fanapt® | $2,438 | $2,030 | | HETLIOZ® | $2,407 | $2,478 | [Selling, general and administrative expenses](index=32&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) Examines the decrease in selling, general and administrative expenses, primarily due to reduced spending on sales and corporate activities Selling, General and Administrative Expenses (in thousands) | Period | SG&A Expenses | | :--- | :--- | | Three Months Ended March 31, 2024 | $30,085 | | Three Months Ended March 31, 2023 | $36,104 | | Net Change | $(6,019) | | Percent Change | (17)% | - The decrease in SG&A expenses was primarily due to a decrease in spending on sales and other corporate activities[120](index=120&type=chunk) [Intangible asset amortization](index=32&type=section&id=Intangible%20asset%20amortization) Discusses the increase in intangible asset amortization expense, primarily due to the PONVORY® product rights acquisition Intangible Asset Amortization (in thousands) | Period | Amortization Expense | | :--- | :--- | | Three Months Ended March 31, 2024 | $2,018 | | Three Months Ended March 31, 2023 | $379 | - Amortization expense increased in **2024** due to amortization on the intangible asset from the rights to **PONVORY®** acquired in **December 2023**[121](index=121&type=chunk) [Other income](index=32&type=section&id=Other%20income) Analyzes other income, primarily consisting of investment income generated from marketable securities Other Income (in thousands) | Period | Other Income | | :--- | :--- | | Three Months Ended March 31, 2024 | $4,571 | | Three Months Ended March 31, 2023 | $3,524 | | Net Change | $1,047 | | Percent Change | 30% | - Other income primarily consists of investment income on marketable securities[121](index=121&type=chunk) [Provision for income taxes](index=32&type=section&id=Provision%20for%20income%20taxes) Examines the income tax provision or benefit, driven by the estimated effective tax rate and discrete income tax expenses Provision (Benefit) for Income Taxes (in thousands) | Period | Income Taxes | | :--- | :--- | | Three Months Ended March 31, 2024 | $(518) (benefit) | | Three Months Ended March 31, 2023 | $2,276 (provision) | - The income tax expense (benefit) was primarily driven by the estimated effective tax rate for the year and discrete income tax expenses[122](index=122&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Vanda's financial liquidity and capital resources, including cash, marketable securities, and future funding requirements Liquidity Resources (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $125,158 | $135,821 | | Marketable securities | $268,984 | $252,443 | | Total cash, cash equivalents and marketable securities | $394,142 | $388,264 | - The company believes its current cash, cash equivalents, marketable securities, and product sales will be sufficient for at least the **next 12 months**, based on current operating plans[128](index=128&type=chunk) - Future cash requirements and adequacy of funds depend on revenue generation, commercial/manufacturing costs, R&D programs, and potential acquisition/licensing costs, with potential needs for additional capital through debt, equity, or collaborations[128](index=128&type=chunk) [Cash Flow](index=34&type=section&id=Cash%20Flow) Analyzes Vanda's net cash flows from operating and investing activities, highlighting changes in accounts receivable, product revenue allowances, and marketable securities Net Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Net Change | | :--- | :--- | :--- | :--- | | Operating activities | $7,569 | $31,803 | $(24,234) | | Investing activities | $(18,218) | $187,294 | $(205,512) | | Net change in cash, cash equivalents and restricted cash | $(10,663) | $219,142 | $(229,805) | - The decrease in cash provided by operating activities was primarily due to changes in accounts receivable and product revenue allowances, and the impact of **HETLIOZ®** inventory stocking[130](index=130&type=chunk) - The significant change in investing activities reflects the timing of net reinvestment in marketable securities and a **$2.7 million** payment for the **PONVORY®** acquisition[130](index=130&type=chunk) [ITEM 3 Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Vanda's market risk exposure is limited to cash, cash equivalents, marketable securities, and restricted cash, with no hedging of interest rate or foreign currency risks - Market risk exposure is confined to cash, cash equivalents, marketable securities, and restricted cash[131](index=131&type=chunk) - The company does not hedge interest rate exposure and does not use derivative financial instruments for speculation or trading[131](index=131&type=chunk) - Foreign currency exchange rate risk is not currently hedged, and the company does not believe fluctuations would have a material impact on results of operations[133](index=133&type=chunk) [ITEM 4 Controls and Procedures](index=34&type=section&id=ITEM%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting [Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures](index=34&type=section&id=Conclusion%20Regarding%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, affirmed the effectiveness of Vanda's disclosure controls and procedures as of March 31, 2024 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of **March 31, 2024**[134](index=134&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports no material changes in internal control over financial reporting during the first quarter of 2024 - There has been no change in internal control over financial reporting during the first quarter of **2024** that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[135](index=135&type=chunk) PART II – OTHER INFORMATION [ITEM 1 Legal Proceedings](index=34&type=section&id=ITEM%201%20Legal%20Proceedings) Incorporates by reference detailed information on legal proceedings from Note 14 to the condensed consolidated financial statements - Information regarding legal proceedings is incorporated by reference from Note 14 to the condensed consolidated financial statements[136](index=136&type=chunk) [ITEM 1A Risk Factors](index=35&type=section&id=ITEM%201A%20Risk%20Factors) Refers to the Annual Report for comprehensive risk factors and highlights new anti-takeover provisions, including a recently adopted rights plan - Important factors affecting the business, financial condition, and results of operations are detailed in Part I, Item 1A of the Annual Report for the year ended **December 31, 2023**[137](index=137&type=chunk) - Anti-takeover provisions in the company's charter and bylaws, along with the adoption of a rights plan in **April 2024**, could prevent or delay a change in control[138](index=138&type=chunk)[141](index=141&type=chunk) [ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities or use of proceeds during the reporting period - None[142](index=142&type=chunk) [ITEM 3 Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203%20Defaults%20Upon%20Senior%20Securities) Reports no defaults upon senior securities during the reporting period - None[143](index=143&type=chunk) [ITEM 4 Mine Safety Disclosures](index=36&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[144](index=144&type=chunk) [ITEM 5 Other Information](index=36&type=section&id=ITEM%205%20Other%20Information) The board approved an amendment to the 2016 Equity Incentive Plan to increase authorized shares, and no Rule 10b5-1 trading arrangements were adopted or modified - The board of directors approved an amendment to the 2016 Equity Incentive Plan, subject to stockholder approval, to increase the aggregate number of shares authorized for issuance by **1,900,000 shares**[145](index=145&type=chunk) - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by the company, its directors, or officers during the fiscal quarter ended **March 31, 2024**[146](index=146&type=chunk) [ITEM 6 Exhibits](index=36&type=section&id=ITEM%206%20Exhibits) Lists all exhibits filed as part of the Form 10-Q, including organizational documents, the Rights Agreement, and certifications - The report includes exhibits such as the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designation of Rights, Preferences and Privileges of Series A Junior Participating Preferred Stock, Rights Agreement, and certifications by the CEO and CFO[148](index=148&type=chunk) [Signatures](index=37&type=section&id=Signatures) The report is signed by Mihael H. Polymeropoulos, M.D. (President, CEO, and Chairman) and Kevin Moran (Senior VP, CFO, and Treasurer) on May 9, 2024 - The report was signed on **May 9, 2024**, by Mihael H. Polymeropoulos, M.D. (President, CEO, and Chairman) and Kevin Moran (Senior VP, CFO, and Treasurer)[153](index=153&type=chunk)

Vanda Pharmaceuticals, Inc. (NASDAQ:VNDA) Q1 2024 Earnings Conference Call May 8, 2024 4:30 PM ET Company Participants Mihael Polymeropoulos - President, Chairman and CEO Kevin Moran - CFO Tim Williams - Senior Vice President and General Counsel Conference Call Participants Operator Thank you for standing by. My name is Hermine, and I will be your conference operator today. At this time, I would like to welcome everyone to Q1 2024 Vanda Pharmaceuticals, Inc. Earnings Conference Call. All lines have been pla ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Q1 2024 saw total revenues of **$47.5 million**, a 24% YoY decrease, resulting in a **$4.1 million net loss**, while cash and marketable securities increased to **$394.1 million** Q1 2024 Revenue Performance (in millions) | Product | Q1 2024 | Q1 2023 | YoY Change | Q4 2023 | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Net Product Sales** | **$47.5** | **$62.5** | **-24%** | **$45.3** | **+5%** | | Fanapt® | $20.6 | $22.9 | -10% | $22.6 | -9% | | HETLIOZ® | $20.1 | $39.6 | -49% | $21.1 | -5% | | PONVORY® | $6.8 | N/A | N/A | N/A | N/A | Q1 2024 Profitability and Cash Position (in millions) | Metric | Q1 2024 | Q1 2023 | Q4 2023 | | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(4.1) | $3.3 | $(2.4) | | Cash, cash equivalents and marketable securities | $394.1 | N/A | $388.2 | - The decrease in HETLIOZ® net product sales compared to Q1 2023 was a direct result of continued generic competition in the U.S.[6](index=6&type=chunk) [Key Operational Highlights & Pipeline Update](index=2&type=section&id=Key%20Operational%20Highlights) Vanda is advancing its pipeline with key milestones including the Q3 2024 launch of Fanapt® and PONVORY®, an NDA review for tradipitant, and new Phase III programs - The company highlighted several expected milestones, including product launches, potential approvals, Phase III results, and new NDA filings, positioning it for potential growth[3](index=3&type=chunk) [Psychiatry Portfolio](index=2&type=section&id=Psychiatry%20Portfolio) The psychiatry portfolio expands with Fanapt® FDA approval and Q3 2024 launch, an NDA planned for milsaperidone, and development of Fanapt® LAI and HETLIOZ® LQ, despite HETLIOZ® challenges - Fanapt® was approved by the FDA for acute bipolar I disorder in adults, with a commercial launch and sales force expansion planned for **Q3 2024**[10](index=10&type=chunk) - Vanda plans to submit an NDA for milsaperidone (active metabolite of Fanapt®) for schizophrenia and bipolar I disorder in **early 