Vanda Pharmaceuticals (VNDA) 10-Q 3 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 24, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	VNDA
Entity Registrant Name	Vanda Pharmaceuticals Inc.
Entity Central Index Key	1,347,178
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		44,552,263

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 20,111	$ 40,426
Marketable securities	117,645	100,914
Accounts receivable, net	17,751	20,268
Inventory	816	779
Prepaid expenses and other current assets	12,239	11,788
Total current assets	168,562	174,175
Property and equipment, net	5,461	5,015
Intangible assets, net	27,365	27,819
Non-current inventory and other	3,332	3,365
Total assets	204,720	210,374
Current liabilities:
Accounts payable and accrued liabilities	18,025	16,196
Accrued government and other rebates	29,943	34,124
Milestone obligation under license agreement	25,000
Total current liabilities	72,968	50,320
Milestone obligation under license agreement		25,000
Other non-current liabilities	3,610	3,724
Total liabilities	76,578	79,044
Commitments and contingencies (Notes 11 and 13)
Stockholders' equity:
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized; 44,546,274 and 44,000,614 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	45	44
Additional paid-in capital	481,551	477,087
Accumulated other comprehensive income	50	58
Accumulated deficit	(353,504)	(345,859)
Total stockholders' equity	128,142	131,330
Total liabilities and stockholders' equity	$ 204,720	$ 210,374

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	44,546,274	44,000,614
Common stock, shares outstanding	44,546,274	44,000,614

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Net product sales	$ 37,415	$ 33,262
Total revenues	37,415	33,262
Operating expenses:
Cost of goods sold, excluding amortization	4,003	5,956
Research and development	10,567	7,548
Selling, general and administrative	30,297	29,290
Intangible asset amortization	454	2,943
Total operating expenses	45,321	45,737
Loss from operations	(7,906)	(12,475)
Other income	280	117
Loss before income taxes	(7,626)	(12,358)
Provision for income taxes	19
Net loss	$ (7,645)	$ (12,358)
Basic and diluted net loss per share	$ (0.17)	$ (0.29)
Weighted average shares outstanding, basic and diluted	44,398,359	43,104,462

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net loss	$ (7,645)	$ (12,358)
Other comprehensive income (loss):
Net foreign currency translation gain	4
Change in net unrealized gain (loss) on marketable securities	(12)	53
Tax provision on other comprehensive income (loss)	0	0
Other comprehensive income (loss), net of tax	(8)	53
Comprehensive loss	$ (7,653)	$ (12,305)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2016	44,000,614	44,000,614
Beginning balance at Dec. 31, 2016	$ 131,330	$ 44	$ 477,087	$ 58	$ (345,859)
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	2,209	$ 1	2,208
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares)		545,660
Stock-based compensation expense	2,256		2,256
Net loss	(7,645)				(7,645)
Other comprehensive loss, net of tax	$ (8)			(8)
Ending balance (in shares) at Mar. 31, 2017	44,546,274	44,546,274
Ending balance at Mar. 31, 2017	$ 128,142	$ 45	$ 481,551	$ 50	$ (353,504)

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities
Net loss	$ (7,645)	$ (12,358)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment	250	219
Stock-based compensation	2,256	2,266
Amortization of discounts and premiums on marketable securities	(53)	28
Intangible asset amortization	454	2,943
Other non-cash adjustments, net	133	12
Changes in operating assets and liabilities:
Accounts receivable	2,516	(348)
Prepaid expenses and other assets	(446)	(1,484)
Inventory	(83)	42
Accounts payable and accrued liabilities	1,442	6,955
Accrued government and other rebates	(4,181)	(3,174)
Net cash used in operating activities	(5,357)	(4,899)
Cash flows from investing activities
Purchases of property and equipment	(478)
Purchases of marketable securities	(53,467)	(47,311)
Maturities of marketable securities	36,777	40,083
Net cash used in investing activities	(17,168)	(7,228)
Cash flows from financing activities
Proceeds from the exercise of employee stock options	2,209	24
Net cash provided by financing activities	2,209	24
Effect of foreign currencies on cash and cash equivalents	1
Net decrease in cash and cash equivalents	(20,315)	(12,103)
Cash and cash equivalents
Beginning of period	40,426	50,843
End of period	$ 20,111	$ 38,740

Business Organization and Prese

Business Organization and Presentation	3 Months Ended
	Mar. 31, 2017
Business Organization and Presentation	1. Business Organization and Presentation Business organization Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s portfolio includes the following products: • HETLIOZ ® ® ® ® • Fanapt ® ® ® ® ® • Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and gastroparesis. • Trichostatin A, a small molecule histone deacetylase (HDAC) inhibitor. • AQW051, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist. • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended December 31, 2016 included in the Company’s annual report on Form 10-K. The financial information as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2016 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year. The financial information included herein should be read in conjunction with the consolidated financial statements and notes in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. The Company has estimated its annual fees for Fanapt ® Inventory Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out method. The Company capitalizes inventory costs associated with its products upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. Inventory is evaluated for impairment by consideration of factors such as lower of cost or net realizable value, obsolescence or expiry. Inventory not expected to be consumed within 12 months following the balance sheet date are classified as non-current. Revenue from Net Product Sales The Company’s revenues consist of net product sales of HETLIOZ ® ® Three Months Ended March 31, March 31, (in thousands) 2017 2016 HETLIOZ ® $ 20,182 $ 16,201 Fanapt ® 17,233 17,061 $ 37,415 $ 33,262 The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-15, Revenue Recognition—Products Major Customers HETLIOZ ® ® Product Sales Discounts and Allowances The Company’s product sales are recorded net of applicable discounts, rebates, chargebacks, service fees, co-pay assistance and product returns that are applicable for various government and commercial payors. Reserves established for discounts and returns are classified as reductions of accounts receivable if the amount is payable to direct customers, with the exception of service fees. Service fees are classified as a liability. Reserves established for rebates, chargebacks or co-pay assistance are classified as a liability if the amount is payable to a party other than customers. The Company currently records sales allowances for the following: Prompt-pay: Rebates: Chargebacks: Medicare Part D Coverage Gap: Service Fees: Co-payment Assistance: Product Returns: Stock-Based Compensation Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company recognizes the expense over the award’s vesting period. The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates Non-Cash Investing and Financing Activities For the three months ended March 31, 2017 and 2016, the Company recorded purchases of property, plant and equipment and the related current liability in the amount of $0.4 million and zero, respectively. Recent accounting pronouncements In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Restricted Cash In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, In February 2016, the FASB issued ASU 2016-02, Leases In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue versus Net), Revenue from Contracts with Customers, identifying Performance Obligations and Licensing Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients,

