Earnings call transcript Q2 2023

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Operator

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2023 Vanda Pharmaceuticals Inc. Earnings Call. All lines have been placed on mute to prevent any background noise. there a remarks session. speakers' the will question-and-answer be After [Operator Instructions]

ahead. I At Chief turn go would the time, Financial conference Please Vanda's to Moran, like this Kevin over Officer. to

Kevin Moran

for Thanks, joining second Audra. XXXX performance. and Good thank quarter us discuss Vanda afternoon, to Pharmaceuticals’ you

SEC's quarter the system second available were XXXX this our results afternoon Our and are on and released on EDGAR www.vandapharma.com. website,

our are versions of call on archived providing this and website. live we addition, In conference

Officer and Joining our Executive me on President, Tim and Dr. call Counsel. of Polymeropoulos, Mihael Chairman Williams, today's is General Board; the Chief our

remarks, our the introductory on lines will my our Mihael activities. comment questions. your Following will update on then opening for ongoing you financial before results I

will I remind the like to within proceed, laws. that meaning everyone of we federal we would forward-looking this be securities statements statements Before call various make on

other Our SEC's on the other recent upon forward-looking assumptions are and with Results are our sections Condition and risks, as changes updated most expectations by and These Form XX-Q, our filings. all these SEC, of note our the report website. of EDGAR the investors current circumstances Factors Operations of system that reports Financial Management's cautionary described encourage Form Risk regarding involve and and risks available statements and statements, and uncertainties. and Form We X-K our quarterly based on reports which in on annual in read Analysis current are reports Discussion subsequent XX-K on filings on to forward-looking

any except by to future on of call make we today, events update provide on may information, account revise is law. of publicly or on and statements we information only no this provided required otherwise, call forward-looking this we as obligation as new or undertake The

over CEO, to With to that Mihael the I like Dr. our Polymeropoulos. would call turn now said,

Mihael H. Polymeropoulos

much, for XXXX quarter us you discuss results. good you afternoon, Thank joining and everyone. Vanda's Thank very Kevin, to second

and matters turning then to commercial clinical I our Williams, key to a litigation Moran, General over will progress Counsel, Tim call commercial provide will highlights to financial before discuss products our the from our and on first results. ask pipeline, discuss and Kevin I update brief

Taking a we half year. environment first challenging the of generic had have the into at-risk due tasimelteon, strong of the launch account to

the we taken to position pursue I bipolar Fanapt potential business near-term disorder. number the we commercial Over of of sales including franchise a force if last as continued well months, our projects that the for support several have of success, will steps our the approval for as reorganization current expansion FDA the

our tasimelteon, therapy at-risk HETLIOZ. with for on solid tirelessly of to work patients, and the results Despite launch delivered support generic performance prescribers. begin continues Let's our and team to

HETLIOZ quarter, second recorded greater done in the number expenses quarter. we first the a During of

indication the approved of larger the to growth Turning and focused capitalize well-positioned driving bipolar Fanapt schizophrenia on we in approved. currently is if are schizophrenia with to significantly than market the ensuring on Fanapt, market

and patients. in for this trial This as providers for the recognized quarter, strong we look initiatives drive and Building that slight upon continue would year-over-year bipolar on into to approval build intended schizophrenia FDA brand recognition clinical to place for Fanapt disorder, we to results indication. growth we pursue Fanapt put we among previous

safety of well preclinical FDA the new results to be submitting application option We we opportunity this of for FDA and to database substantial this For for efficacy of we support tradipitant the as FDA commercial believe to pursuing an also approval this. of HETLIOZ, for our tradipitant, insomnia in evidence patients meaningful tolerability provide in believe In gastroparesis. as with a pursue that approval studies demonstrate for could will we also insomnia. of tradipitant therapeutic the HETLIOZ continue present drug We're that support drug. for exciting indication,

III had patients May, multiple with months ongoing is announced than we Phase program the years. the for completion study and more for treatment positive motion approval of after the marketing treated the been at studies in tradipitant treated clinical to two for in In from the currently of plan of patient apply conducting sickness. six additional least access program. results longest expanded We're The

the the Charcot-Marie-Tooth, rare In axonal, which late-stage there we inherited splice variants Charcot-Marie-Tooth IGHMBPX. is or also peripheral an announced CMTXS programs, Oligonucleotide neuropathy addition to available these Drug therapeutic disease, granted VCA-XXXA by Antisense caused cryptic XS, Designation is subtype type a that of granted Orphan FDA for of for treatment. no within for treatment

a Williams, provide brief At this update will ask, our matters. Tim Counsel litigation General on to Tim? point, I

