Vanda Pharmaceuticals(VNDA) - 2024 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1 Financial Statements (Unaudited) 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 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 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) 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 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 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 Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, acquisitions, and legal matters 1. Business Organization and Presentation 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] - The commercial portfolio includes Fanapt® (schizophrenia, bipolar I disorder), HETLIOZ® (Non-24, SMS), and PONVORY® (relapsing multiple sclerosis)[29] - 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] 2. Summary of Significant Accounting Policies 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] 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] - Five major customers accounted for 72% of total revenues and 71% of total accounts receivable for the three months ended March 31, 2024[37] 3. PONVORY Acquisition 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] - 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] 4. Marketable Securities 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 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][43] 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] 6. Inventory 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 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] 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 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 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][53][54][55] - For HETLIOZ®, the U.S. royalty on net sales to BMS will end in April 2024[53] - 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] - Non-cancellable purchase commitments for agreements longer than one year are not material[57] 10. Accumulated Other Comprehensive Loss 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 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] - 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] 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 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 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] 14. Legal Matters 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] - 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] - 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][75] - 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] - 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][79][81] - A lawsuit against CMS challenging its 'line extension' rule was ruled against Vanda by the Fourth Circuit in April 2024[77] - 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] 15. Subsequent Events 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][83] - The Rights Agreement has a one-year term, expiring on April 16, 2025[141] ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on Vanda's financial condition and results of operations, including commercial portfolio, development pipeline, and critical accounting policies 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][87] - The commercial portfolio includes Fanapt® (schizophrenia, bipolar I disorder), HETLIOZ® (Non-24, SMS), and PONVORY® (relapsing multiple sclerosis), with a robust development pipeline[88][90] Operational Highlights Summarizes key operational achievements and advancements across Vanda's psychiatry portfolio, HETLIOZ®, PONVORY®, Tradipitant, and early-stage development programs Psychiatry Portfolio 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] - 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] - 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] 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] - The FDA issued a Complete Response Letter (CRL) for the HETLIOZ® sNDA in insomnia, which Vanda is currently reviewing[91] - 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] 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] - 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] - 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] 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] - 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] Early-Stage Programs 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] - 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] - A Phase I clinical study of VTR-297 for onychomycosis was initiated in April 2024[100] Critical Accounting Policies and Estimates 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] - 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][101] - 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] - 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] - 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][113] Results of Operations Analyzes Vanda's financial performance for the three months ended March 31, 2024, compared to 2023, covering revenues, expenses, and income taxes 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] - 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] Cost of goods sold 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] - 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] Research and development expenses 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] 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 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] Intangible asset amortization 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] Other income 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] Provision for income taxes 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] Liquidity and Capital Resources 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] - 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] Cash Flow 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] - 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] ITEM 3 Quantitative and Qualitative Disclosures about Market Risk 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] - The company does not hedge interest rate exposure and does not use derivative financial instruments for speculation or trading[131] - 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] ITEM 4 Controls and Procedures 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 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] Changes in Internal Control over Financial Reporting 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] PART II – OTHER INFORMATION ITEM 1 Legal Proceedings 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] ITEM 1A Risk Factors 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] - 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][141] ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities or use of proceeds during the reporting period - None[142] ITEM 3 Defaults Upon Senior Securities Reports no defaults upon senior securities during the reporting period - None[143] ITEM 4 Mine Safety Disclosures This item is not applicable to the company - Not applicable[144] ITEM 5 Other Information 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] - 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] ITEM 6 Exhibits 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] 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]