Earnings per Share

Earnings per Share	3 Months Ended
	Mar. 31, 2017
Earnings per Share	3. Earnings per Share Basic earnings per share (EPS) is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing the net loss by the weighted average number of shares of common stock outstanding, plus potential outstanding common stock for the period. Potential outstanding common stock includes stock options and shares underlying RSUs, but only to the extent that their inclusion is dilutive. The following table presents the calculation of basic and diluted net loss per share of common stock for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, March 31, (in thousands, except for share and per share amounts) 2017 2016 Numerator: Net loss $ (7,645 ) $ (12,358 ) Denominator: Weighted average shares outstanding, basic and diluted 44,398,359 43,104,462 Net loss per share, basic and diluted: $ (0.17 ) $ (0.29 ) Antidilutive securities excluded from calculations of diluted net loss per share 3,160,500 6,245,280 The Company incurred net losses for the three months ended March 31, 2017 and 2016 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent.

Marketable Securities

Marketable Securities	3 Months Ended
	Mar. 31, 2017
Marketable Securities	4. Marketable Securities The following is a summary of the Company’s available-for-sale marketable securities as of March 31, 2017, which all have contract maturities of less than one year: March 31, 2017 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value U.S. Treasury and government agencies $ 60,106 $ — $ (47 ) $ 60,059 Corporate debt 57,492 102 (8 ) 57,586 $ 117,598 $ 102 $ (55 ) $ 117,645 The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2016, which all have contract maturities of less than one year: December 31, 2016 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value U.S. Treasury and government agencies $ 50,661 $ 3 $ (17 ) $ 50,647 Corporate debt 50,194 89 (16 ) 50,267 $ 100,855 $ 92 $ (33 ) $ 100,914

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2017
Fair Value Measurements	5. Fair Value Measurements Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — defined as observable inputs such as quoted prices in active markets • Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable • Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions Marketable securities classified in Level 1 and Level 2 as of March 31, 2017 and December 31, 2016 consist of available-for-sale marketable securities. The valuation of Level 1 instruments is determined using a market approach, and is based upon unadjusted quoted prices for identical assets in active markets. The valuation of investments classified in Level 2 also is determined using a market approach based upon quoted prices for similar assets in active markets, or other inputs that are observable for substantially the full term of the financial instrument. Level 2 securities include certificates of deposit, commercial paper and corporate notes that use as their basis readily observable market parameters. The Company did not transfer any assets between Level 2 and Level 1 during the three months ended March 31, 2017 and 2016. As of March 31, 2017, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows: Fair Value Measurement as of March 31, 2017 Using (in thousands) March 31, 2017 Quoted Prices in Significant Other Significant Inputs (Level 3) Available-for-sale securities: U.S. Treasury and government agencies $ 60,059 $ 60,059 $ — $ — Corporate debt 57,586 — 57,586 $ 117,645 $ 60,059 $ 57,586 $ — As of December 31, 2016, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows: Fair Value Measurement as of December 31, 2016 Using (in thousands) December 31, 2016 Quoted Prices in Significant Other Significant Inputs (Level 3) Available-for-sale securities: U.S. Treasury and government agencies $ 50,647 $ 50,647 $ — $ — Corporate debt 50,267 — 50,267 $ 100,914 $ 50,647 $ 50,267 $ — The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, and milestone obligations under license agreements, the carrying value of which materially approximate their fair values.

Inventory

Inventory	3 Months Ended
	Mar. 31, 2017
Inventory	6. Inventory The Company evaluates expiry risk by evaluating current and future product demand relative to product shelf life. The Company builds demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. Inventory levels are evaluated for the amount of inventory that would be sold within one year. At certain times, the level of inventory can exceed the forecasted level of cost of goods sold for the next twelve months. The Company classifies the estimate of such inventory as non-current. Inventory consisted of the following as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Current assets Work-in-process $ 50 $ 17 Finished goods 766 762 $ 816 $ 779 Non-Current assets Raw materials $ 127 $ 127 Work-in-process 2,191 2,225 Finished goods 125 83 $ 2,443 $ 2,435

Prepaid Expenses and Other Curr

Prepaid Expenses and Other Current Assets	3 Months Ended
	Mar. 31, 2017
Prepaid Expenses and Other Current Assets	7. Prepaid Expenses and Other Current Assets The following is a summary of the Company’s prepaid expenses and other current assets as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 2,879 $ 2,397 Consulting and other professional fees 6,888 6,051 Prepaid royalties 1,207 1,761 Other 1,265 1,579 $ 12,239 $ 11,788