Tim Williams

our I'll Thank litigation. with you, Mihael. related start intellectual and property

previously we the for to in negative Appeals the Court the HETLIOZ appealed decision Federal of Litigation our As disclosed, Circuit. ANDA

Back in X. Circuit affirmed pending Circuit the in full lawsuit against to this Apotex respond lower then panel ruling and and we for additional the Circuit regarding to an patent the that and August was the in that method Federal Separately, treatment requested rehearing Federal litigated patent petitioned for Court not case. the this court Apotex petition case. we have the our May, Tuesday, month, rehear Teva Federal Delaware of a HETLIOZ prior Teva by Earlier infringement

Act in intend And Teva launch interest of of matters. pursue Jersey version these to the of generic pending have each We against vigorously related HETLIOZ. our New a to finally, Teva's for we violations its in lawsuit Lanham of at-risk

generic to now some of approvals. turn our recent regulatory challenges I’ll product related to

of approved We FDA's filed challenging braille labeling. both FDA petitions earlier braille tasimelteon suit its citizen’s these continue to arguments. federal citizen’s of generic Apotex's without responded and approval The our filed this FDA's week rejecting in challenge for by labeling. approval tasimelteon to court challenging and without of both we which of We were tasimelteon, Teva's Teva approval FDA FDA generic the the petitions generic

FDA's our applications. challenge generic pursuing we Teva two We inadequate to we and we litigation. including undertaken believe We with matters, bioequivalence tasimelteon, citizen’s and actions to to during continue petitions of approval MSN's generic review what be intend other FDA's continue Separately, believe testing. vigorously are filed continue of law, that under these improper pending approvals to FDA challenging

petitions. the yet not have a We these received response on FDA from

Court versions systems. our we was lawsuit of applications and review ANDA-filers of a the unlawful HETLIOZ Fanapt. economic and on to seeking matters damages the for of can public on based in filed on we docking trade filings other FDA's during Claims litigation information the FDA's generic both pending confidential And in secrets and last, our disclosure our More and generic believe be of detail found what this periodic Federal

it With that, turn back to Mihael, I'll you.

Mihael H. Polymeropoulos

financial to turn Thank you Tim. call the Kevin commercial results. discuss to very Kevin? I now our would Moran progress much, and

Kevin Moran

summarizing financial results the to turning XXXX. first by the of begin I'll of XXXX, six for discuss months Mihael. our you, Thank quarter before second

compared decrease saw months were Total the $XXX.X in decrease million in to of for six the for the and same for XXXX. $XXX.X $XX.X compared net product HETLIOZ million first XXXX, revenues same first of million, a XXXX XXXX. period were million a sales $XX.X period six months sales XX% the were XX% for

at-risk volume. decrease sales decrease to The HETLIOZ months had during was significant HETLIOZ increase generic net of to in of product XXXX. partially of performance a offset on attributable a by of in deductions, impact price The net the a version launch an first six

of compared of higher HETLIOZ unit the as customers and product reflected quarter inventory first of at Our end and first quarter net of periods of for at second sales pharmacy resulted recent docking XXXX prior to the significant both XXXX. sales the in specialty quarter XXXX increase a the

period the Turning sales to same net of $XX $XX.X now for product months for compared million Fanapt first in to million XXXX Fanapt. in X% of six the effective XXXX.

a For the of Vanda months income million loss period compared the $X.X in first to XXXX. net recorded $X.X six for net million XXXX, same of of

Net to compared months sold. of tax million for and goods compared provision of XXXX. six included months the of $X.X an period XXXX. first a driven of income expenses first decrease by XXXX to income expenses $XX.X income expenses for for SG&A R&D for months tax six the six the were provision cost and same in The of XXXX lower as first the Operating primarily lower $XXX.X million $X.X an million of $XXX.X was million lower million

decrease increases driven ASO to tradipitant related program activities expenses our clinical and program. early-stage development our our and was to VQW-XXX by primarily related The for Fanapt our program by offset R&D in decreases late-stage partially

