Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2022 Earnings Conference Call February 8, 2023 4:30 AM ET
Company Participants
Kevin Moran – CFO
Mihael Polymeropoulos – President, CEO and Chairman
Timothy Williams – General Counsel
Conference Call Participants
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2022 Vanda Pharmaceuticals Inc. Earnings Conference Call.
I would now like to turn the call over to Kevin Moran, Vanda’s Chief Financial Officer. Please go ahead.
Kevin Moran
Thank you, Mandy. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals fourth quarter and full year 2022 performance. Our fourth quarter and full year 2022 results were released this afternoon and are available on the SEC’s EDGAR system and on our website, www.vandapharma.com.
In addition, we are providing live and archived versions of this conference call on our website. Joining me on today’s call is Dr. Mihael Polymeropoulos, our President, Chief Executive Officer and Chairman of the Board; and Tim Williams, our General Counsel. Following my introductory remarks, Mihael will update you on our ongoing activities. I will then comment on our financial results before opening the lines for your questions.
Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our 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. Mihael Polymeropoulos.
Mihael Polymeropoulos
Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda’s fourth quarter and full year 2022 results.
I will first discuss key highlights from our clinical programs and then I will ask our General Counsel, Tim Williams, to provide a brief update on litigation matters before turning the call over to Kevin to discuss our commercial progress and financial results.
I will begin with our announcement of positive results in the Phase 3 clinical study of Fanapt in the treatment of bipolar I disorder in adult patients. This was a large placebo-controlled study conducted in the U.S. and Europe that enrolled approximately 400 patients with acute episodes of bipolar I disorder. The primary endpoint of that study was measured in week 4 of treatment and it was assessed by the Young Mania Rating Scale, YMRS, a rating scale of clinical severity in the core symptoms of Mania.
At the end of the study, week 4, Fanapt’s patients saw a large improvement on placebo-treated patients and this difference was highly statistically significant. YMRS was assessed at end of weeks 1, 2, 3 and 4. Statistically significant benefit in the Fanapt group over placebo was observed as early as week 2 of treatment.
Consistent with the total YMRS score, the individual YMRS subscale items also showed improvement in the Fanapt group versus the placebo group over the course of the 4-week study. Other outcomes such as clinical global impression of severity and clinical global impression of chains also achieved high statistical significance.
We plan to submit a supplemental new drug application, SNDA, for Fanapt for the treatment of acute manic and mixed episodes associated with bipolar I disorder in adults in the first half of this year 2023.
As a reminder, bipolar disorder is estimated to affect 2.8% of the U.S. adult population, a number approximately up to 10 times higher than the estimated prevalence of schizophrenia. Therefore, an indication of bipolar disorder presents a substantial opportunity to expand the Fanapt front size above and beyond the already approved indication of schizophrenia in adults.
We also reported results for VQW-765, a Novel alpha-7 nicotinic acetylcholine receptor partial agonist from clinical study 2201 in the treatment of acute performance anxiety in social situations. In study 2201, participants who receive VQW-765 sold numerically lower stress levels compared to those who received placebo.
The stress level was assessed by the Subjective Units of Distress Scale, SUDS, a self-rating scaled level of nervousness or distress ranging from 0 to 100 at multiple time points during the duration of the TSST test.
In particular in female participants, approximately 70% of the total participants a larger magnitude of effect was observed, which was also statistically significant. This is the first time that the alpha-7 niconitic acetylcholine receptor partial agonist has shown efficacy in a clinical study of performance anxiety, and we look forward to confirming the efficacy in future studies.
On tradipitant, preparation of the new drug application NDA in gastroparesis is ongoing with an expected FDA submission in the first half of 2023. Additionally, an open-label study of tradipitant in patients with gastroparesis is ongoing with the first 400 patients having already completed this 12-week study. Patients continue to seek access to the expanded access program with a number of patients having been treated with tradipitant for over a year.
On tradipitant for the treatment of motion sickness, enrollment in the clinical program is over 75% complete, and we expect results by mid-2023. We’ve experienced great success in recruitment as a result of target advertising, some of which you may have seen during Sunday football and other sporting events.
On HETLIOZ, we continue to pursue regulatory approvals, HETLIOZ in the indications of insomnia and jet lag disorder supported by robust clinical program results that we have previously reported. We look forward to bringing our clinical programs to successful completion in pursuit of regulatory filings and approvals.
As we reported today, 2022 was another successful year commercializing HETLIOZ for Non-24 in SMS and Fanapt for schizophrenia. The adverse decision in December by the District Court on the HETLIOZ patent litigation poses a significant challenge, but we remain focused and determined in asserting our patents.
I will now turn the call to Tim Williams, our General Counsel, to discuss this and other legal matters. Tim?
Timothy Williams
Thank you, Mihael.