Accounts Payable and Accrued Li

Accounts Payable and Accrued Liabilities	3 Months Ended
	Mar. 31, 2017
Accounts Payable and Accrued Liabilities	8. Accounts Payable and Accrued Liabilities The following is a summary of the Company’s accounts payable and accrued liabilities as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 4,313 $ 3,024 Consulting and other professional fees 5,892 3,192 Compensation and employee benefits 2,848 4,291 Royalties payable 3,114 4,555 Other 1,858 1,134 $ 18,025 $ 16,196

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2017
Intangible Assets	9. Intangible Assets The following is a summary of the Company’s intangible assets as of March 31, 2017: March 31, 2017 (in thousands) Estimated Useful Life Gross Accumulated Net HETLIOZ ® January 2033 $ 33,000 $ 5,635 $ 27,365 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,576 $ 27,365 The following is a summary of the Company’s intangible assets as of December 31, 2016: December 31, 2016 (in thousands) Estimated Useful Life Gross Accumulated Net HETLIOZ ® January 2033 $ 33,000 $ 5,181 $ 27,819 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,122 $ 27,819 HETLIOZ ® . ® ® The Company is obligated to make a future milestone payment to BMS of $25.0 million when cumulative worldwide sales of HETLIOZ ® ® ® Fanapt ® ® ® Pursuant to a settlement agreement in December 2014, Novartis transferred all U.S. and Canadian rights in the Fanapt ® ® ® ® ® Intangible assets are amortized over their estimated useful economic life using the straight-line method. Amortization expense was $0.4 million and $2.9 million for the three months ended March 31, 2017 and 2016, respectively. The following is a summary of the future intangible asset amortization schedule as of March 31, 2017: (in thousands) Total 2017 2018 2019 2020 2021 Thereafter HETLIOZ ® $ 27,365 $ 1,296 $ 1,728 $ 1,728 $ 1,728 $ 1,728 $ 19,157