in primarily decrease decrease from in expenses sold due owed goods lower product marketing, X% activities support by lower is to HETLIOZ XX% for commercial and BMS expenses and associated sales driven net cost XXXX. our net sales of HETLIOZ with the effective The December SG&A The lower the product was rate to to on in products. commercial royalty sales,

compared June to Vanda's an XX, $XX.X as XX, an XX, increase as million, to to XXXX. cash, of million increase referred equivalents XXXX was compared $XX.X million of cash, and and securities, of to representing $XXX.X June cash XXXX marketable December cash,

were second quarter Total $XX.X to a significant the HETLIOZ compared to quarter XXXX. a quarter quarter XXXX. during at-risk to now impact for decrease of XX% the performance XXXX, the continued XXXX. results. of a million for $XX.X of quarter generic million, version second second second the XXXX million, Turning XX% launch a of to in for compared revenues sales our decrease The quarterly product have $XX.X of the net HETLIOZ second were million $XX HETLIOZ of on

estimate sales of net to net and on constrained revenue net in a quarter $X.X partially offset during was price, first decrease decrease change a attributable sales of deductions to product related of decrease of in recognition The the a product in to volume the by XXXX. million

product quarter Our prior XXXX, compared unit of to reflected periods. the HETLIOZ higher first as for recent net as sales reported sales

unit of inventory first second pharmacy specialty The at the XXXX, of the the higher XXXX both specialty quarter significant quarter stocking and unit end of XXXX. the a of first during customers, result HETLIOZ XXXX. levels of quarter elevated quarter the resulted of customers sales quarter a increase reflect at in inventory of reduction the end of pharmacy of the sales first XXXX during product sales at lower net as of at the second the

for XXXX. of $XX.X Fanapt as to second the to Fanapt to first of net the second X% X% Fanapt. million increase XXXX. the in of reported product less the of million for as of Xponent product million $XX.X compared quarter increased net a by in to than first XXXX. quarter were sales of XXXX, XXXX compared the quarter quarter the X% by by Fanapt prescriptions second quarter $XX.X increased second compared IQVIA Turning sales quarter XXXX in

second XXXX. the income provision second in quarter tax to $X.X $X.X period million the same included of XXXX Net million net provision XXXX, the million an recorded second an quarter income income the net For compared for $X.X for income million compared quarter of of $X.X tax Vanda to of XXXX. as income of for of of

expenses lower $XX.X related the decrease expenses late-stage to million of commercial partially Fanapt HETLIOZ in product VQW-XXX from in second to to offset $XX product the related activities The lower program ASO product, our BMS and was and royalty HETLIOZ spending December our compared XX% to quarter development the million and R&D on early-stage decrease SG&A million the our to marketing to second by program, expenses primarily driven X% Operating lower our were owed of quarter goods program, XXXX. cost in sold expenses net of effective for due development to $XX.X on rate by lower XXXX sales sales and sales XXXX. related net in

related decrease in litigation $XX.X lower to driven decreased XXXX. SG&A corporate by expenses as related lower our ongoing by expenses the The XXXX of and primarily the first and expenses second in compared quarter R&D other Operating tradipitant million $XX.X development. of quarter expenses million to to was

significantly Non-XX the year generic to a version sales time. at-risk financial of of litigation, guidance product evaluate of the surrounding XXXX in market HETLIOZ uncertainties patent launch the provide launch the HETLIOZ treatment HETLIOZ, guidance in to a its of as at-risk Vanda at HETLIOZ likely as for net Vanda Given related continue decline will periods for generic of to future potentially U.S. the version this ongoing will progresses. result U.S. of unable the the a HETLIOZ ability to provide financial is and

reversal. not amount company of product sales the net significant months revenue the Additionally, six XXXX to HETLIOZ for probable an constrained first

As sales future resolved. variability the as periods remaining in result, HETLIOZ associated experience a variable consideration uncertainties net with could are product

With back now that, turn the to, I'll call Mihael.

Mihael H. Polymeropoulos

will we any you open point, line the you have. happy may to Thank very At to much, Kevin. this questions be

Operator

Tsai We'll at from you. question Andrew take Instructions] [Operator Thank Jefferies. our

Andrew Tsai

so Thanks all updates. much. everyone. Hi, Appreciate the

on us So, the existing for is question sales. first HETLIOZ,

potentially of see drawdown? Thanks. increase were price what of buildup. or quarter-over-quarter to inventory much curious some could in in sales So, trying drawdown how terms to did if QX a organic we're see trying of just quarter there QX inventory whether volume the inventory outside Just And was sales gauge and assuming type also in there QX was fluctuations? this

Mihael H. Polymeropoulos

will I much, Yes. very Thank you let, this answer question. Kevin, Andrew.