2025**, with potential patent exclusivity into the **2040s**[10](index=10&type=chunk) - A Phase III program for a long-acting injectable (LAI) formulation of Fanapt® is expected to begin by the **end of 2024**[10](index=10&type=chunk) - The company plans to initiate a HETLIOZ® LQ program for pediatric insomnia, targeting a significant unmet need as there are no currently approved treatments[10](index=10&type=chunk) [PONVORY® (ponesimod)](index=2&type=section&id=PONVORY%20(ponesimod)) Vanda plans a Q3 2024 commercial launch of PONVORY® for multiple sclerosis and will initiate Phase III studies for psoriasis and ulcerative colitis by year-end 2024, targeting significant patient populations - The commercial launch of PONVORY® for multiple sclerosis is expected in **Q3 2024**, supported by a new specialty sales force and marketing programs[9](index=9&type=chunk) - Vanda plans to initiate a Phase III study of PONVORY® for psoriasis by the **end of 2024**, based on positive prior Phase II results[9](index=9&type=chunk) - A Phase III study of PONVORY® for ulcerative colitis is also planned to start by the **end of 2024**, aiming to expand its addressable patient population[9](index=9&type=chunk)[11](index=11&type=chunk) [Tradipitant](index=4&type=section&id=Tradipitant) Tradipitant's NDA for gastroparesis is under FDA review with a September 2024 PDUFA date, while a motion sickness NDA is planned for Q4 2024 following Q2 2024 Phase III results - The NDA for tradipitant in gastroparesis is under FDA review, with a PDUFA target action date set for **September 18, 2024**[16](index=16&type=chunk) - Results from the second Phase III study of tradipitant for motion sickness are expected in **Q2 2024**, with an NDA submission to the FDA planned for **Q4 2024**[16](index=16&type=chunk) [Early-Stage Programs](index=4&type=section&id=Early-Stage%20Programs) Vanda's early-stage pipeline is progressing with a Phase II study for VSJ-110 (dry eye) over 50% enrolled and Phase I studies initiated or underway for VCA-894A, VTR-297, and VQW-765 - The pipeline includes several ongoing clinical programs: - **VSJ-110 (dry eye):** Phase II study is more than **50% enrolled** - **VCA-894A (CMT2S):** Phase I study expects to enroll its first patient in **mid-2024** - **VTR-297 (onychomycosis):** Phase I study was initiated in **April 2024** - **VQW-765 (performance anxiety):** Currently in clinical development[16](index=16&type=chunk) [2024 Financial Guidance](index=4&type=section&id=2024%20Financial%20Guidance) Vanda Pharmaceuticals has withheld 2024 financial guidance due to uncertainties from HETLIOZ® generic competition and upcoming Fanapt® and PONVORY® commercial launches - The company is currently unable to provide **2024 financial guidance**[14](index=14&type=chunk) - Key uncertainties cited for withholding guidance include continued generic competition for HETLIOZ® and the upcoming commercial launches for Fanapt® and PONVORY®[14](index=14&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Unaudited Q1 2024 financial statements show a **$4.1 million net loss** on **$47.5 million revenue**, with **$394.1 million** in cash and marketable securities and **$652.7 million** in total assets [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2024 saw total revenues of **$47.5 million**, operating expenses of **$56.7 million**, and a **net loss of $4.1 million** or **($0.07) per share**, a decline from Q1 2023 net income Q1 2024 Statement of Operations (in thousands, except per share data) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Total revenues** | **$47,462** | **$62,498** | | Total operating expenses | $56,697 | $60,494 | | Income (loss) from operations | $(9,235) | $2,004 | | **Net income (loss)** | **$(4,146)** | **$3,252** | | Net income (loss) per share, diluted | $(0.07) | $0.06 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets reached **$652.7 million**, with **$394.1 million** in cash and marketable securities, total liabilities at **$108.7 million**, and stockholders' equity at **$544.0 million** Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $125,158 | $135,821 | | Marketable securities | $268,984 | $252,443 | | **Total Assets** | **$652,682** | **$648,440** | | Total current liabilities | $93,342 | $87,697 | | **Total Liabilities** | **$108,687** | **$103,530** | | **Total Stockholders' Equity** | **$543,995** | **$544,910** |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-34186 VANDA PHARMACEUTICALS INC. (Exact name of registrant as specified in its charter) Delaware 03-0491827 (State or other jurisdiction of incorporation or organizat ...

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2023 Earnings Conference Call February 7, 2024 4:30 PM ET Company Participants Kevin Moran - Chief Financial Officer Mihael Polymeropoulos - President, Chief Executive Officer & Chairman Tim Williams - General Counsel Conference Call Participants Andrew Tsai - Jefferies Operator Good afternoon. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 Vanda Pharmaceuticals Inc. Earnings Conferenc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-34186 VANDA PHARMACEUTICALS INC. (Exact name of registrant as specified in its charter) Delaware 03-04918 ...

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q3 2023 Results Conference Call November 8, 2023 4:30 PM ET Company Participants Kevin Moran - SVP, CFO and Treasurer Dr. Mihael Polymeropoulos - President, CEO and Chairman Tim Williams - General Counsel Operator Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2023 Vanda Pharmaceuticals, Inc. Earnings Conference Call. [Operator Instr ...