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Taxes	10. Income Taxes Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The fact that the Company has historically generated pretax losses in the U.S. serves as strong evidence that it is more likely than not that deferred tax assets in the U.S. will not be realized in the future. Therefore, the Company had a full tax valuation allowance against all deferred tax assets in the U.S. as of March 31, 2017 and December 31, 2016. As a result of the tax valuation allowance against deferred tax assets in the U.S., the provision or benefit for income taxes for the three months ended March 31, 2017 and 2016 was not material. Certain tax attributes of the Company, including net operating losses (NOLs) and credits, are potentially subject to a limitation should an ownership change as defined under the Internal Revenue Code of 1986, as amended (IRC), Section 382, occur. The limitations resulting from a change in ownership could affect the Company’s ability to use NOLs and credit carryforward (tax attributes). Ownership changes did occur as of December 31, 2014 and December 31, 2008. However, the Company believes that it will be able to utilize all existing NOL carryforwards before their expiration despite these limitations. Any future ownership changes may cause the Company’s existing tax attributes to have additional limitations. Additionally, the Company maintains a valuation allowance on its U.S. tax attributes, therefore, any IRC Section 382 limitation would not have a material impact on the Company’s provision for income taxes as of March 31, 2017.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies	11. Commitments and Contingencies Operating leases Commitments relating to operating leases represent the minimum annual future payments under operating leases and subleases for a total of 40,188 square feet of office space for the Company’s headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. that expire in 2026, the operating lease for 2,880 square feet of office space for the Company’s European headquarters in London that has a noncancellable lease term ending in 2021, and 1,249 square feet of office space in Berlin under a short-term operating lease. The following is a summary of the minimum annual future payments under operating leases and subleases for office space as of March 31, 2017: Cash payments due by year (in thousands) Total 2017 2018 2019 2020 2021 Thereafter Operating leases $ 21,164 $ 1,509 $ 2,220 $ 2,275 $ 2,331 $ 2,171 $ 10,658 In 2011, the Company entered into an operating lease for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. A lease amendment in 2014 increased the office space under lease to 30,260 square feet, and a lease amendment in June 2016 extended the lease term from April 2023 to September 2026. Subject to the prior rights of other tenants, the Company has the right to renew the lease for five years following its expiration. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. The lease may be terminated early by the Company or the landlord under certain circumstances. In June 2016, the Company entered into a sublease under which the Company leases 9,928 square feet of office space for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. The sublease term began in January 2017 and ends in July 2026, but may be terminated earlier by either party under certain circumstances. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. Rent expense under operating leases was $0.8 million and $0.5 million for the three months ended March 31, 2017 and 2016. Guarantees and Indemnifications The Company has entered into a number of standard intellectual property indemnification agreements in the ordinary course of its business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual from the date of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Since inception, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain conditions. License Agreements The Company’s rights to develop and commercialize its products are subject to the terms and conditions of licenses granted to the Company by other pharmaceutical companies. HETLIOZ ® . ® ® ® ® ® ® ® ® ® ® ® ® The license agreement was amended in April 2013 to add a process that would allow BMS to waive the right to develop and commercialize HETLIOZ ® ® Either party may terminate the HETLIOZ ® Fanapt ® . ® ® ® ® ® ® ® ® ® ® Pursuant to the terms of the Settlement Agreement with Novartis, Novartis transferred all U.S. and Canadian rights in the Fanapt ® ® ® ® The Company has entered into distribution agreements with Probiomed S.A. de C.V. for the commercialization of Fanapt ® ® Tradipitant. AQW051. ® Portfolio of CFTR activators and inhibitors Research and Development and Marketing Agreements In the course of its business, the Company regularly enters into agreements with clinical organizations to provide services relating to clinical development and clinical manufacturing activities under fee service arrangements. The Company’s current agreements for clinical services may be terminated on generally 60 days’ notice without incurring additional charges, other than charges for work completed but not paid for through the effective date of termination and other costs incurred by the Company’s contractors in closing out work in progress as of the effective date of termination.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation	12. Stock-Based Compensation As of March 31, 2017, there were 6,583,429 shares that were subject to outstanding options and RSUs under the 2006 Equity Incentive Plan (the 2006 Plan) and the 2016 Equity Incentive Plan (the 2016 Plan, and together with the 2006 Plan, the Plans). The 2006 Plan expired by its terms on April 12, 2016. Outstanding options and RSUs under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan. In June 2016, the Company’s stockholders approved the 2016 Plan. There are 2,000,000 shares of common stock reserved for issuance under the 2016 Plan, of which 526,661 shares remained available for future grant as of as of March 31, 2017. Stock Options The Company has granted option awards under the Plans with service conditions (service option awards) that are subject to terms and conditions established by the compensation committee of the board of directors. Service option awards have 10-year contractual terms and all service option awards granted prior to December 31, 2006, service option awards granted to new employees, and certain service option awards granted to existing employees vest and become exercisable on the first anniversary of the grant date with respect to the 25% of the shares subject to service option awards. The remaining 75% of the shares subject to the service option awards vest and become exercisable monthly in equal installments thereafter over three years. Certain service option awards granted to existing employees after December 31, 2006 vest and become exercisable monthly in equal installments over four years. The initial service option awards granted to directors upon their election vest and become exercisable in equal monthly installments over a period of four years, while the subsequent annual service option awards granted to directors vest and become exercisable in equal monthly installments over a period of one year. Certain service option awards to executives and directors provide for accelerated vesting if there is a change in control of the Company. Certain service option awards to employees and executives provide for accelerated vesting if the respective employee’s or executive’s service is terminated by the Company for any reason other than cause or permanent disability. As of March 31, 2017, $11.1 million of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of 1.4 years. No option awards are classified as a liability as of March 31, 2017. A summary of option activity under the Plans for the three months ended March 31, 2017 follows: 2006 and 2016 Plans (in thousands, except for share and per share amounts) Number of Weighted Average Weighted Average Aggregate Outstanding at December 31, 2016 5,548,336 $ 11.62 5.58 $ 32,453 Granted 592,750 14.50 Forfeited (212,718 ) 10.71 Expired (570,600 ) 30.57 Exercised (198,156 ) 11.14 669 Outstanding at March 31, 2017 5,159,612 9.92 6.37 21,602 Exercisable at March 31, 2017 3,410,101 8.94 5.12 17,474 Vested and expected to vest at March 31, 2017 4,857,256 9.75 6.18 21,090 The weighted average grant-date fair value of options granted was $7.84 and $4.27 per share for the three months ended March 31, 2017 and 2016, respectively. Proceeds from the exercise of stock options amounted to $2.2 million and less than $0.1 million for the three months ended March 31, 2017 and 2016, respectively. Restricted Stock Units An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs under the Plans with service conditions (service RSUs) that vest in four equal annual installments provided that the employee remains employed with the Company. As of March 31, 2017, $16.9 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 2.0 years. No RSUs are classified as a liability as of March 31, 2017. A summary of RSU activity under the Plans for the three months ended March 31, 2017 follows: 2006 and 2016 Plans Number of Weighted Average Unvested at December 31, 2016 1,138,428 $ 10.07 Granted 760,086 14.50 Forfeited (127,193 ) 10.49 Vested (347,504 ) 9.60 Unvested at March 31, 2017 1,423,817 12.52 The grant date fair value for the 347,504 shares underlying RSUs that vested during the three months ended March 31, 2017 was $3.3 million. Stock-Based Compensation Stock-based compensation expense recognized for the three months ended March 31, 2017 and 2016 was comprised of the following: Three Months Ended March 31, March 31, (in thousands) 2017 2016 Research and development $ 409 $ 524 Selling, general and administrative 1,847 1,742 $ 2,256 $ 2,266 The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has not paid dividends to its stockholders since its inception (other than a dividend of preferred share purchase rights, which was declared in September 2008) and does not plan to pay dividends in the foreseeable future. Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended March 31, March 31, 2017 2016 Expected dividend yield 0 % 0 % Weighted average expected volatility 57 % 57 % Weighted average expected term (years) 5.89 6.08 Weighted average risk-free rate 1.98 % 1.38 %

Legal Matters

Legal Matters	3 Months Ended
	Mar. 31, 2017
Legal Matters	13. Legal Matters In June 2014, the Company filed suit against Roxane Laboratories, Inc. (Roxane) in the U.S. District Court for the District of Delaware (the Delaware District Court). The suit seeks an adjudication that Roxane has infringed one or more claims of the Company’s U.S. Patent No. 8,586,610 (the ‘610 Patent) by submitting to the FDA an Abbreviated New Drug Application (ANDA) for a generic version of Fanapt ® ® In 2015, the Company filed six separate patent infringement lawsuits in the Delaware District Court against Roxane, Inventia Healthcare Pvt. Ltd. (Inventia), Lupin Ltd. and Lupin Pharmaceuticals, Inc. (Lupin), Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd. (Taro), and Apotex Inc. and Apotex Corp. (collectively, the Defendants). The lawsuits each seek an adjudication that the respective Defendants infringed one or more claims of the ‘610 Patent and/or the Company’s U.S. Patent No. 9,138,432 (the ‘432 Patent) by submitting to the FDA an ANDA for a generic version of Fanapt ® Lupin filed counter claims for declaratory judgment of invalidity and noninfringement of seven of the Company’s method of treatment patents that are listed in the Approved Drug Products with Therapeutic Equivalence Evaluations ® On October 24, 2016, the Company entered into a License Agreement with Taro to resolve the Company’s patent litigation against Taro regarding Taro’s ANDA seeking approval of its generic version of Fanapt ® ® ® On December 7, 2016, the Company entered into a License Agreement with Apotex to resolve the Company’s patent litigation against Apotex regarding Apotex’s ANDA seeking approval of its generic version of Fanapt ® ® ® On February 26, 2016, Roxane filed suit against the Company in the U.S. District Court for the Southern District of Ohio (the Ohio District Court). The suit seeks a declaratory judgment of invalidity and noninfringement of the Method of Treatment Patents. The Company has not sued Roxane for infringing the Method of Treatment Patents. The Company filed a motion to dismiss this lawsuit for lack of personal jurisdiction or to transfer the lawsuit to the Delaware District Court. On December 20, 2016, the Ohio District Court ruled in our favor, dismissing Roxane’s suit without prejudice for lack of personal jurisdiction. On February 26, 2016, Roxane filed a Petition for Inter Partes