As you probably know, in December, the Delaware District Court found certain of our HETLIOZ patent claims invalid or not infringed by the generic defendants in our Vanda litigation. We appealed that ruling and we have a hearing at the Federal Circuit scheduled for March 14. We expect the decision by the court after that hearing.
Teva Pharmaceuticals has since launched a generic version of tasimelteon, and we have brought several actions against Teva based on problematic aspects of that launch, including infringement of other HETLIOZ patents, [Vanda Act] of violations, and patient safety issues, to name a few. These are separate and distinct cases from our Federal Circuit appeal, but are nonetheless important to protect the safety of patients and to protect Vanda’s legal rights.
As an example, we discovered that Teva’s generic tasimelteon is sold without braille labeling, which presents an immediate risk to blind HETLIOZ users who are accustomed to the braille labeling, packaging, and safety information that is accompanied HETLIOZ since its launch. To address this concern, we filed a citizen’s petition with the FDA and filed suit in Federal Court requesting immediate action from the FDA.
On the regulatory front, we continue to pursue multiple actions against the FDA on a variety of regulatory matters in an effort to continue to hold the FDA accountable to law. We intend to continue this litigation to protect the interest of Vanda and to make our products more broadly available to the patients we serve.
Mihael?
Mihael Polymeropoulos
Thank you very much, Tim.
I will turn now the call to Kevin Moran to discuss our commercial progress and financial results. Kevin?
Kevin Moran
Thank you, Mihael.
I’ll begin by summarizing our full year 2022 financial results before turning to discuss the fourth quarter of 2022. Total revenues for the full year 2022 were $254.4 million, a 5% decrease compared to $268.7 million for the same period in 2021. HETLIOZ net product sales of $159.7 million were the primary contributor and driver of our 2022 revenues and saw an 8% decrease compared to 2021. The year-over-year decline in the HETLIOZ business reflects continued reimbursement challenges for prescriptions for patients with Non-24.
Fanapt net product sales of $94.7 million for the full year 2022 were essentially flat compared to 2021. For the full year 2022, Vanda recorded net income of $6.3 million compared to net income of $33.2 million for 2021. Net income for the full year 2022 included an income tax provision of $5 million as compared to an income tax provision of $9.2 million for 2021. Vanda’s cash, cash equivalents and marketable securities, referred to as cash, as of December 31, 2022, were $466.9 million representing an increase of $34 million as compared to December 31, 2021.
Turning now to our quarterly results. Total revenues for the fourth quarter of 2022 were $64.5 million, a 5% decrease compared to $68 million for the fourth quarter of 2021. HETLIOZ net product sales were $40.1 million for the fourth quarter of 2022, a 9% decrease compared to $44.1 million in the fourth quarter of 2021. Consistent with the full year of 2022, net sales for the fourth quarter reflect the continued reimbursement challenges for prescriptions for patients with Non-24.
Fanapt net product sales in the fourth quarter of 2022 were $24.4 million, a 2% increase compared to $24 million in the fourth quarter of 2021. Fanapt net product sales in the fourth quarter of 2022 increased by 2% as compared to $24 million in the third quarter of 2022. Fanapt prescriptions in the fourth quarter of 2022, as reported by equivalent exponent, decreased by approximately 2% compared to the third quarter of 2022. For the fourth quarter of 2022, Vanda recorded net income of $6.9 million compared to net income of $7.1 million for the fourth quarter of 2021. The net income for the fourth quarter of 2022 included an income tax provision of $2.8 million as compared to an income tax provision of $1.5 million for the same period in 2021.
Operating expenses in the fourth quarter of 2022 were $57.9 million compared to $59.4 million in the fourth quarter of 2021. The $1.5 million decrease was primarily driven by lower R&D expenses related to the late-stage Fanapt development program.
Operating expenses in the fourth quarter of 2022 decreased by $3.6 million as compared to $61.4 million in the third quarter of 2022. This decrease was primarily driven by lower R&D expenses related to the late-stage Fanapt development program and our previously announced OliPass agreement, partially offset by higher SG&A expenses related to spending for ongoing litigation. As a reminder, a $3 million upfront fee was expensed in the third quarter of 2022 upon entering into the OliPass agreement.
Giving uncertainty surrounding the U.S. market for HETLIOZ for the treatment of Non-24 as a result of the ongoing HETLIOZ patent litigation, Vanda is unable to provide 2023 financial guidance at this time. Vanda will continue to evaluate its ability to provide financial guidance as the year progresses.
With that, I’ll now turn the call back to Mihael.
Mihael Polymeropoulos
Thank you very much, Kevin. At this point, we’ll be happy to answer any questions you may have.
Question-and-Answer Session
Operator
Mihael Polymeropoulos
Thank you very much, everybody, for joining us on this quarterly call, and we look forward to discussing our progress in the future. Thank you.
Operator
Thank you. Ladies and gentlemen, this does conclude today’s call. Thank you for your participation. You may now disconnect.
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