VNDA - NASDAQ

Good afternoon. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 Vanda Pharmaceuticals Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would like now to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Mr. Moran, you may begin your conference.

Thank you, Jeannie. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' fourth quarter and full year 2023 performance. Our fourth quarter and full year 2023 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.

Thank you very much, Kevin and good afternoon everyone. Thank you for joining us to discuss Vanda's fourth quarter and full year 2023 results. I will briefly discuss key updates and then I will ask our General Counsel, Tim Williams, to provide a brief update on litigation measures, before turning the call over to Kevin Moran to discuss our financial results. We have significantly advanced our development pipeline now with three PDUFA action dates in 2024, including our supplemental new drug application or sNDA for bipolar I disorder in adults with a PDUFA date in April of 2024 and our New Drug Application, or NDA, for gastroparesis with a PDUFA date in September 2024. On our supplemental NDA for HETLIO

Thank you, Mihael. I'll provide a few litigation updates, starting with our HETLIO

Thank you very much, Tim. I will now turn the call to Kevin Moran, our Chief Financial Officer, to discuss our financial results. Kevin?

Thank you, Mihael. And as Mihael mentioned, I'll begin by highlighting the acquisition of the US and Canadian rights to PONVORY from Actelion Pharmaceuticals Ltd or Janssen, a Johnson & Johnson Company for $100 million that was completed in December of 2023 and where the transition is ongoing. PONVORY is a once-daily oral selective S1P1R modulator approved by the FDA in Health Canada to treat adults with relapsing forms of multiple sclerosis. During this transition period, Janssen will continue to operate the business pursuant to a customary transition agreement, while Vanda and Janssen transitioned regulatory and supply responsibility, for PONVORY to Vanda. This acquisition represents a significant milestone for Vanda expanding our commercial portfolio, diversifying our sources of revenue and providing Vanda the opportunity to develop a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders ranging from psoriasis to ulcerative colitis. Turning now to our financial results. I'll first discuss the results for the full year 2023 before turning to discuss the fourth quarter of 2023. Total revenues for the full year 2023 were $192.6 million, a 24% decrease compared to $254.4 million for the same period in 2022. HETLIO

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

[Operator Instructions] And your question comes from Andrew Tsai with Jefferies. Your line is open.

Hey, good afternoon. Thanks for taking my questions, and big congratulations on the acquisition of PONVORY. So maybe a couple of questions on that asset. First, what do you guys think you can do that J&J might not have been able to do in terms of driving sales growth at PONVORY? And then secondly, why is this differentiated from the other multiple sclerosis drugs out there? What's the appeal here?

Thank you very much, Andrew. First of all, to give a background here for everyone. PONVORY ponesimod belongs in the class of sphingosine-1-phosphate receptor analogs. And their mechanism of action is by sequestering or preventing the egress of lymphocytes from peripheral lymph nodes, so that they can have wide applications in disorders where you have autoimmune attack on a system or organ of the body, in the case of multiple sclerosis, this central nervous system. As you also know, this class of drugs has several members. It started some years ago with Fingolimod or Gilenya, now generic and has expanded with additional members in the class. We believe that ponesimod due to its receptor specificity and quick reversibility of effect can play a critical role for the treatment of multiple sclerosis for many groups of patients, especially for those that require a specificity avoiding side effects and quick reversibility. It has been clear that this drug may be attractive, especially to women of childbearing aids as they contemplate family planning and that the drug will come out of the circulation within a short period of time in a matter of days. And the same is true about the recovery of the lymphocytes. So directly to your question, the increased specificity and quick reversibility both in amount and lymphocyte counts make this drug differentiated and attractive. Second part of your question was what can we do different from J&J. And the simple answer is we plan to market it. J&J for their own business reasons had decided to remove their market in support of the product, while they were in the process of identifying a potent partner to divest it to. And so we believe there is a significant opportunity both with neurologists and multiple sclerosis centers and consumers to be able to increase the awareness of the existence of this potentially quite useful product. And beyond that, as we have learned, this type of mechanism of action can be useful in an array of autoimmune disorders in front of us, of course, are the examples of the effect in ulcerative colitis. And the BMS compound has been successfully addressing that as well as Pfizer's compound interestingly, not approved for multiple sclerosis do not pursue it, but actually directly being approved now for ulcerative colitis. And we think our drug, PONVORY is well-positioned from the mechanism of vaccine with very key similarities to the receptor binding effects that both the BMS compound and the Pfizer compound we have, both of them successful in ulcerative colitis to give us reasons to believe that could be successful in that indication. In addition, Actelion, a J&J company, had conducted a Phase 2 large study in psoriasis, which was successful. And we are evaluating now a path to continue the development in that indication as well. And as I said, the opportunities around the once-day oral sphingosine-1-phosphate analog like PONVORY are just beginning to be realized and likely there will be wide. We are developing our plans now. We're in the midst of the transition period, and we'll be able to talk more about these plans in the future.

Thanks. That's very helpful. Thank you for the color. And then shifting gears to the HETLIO

Andrew, let me clarify. Are you asking about the insomnia in HETLIO

HETLIO

Yes. For HETLIO

Got it. And then maybe just speaking of the Fanapt for bipolar then or as well as tradipitant for gastroparesis, my final question is, is your confidence in those applications the same despite the insomnia development and second to that is, are you hiring ahead of the potential PDUFA decision. Thank you.

Yes. So just to talk about confidence. Of course, we're optimistic because we believe in science and the robustness of our packages that we have already communicated with you all. But of course, we're – the experience with the agencies that we are prepared for unpredictable results. And having said that, we're cautiously working towards being ready to expand the already existing Fanapt salesforce. And I will let Kevin give you a little more color of how we think about cadence of operational expenses there. And the same thing holds through for tradipitant in gastroparesis. We have done work prelaunch to understand the market and develop a commercial plan. But of course, we're quite a few months away from an agency action in September of 2018. And yet again there, we are proceeding very cautiously with the expenditures ahead of that decision. But I will let Kevin give you more color.

Yes. And thanks, Andrew. On the Fanapt side, specifically, as Mihael mentioned, we have a very well-established commercial infrastructure given Fanapt's history on the market and as well as HETLIO

Very good. Thank you. Thank you all for the developments.

Thank you very much Andrew. thank you.

There are no further questions at this time. I will now turn the call back over to Vanda management for closing remarks.

Thank you very much all for joining us on this call. Thank you.