Business Organization and Pre21

Business Organization and Presentation (Policies)	3 Months Ended
	Mar. 31, 2017
Business organization	Business organization Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s portfolio includes the following products: • HETLIOZ ® ® ® ® • Fanapt ® ® ® ® ® • Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and gastroparesis. • Trichostatin A, a small molecule histone deacetylase (HDAC) inhibitor. • AQW051, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist. • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended December 31, 2016 included in the Company’s annual report on Form 10-K. The financial information as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2016 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year. The financial information included herein should be read in conjunction with the consolidated financial statements and notes in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. The Company has estimated its annual fees for Fanapt ®
Inventory	Inventory Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out method. The Company capitalizes inventory costs associated with its products upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. Inventory is evaluated for impairment by consideration of factors such as lower of cost or net realizable value, obsolescence or expiry. Inventory not expected to be consumed within 12 months following the balance sheet date are classified as non-current.
Revenue from Net Product Sales	Revenue from Net Product Sales The Company’s revenues consist of net product sales of HETLIOZ ® ® Three Months Ended March 31, March 31, (in thousands) 2017 2016 HETLIOZ ® $ 20,182 $ 16,201 Fanapt ® 17,233 17,061 $ 37,415 $ 33,262 The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-15, Revenue Recognition—Products Product Sales Discounts and Allowances The Company’s product sales are recorded net of applicable discounts, rebates, chargebacks, service fees, co-pay assistance and product returns that are applicable for various government and commercial payors. Reserves established for discounts and returns are classified as reductions of accounts receivable if the amount is payable to direct customers, with the exception of service fees. Service fees are classified as a liability. Reserves established for rebates, chargebacks or co-pay assistance are classified as a liability if the amount is payable to a party other than customers. The Company currently records sales allowances for the following: Prompt-pay: Rebates: Chargebacks: Medicare Part D Coverage Gap: Service Fees: Co-payment Assistance: Product Returns:
Major Customers	Major Customers HETLIOZ ® ®
Stock-Based Compensation	Stock-Based Compensation Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company recognizes the expense over the award’s vesting period. The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates
Non-Cash Investing and Financing Activities	Non-Cash Investing and Financing Activities For the three months ended March 31, 2017 and 2016, the Company recorded purchases of property, plant and equipment and the related current liability in the amount of $0.4 million and zero, respectively.
Recent accounting pronouncements	Recent accounting pronouncements In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Restricted Cash In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, In February 2016, the FASB issued ASU 2016-02, Leases In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue versus Net), Revenue from Contracts with Customers, identifying Performance Obligations and Licensing Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients,

Summary of Significant Accoun22

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2017
Revenue From Net Sales by Product	The Company’s revenues consist of net product sales of HETLIOZ ® ® Three Months Ended March 31, March 31, (in thousands) 2017 2016 HETLIOZ ® $ 20,182 $ 16,201 Fanapt ® 17,233 17,061 $ 37,415 $ 33,262

Earnings per Share (Tables)

Earnings per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Basic and Diluted Net Loss Per Share of Common Stock	The following table presents the calculation of basic and diluted net loss per share of common stock for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, March 31, (in thousands, except for share and per share amounts) 2017 2016 Numerator: Net loss $ (7,645 ) $ (12,358 ) Denominator: Weighted average shares outstanding, basic and diluted 44,398,359 43,104,462 Net loss per share, basic and diluted: $ (0.17 ) $ (0.29 ) Antidilutive securities excluded from calculations of diluted net loss per share 3,160,500 6,245,280

Marketable Securities (Tables)

Marketable Securities (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Available-for-Sale Marketable Securities	The following is a summary of the Company’s available-for-sale marketable securities as of March 31, 2017, which all have contract maturities of less than one year: March 31, 2017 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value U.S. Treasury and government agencies $ 60,106 $ — $ (47 ) $ 60,059 Corporate debt 57,492 102 (8 ) 57,586 $ 117,598 $ 102 $ (55 ) $ 117,645 The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2016, which all have contract maturities of less than one year: December 31, 2016 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value U.S. Treasury and government agencies $ 50,661 $ 3 $ (17 ) $ 50,647 Corporate debt 50,194 89 (16 ) 50,267 $ 100,855 $ 92 $ (33 ) $ 100,914

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2017
Assets Measured at Fair Value on Recurring Basis	As of March 31, 2017, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows: Fair Value Measurement as of March 31, 2017 Using (in thousands) March 31, 2017 Quoted Prices in Significant Other Significant Inputs (Level 3) Available-for-sale securities: U.S. Treasury and government agencies $ 60,059 $ 60,059 $ — $ — Corporate debt 57,586 — 57,586 $ 117,645 $ 60,059 $ 57,586 $ — As of December 31, 2016, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows: Fair Value Measurement as of December 31, 2016 Using (in thousands) December 31, 2016 Quoted Prices in Significant Other Significant Inputs (Level 3) Available-for-sale securities: U.S. Treasury and government agencies $ 50,647 $ 50,647 $ — $ — Corporate debt 50,267 — 50,267 $ 100,914 $ 50,647 $ 50,267 $ —