Kevin Moran

question, for the Thanks Andrew. Yes.

pieces I'll provided it provide couple of there, release. we where a in different the So, and detail the

the saw second the we we But or the levels inventory of of a quarter saw was So, quarter. still end relative what inventory inventory periods. portion in stocking to at in elevated were the the drawdown stocking a that of prior quarter second recent first the

high recent seen than in as the still periods. higher we've not as So, quarter, first prior but

So, to inventory they there's to some through still historic would work before levels. return

Andrew Tsai

clear. Very

And so, ongoing, to like think the generics, Tuesday you've the and the rehear speaking to you've has case, litigation mentioned next I respond. sounded case. Teva until core of guess And other think the versus petitioned it I I party

do we So, get potential what that? be after a resolution? quickly how the next would steps And

Mihael H. Polymeropoulos

And a the Circuit. we handle bit think the about maybe I this. I little procedure like, Yes. with Tim discuss would can Williams, Federal

Tim Williams

bit These one information response to more parties. other do a Federal hear can about from request Circuit certain response to because decided the the of Mihael. petitions happy the Circuit a to be Federal from little on more party. the instances for without In rehearing judges the that, Yes, Circuit are the any Federal by other sitting the interested learn case or may

So, in what occurred case. that's this

required set terms really next And not of so procedure in here from there's steps.

of provide there's procedure. If request have but and reply, likewise appellate an on Circuit’s not either week. the from there the, in court or court opportunity terms Apotex we response The like file is the court, need after the may would to And holds this procedure that. timing, timing no then that, the around prescribed definite a Teva I timing is in Tuesday rules with additional mentioned the rules of to of Federal next

the and timing bit what be. the look resolution like what it's So a unclear little would would

Andrew Tsai

though, clear Very nonetheless. it. Got

a does about catalyst. as to of about the next be pipeline, think good there speaking seem six to potentially So, we the XX months, set

so on have the what later free steps gastroparesis, to about all the bipolar? Fanapt XXXX. question HETLIOZ for to you talk And those sNDA and filed your would filings? for And approvals tradipitant three be, in are not, if confidence NDA the insomnia, for or gating feel And potential

Mihael H. Polymeropoulos

which data. what what a where each Yes. you decision We it been give are could applications months. is necessarily do XX we are, the of when submitted, ones or filed telling progressing do and within they submitted. next as submit, can three all rendered not all be interim to files we one updates, to when be have be details such you, regulatory But specific we given FDA for without we and that and in able the expect But tell them should that

Andrew Tsai

cash. do about it. just And that almost Got more one spend is last maybe think cash, one, we million, as your $XXX how question, foresee existing to you

what Are what or building kind indication buy areas to earlier Thank pipeline? you And ask the you I for? open Specifically, are business you deal in revenues the of immediate looking looking that? about are, are of thinking if stage more to you context secondly, out development, you. structure,

Mihael H. Polymeropoulos

marginal our have us And we as we is revenue because have lot commercial ongoing. at ago very from of development filings we're with to our have terms number first Certainly, exceptional to the to of allows a a presence, outside. business the of minute own support ongoing. our And and just discussed as pipeline new them diversify flexibility look a we types, focused organic actually Yes. in opportunities potential profitability,

where potential understand agnostic that that opportunities presence types are focused generally commercial on maybe believe already with revenue can infrastructure. synergistic again, a on think more But existing sources. the more with but our already to commercial we we and we we're indications compound keen and we be can in exist, So, be diversification of indications of agnostic late-stage

Andrew Tsai

it. Thank much. you very Got

Mihael H. Polymeropoulos

for Sure, you Andrew. Thank your questions.

Operator

for to closing does conference that Vanda And back question-and-answer management the to turn session. I'd conclude the remarks. like

Mihael H. Polymeropoulos

Yes. call. quarterly thank for Thank you much. And you this all joining very

talk forward periods. future to you you. to Looking Thank in

Operator

And today's for concludes your call. you this conference Thank participation.

disconnect. now may You

Vanda Pharmaceuticals (VNDA) 27 Jul 232023 Q2 Earnings call transcript