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory	Inventory consisted of the following as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Current assets Work-in-process $ 50 $ 17 Finished goods 766 762 $ 816 $ 779 Non-Current assets Raw materials $ 127 $ 127 Work-in-process 2,191 2,225 Finished goods 125 83 $ 2,443 $ 2,435

Prepaid Expenses and Other Cu27

Prepaid Expenses and Other Current Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Prepaid Expenses, and Other Current Assets	The following is a summary of the Company’s prepaid expenses and other current assets as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 2,879 $ 2,397 Consulting and other professional fees 6,888 6,051 Prepaid royalties 1,207 1,761 Other 1,265 1,579 $ 12,239 $ 11,788

Accounts Payable and Accrued 28

Accounts Payable and Accrued Liabilities (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Accounts Payable and Accrued Liabilities	The following is a summary of the Company’s accounts payable and accrued liabilities as of March 31, 2017 and December 31, 2016: March 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 4,313 $ 3,024 Consulting and other professional fees 5,892 3,192 Compensation and employee benefits 2,848 4,291 Royalties payable 3,114 4,555 Other 1,858 1,134 $ 18,025 $ 16,196

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Intangible Assets	The following is a summary of the Company’s intangible assets as of March 31, 2017: March 31, 2017 (in thousands) Estimated Useful Life Gross Accumulated Net HETLIOZ ® January 2033 $ 33,000 $ 5,635 $ 27,365 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,576 $ 27,365 The following is a summary of the Company’s intangible assets as of December 31, 2016: December 31, 2016 (in thousands) Estimated Useful Life Gross Accumulated Net HETLIOZ ® January 2033 $ 33,000 $ 5,181 $ 27,819 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,122 $ 27,819
Summary of Future Intangible Asset Amortization	The following is a summary of the future intangible asset amortization schedule as of March 31, 2017: (in thousands) Total 2017 2018 2019 2020 2021 Thereafter HETLIOZ ® $ 27,365 $ 1,296 $ 1,728 $ 1,728 $ 1,728 $ 1,728 $ 19,157

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Minimum Annual Future Payments under Operating Leases and Subleases	The following is a summary of the minimum annual future payments under operating leases and subleases for office space as of March 31, 2017: Cash payments due by year (in thousands) Total 2017 2018 2019 2020 2021 Thereafter Operating leases $ 21,164 $ 1,509 $ 2,220 $ 2,275 $ 2,331 $ 2,171 $ 10,658

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Option Activity Plan	A summary of option activity under the Plans for the three months ended March 31, 2017 follows: 2006 and 2016 Plans (in thousands, except for share and per share amounts) Number of Weighted Average Weighted Average Aggregate Outstanding at December 31, 2016 5,548,336 $ 11.62 5.58 $ 32,453 Granted 592,750 14.50 Forfeited (212,718 ) 10.71 Expired (570,600 ) 30.57 Exercised (198,156 ) 11.14 669 Outstanding at March 31, 2017 5,159,612 9.92 6.37 21,602 Exercisable at March 31, 2017 3,410,101 8.94 5.12 17,474 Vested and expected to vest at March 31, 2017 4,857,256 9.75 6.18 21,090
Summary of RSU Activity Plan	A summary of RSU activity under the Plans for the three months ended March 31, 2017 follows: 2006 and 2016 Plans Number of Weighted Average Unvested at December 31, 2016 1,138,428 $ 10.07 Granted 760,086 14.50 Forfeited (127,193 ) 10.49 Vested (347,504 ) 9.60 Unvested at March 31, 2017 1,423,817 12.52
Stock-Based Compensation Expense	Stock-based compensation expense recognized for the three months ended March 31, 2017 and 2016 was comprised of the following: Three Months Ended March 31, March 31, (in thousands) 2017 2016 Research and development $ 409 $ 524 Selling, general and administrative 1,847 1,742 $ 2,256 $ 2,266
Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted	Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended March 31, March 31, 2017 2016 Expected dividend yield 0 % 0 % Weighted average expected volatility 57 % 57 % Weighted average expected term (years) 5.89 6.08 Weighted average risk-free rate 1.98 % 1.38 %

Business Organization and Pre32

Business Organization and Presentation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017Segment
Organization and Summary of Significant Accounting Policies Disclosure [Line Items]
Number of operating segments	1

Net Sales by Product (Detail)

Net Sales by Product (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue from External Customer [Line Items]
Net product sales	$ 37,415	$ 33,262
HETLIOZ
Revenue from External Customer [Line Items]
Net product sales	20,182	16,201
Fanapt
Revenue from External Customer [Line Items]
Net product sales	$ 17,233	$ 17,061

Summary of Significant Accoun34

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2017USD ($)Customer	Mar. 31, 2016USD ($)
Summary Of Significant Accounting Policies [Line Items]
Percentage of insurance coverage gap allocated for prescription drugs under Medicare Part D	50.00%
Purchases of property, plant and equipment and the related current liability | $	$ 0.4	$ 0
Customer Concentration Risk | Sales Revenue, Net
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	79.00%
Number of major customers that each accounted for more than 10% of total revenues	4
Credit Concentration Risk | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	86.00%
Number of major customers that each accounted for more than 10% of total accounts receivable	5

Basic and Diluted Net Loss Per

Basic and Diluted Net Loss Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net loss	$ (7,645)	$ (12,358)
Denominator:
Weighted average shares outstanding, basic and diluted	44,398,359	43,104,462
Net loss per share, basic and diluted:	$ (0.17)	$ (0.29)
Antidilutive securities excluded from calculations of diluted net loss per share	3,160,500	6,245,280

Summary of Available-For-Sale M

Summary of Available-For-Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	$ 117,645	$ 100,914
U.S. Treasury and government agencies
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	60,059	50,647
Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	57,586	50,267
Current Investment
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	117,598	100,855
Gross Unrealized Gains	102	92
Gross Unrealized Losses	(55)	(33)
Fair Market Value	117,645	100,914
Current Investment | U.S. Treasury and government agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	60,106	50,661
Gross Unrealized Gains		3
Gross Unrealized Losses	(47)	(17)
Fair Market Value	60,059	50,647
Current Investment | Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	57,492	50,194
Gross Unrealized Gains	102	89
Gross Unrealized Losses	(8)	(16)
Fair Market Value	$ 57,586	$ 50,267

Assets Measured at Fair Value o

Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 117,645	$ 100,914
U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	60,059	50,647
Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	57,586	50,267
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	60,059	50,647
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	60,059	50,647
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	57,586	50,267
Significant Other Observable Inputs (Level 2) | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 57,586	$ 50,267

Inventory (Detail)

Inventory (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets
Work-in-process	$ 50	$ 17
Finished goods	766	762
Total	816	779
Non-Current assets
Raw materials	127	127
Work-in-process	2,191	2,225
Finished goods	125	83
Total	$ 2,443	$ 2,435

Summary of Prepaid Expenses and

Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Prepaid Expenses And Other Current Assets [Line Items]
Research and development expenses	$ 2,879	$ 2,397
Consulting and other professional fees	6,888	6,051
Prepaid royalties	1,207	1,761
Other	1,265	1,579
Prepaid expenses and other current assets	$ 12,239	$ 11,788

Summary of Accounts Payable and

Summary of Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounts Payable and Accrued Liabilities [Line Items]
Research and development expenses	$ 4,313	$ 3,024
Consulting and other professional fees	5,892	3,192
Compensation and employee benefits	2,848	4,291
Royalties payable	3,114	4,555
Other	1,858	1,134
Accounts payable and accrued liabilities	$ 18,025	$ 16,196

Summary of Intangible Assets (D

Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 60,941	$ 60,941
Accumulated Amortization	33,576	33,122
Net Carrying Amount	$ 27,365	$ 27,819
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful life	2033-01	2033-01
Gross Carrying Amount	$ 33,000	$ 33,000
Accumulated Amortization	5,635	5,181
Net Carrying Amount	$ 27,365	$ 27,819
Fanapt
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful life	2016-11	2016-11
Gross Carrying Amount	$ 27,941	$ 27,941
Accumulated Amortization	$ 27,941	$ 27,941

Intangible Assets (Textual 2 -

Intangible Assets (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		12 Months Ended
	Jul. 31, 2013	Feb. 29, 2004	Mar. 31, 2017	Mar. 31, 2014	Dec. 31, 2016	Dec. 31, 2006
Finite-Lived Intangible Assets [Line Items]
Milestone obligation under license agreement					$ 25,000
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets	$ 3,000	$ 500		$ 8,000		$ 1,000
Intangible assets, estimated useful life			2033-01		2033-01
Cumulative worldwide sales milestone			$ 250,000
Milestone obligation under license agreement			25,000
Intangible assets capitalized			$ 25,000

Intangible Assets (Textual 3 -

Intangible Assets (Textual 3 - Fanapt) - Additional Information (Detail) - Fanapt - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2009	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets			$ 12
Estimated Patent life end date	2016-11	2016-11
Assets acquired and recorded at fair value, Intangible re-acquired right				$ 15.9

Intangible Assets - Additional

Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization	$ 454	$ 2,943

Summary of Future Intangible As

Summary of Future Intangible Asset Amortization (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 27,365	$ 27,819
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	27,365	$ 27,819
2,017	1,296
2,018	1,728
2,019	1,728
2,020	1,728
2,021	1,728
Thereafter	$ 19,157

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2017USD ($)ft²	Mar. 31, 2016USD ($)
Commitments and Contingencies Disclosure [Line Items]
Rent expense | $	$ 0.8	$ 0.5
Washington DC Lease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	40,188
Expiration date of leases for office space	2,026
Washington DC Lease | Sublease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	9,928
Washington DC Lease Amendment
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	30,260
Renewal term of lease agreement	5 years
London Lease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	2,880
Noncancellable lease term ending date	2,021
Berlin Lease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	1,249

Summary of Minimum Annual Futur

Summary of Minimum Annual Future Payments Under Operating Leases and Subleases for Office Space (Detail) $ in Thousands	Mar. 31, 2017USD ($)
Operating Leased Assets [Line Items]
Operating leases, Total	$ 21,164
Operating leases, 2017	1,509
Operating leases, 2018	2,220
Operating leases, 2019	2,275
Operating leases, 2020	2,331
Operating leases, 2021	2,171
Operating leases, Thereafter	$ 10,658

Commitments and Contingencies48

Commitments and Contingencies (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		12 Months Ended
	Jul. 31, 2013	Feb. 29, 2004	Mar. 31, 2017	Mar. 31, 2014	Dec. 31, 2006	Dec. 31, 2016
HETLIOZ
Milestone obligation under license agreement						$ 25,000
Percentage of future sublicense fees payable to third-party			Mid-twenties
HETLIOZ
HETLIOZ
Acquisition of intangible assets	$ 3,000	$ 500		$ 8,000	$ 1,000
Milestone obligation under license agreement			$ 25,000
Royalty payable percentage on net sales			10.00%
Cumulative worldwide sales milestone			$ 250,000
Intangible assets capitalized			$ 25,000

Commitments and Contingencies49

Commitments and Contingencies (Textual 3 - Fanapt) - Additional Information (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2014	Dec. 31, 2016
Fanapt
Royalty received percentage on net sales		10.00%
Prepaid royalty	$ 1,207,000		$ 1,761,000
Royalty Rate for Annual Sales up to $200 million through November 2016
Fanapt
Royalty percentage payable on net sales below annual threshold	23.00%
Royalty Rate for Annual Sales in Excess of $200 million through November 2016
Fanapt
Royalty percentage payable on net sales above annual threshold	Mid-twenties
November 16,2016 through December 31,2019
Fanapt
Royalty payable percentage on net sales	3.00%
Prepaid royalty	$ 2,000,000
Maximum
Fanapt
Agreed upon sales threshold level for royalty rate	$ 200,000,000
Fanapt
Fanapt
Royalty payable percentage on net sales	6.00%
Royalty payment period	10 years

Commitments and Contingencies50

Commitments and Contingencies (Textual 4 - Tradipitant) - Additional Information (Detail) - Tradipitant $ in Millions	12 Months Ended
	Dec. 31, 2012USD ($)
Tradipitant
Future percentage of royalty payments based net sales	Low double digits
Possible future milestone payments	$ 4
Milestone payment under license agreement	1
Future Regulatory Approval and Sales Milestones
Tradipitant
Possible future milestone payments	$ 95

Commitments and Contingencies51

Commitments and Contingencies (Textual 5 - CFTR Activators and Inhibitors - Additional Information (Detail) - CFTR Activators and Inhibitors - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
CFTR activators and inhibitors
Milestone payment under license agreement	$ 1
Possible future milestone payments	$ 46
Tiered royalties payable on future net sales		Single-digit

Stock-Based Compensation (Textu

Stock-Based Compensation (Textual 1 - Stock-Based Compensation) - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
2006 Plan and 2016 Plan | Outstanding options and RSUs granted (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares subject to outstanding options and RSUs	6,583,429
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance		2,000,000
Number of shares of common stock available for future grant	526,661

Stock-Based Compensation (Tex53

Stock-Based Compensation (Textual 2 Stock Option) - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation option awards contractual term	10 years
Portion of initial stock options granted to employees that vests on employee's first anniversary	25.00%
Portion of initial stock options granted to employees that vests ratably over three years after completion of first year of service	75.00%
Option awards vesting period, after completion of one year of service	3 years
Vesting period	4 years
Vesting period for initial stock options granted to directors	4 years
Vesting period for subsequent stock options granted to directors	1 year
Proceeds from exercise of employee stock options	$ 2,209	$ 24
Options granted, weighted average fair value per share	$ 7.84	$ 4.27
Service option awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 11,100
Unrecognized compensation expenses, weighted average period	1 year 4 months 24 days

Summary of Option Activity for

Summary of Option Activity for 2006 Plan and the 2016 Plan (Detail) - 2006 Plan and 2016 Plan - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Number of Shares
Beginning balance	5,548,336
Granted	592,750
Forfeited	(212,718)
Expired	(570,600)
Exercised	(198,156)
Ending balance	5,159,612	5,548,336
Exercisable	3,410,101
Vested and expected to vest at March 31, 2017	4,857,256
Weighted Average Exercise Price at Grant Date
Beginning balance	$ 11.62
Granted	14.50
Forfeited	10.71
Expired	30.57
Exercised	11.14
Ending balance	9.92	$ 11.62
Exercisable	8.94
Vested and expected to vest at March 31, 2017	$ 9.75
Weighted Average Remaining Term (Years)
Weighted Average Remaining Term	6 years 4 months 13 days	5 years 6 months 29 days
Exercisable	5 years 1 month 13 days
Vested and expected to vest at March 31, 2017	6 years 2 months 5 days
Aggregate Intrinsic Value
Beginning balance	$ 32,453
Exercised	669
Ending balance	21,602	$ 32,453
Exercisable	17,474
Vested and expected to vest at March 31, 2017	$ 21,090

Stock-Based Compensation (Tex55

Stock-Based Compensation (Textual 3 RSU) - Additional Information (Detail) - Restricted Stock Units (RSU) $ in Millions	3 Months Ended
	Mar. 31, 2017USD ($)shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of RSU awards in equal installments	4 years
Unrecognized compensation expenses, weighted average period	2 years
Unrecognized compensation expenses related to unvested RSUs	$ 16.9
Grant date fair value of common stock vested, shares | shares	347,504
Grant date fair value of common stock vested	$ 3.3

Summary of RSU Activity Plan (D

Summary of RSU Activity Plan (Detail) - Restricted Stock Units (RSU)	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Number of Shares Unvested
Beginning balance | shares	1,138,428
Granted | shares	760,086
Forfeited | shares	(127,193)
Vested | shares	(347,504)
Ending balance | shares	1,423,817
Weighted Average Price/Share Unvested
Beginning balance | $ / shares	$ 10.07
Granted | $ / shares	14.50
Forfeited | $ / shares	10.49
Vested | $ / shares	9.60
Ending balance | $ / shares	$ 12.52

Total Stock-Based Compensation

Total Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 2,256	$ 2,266
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	409	524
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,847	$ 1,742

Black-Scholes-Merton Option Pri

Black-Scholes-Merton Option Pricing Model for Stock Options Granted (Detail)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share Based Payment Award Stock Options Valuation Assumptions [Line Items]
Expected dividend yield	0.00%	0.00%
Weighted average expected volatility	57.00%	57.00%
Weighted average expected term (years)	5 years 10 months 21 days	6 years 29 days
Weighted average risk-free rate	1.98%	1.38%