Vanda Pharmaceuticals Inc (VNDA) Q2 2021 Earnings Call Transcript

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Vanda Pharmaceuticals Inc (VNDA 4.33%)
Q2 2021 Earnings Call
Jul 28, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to the Vanda Pharmaceuticals Inc Second Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Please go ahead.

Kevin Moran -- Senior Vice President, Chief Financial Officer and Treasurer

Thank you, Joel. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals Second Quarter 2021 performance. Our second quarter 2021 results 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 office and Chairman of the Board. 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings with the FTC, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other filings.

The information we provide on this call is provided only as of today. And we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Dr. Mihael Polymeropoulos.

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Thank you very much, Kevin. Good afternoon everyone and thank you joining us. We're excited to share our second quarter 2021 performance and our upcoming clinical development milestones. 2021 is supposed to be an exciting year for Vanda with several late stage clinical projects that have the potential for significant short-term value creation as well as long-term advancement with the growth revenue. In a [Phonetic], to our ongoing commercial launch of HETLIOZ for Smith-Magenis Syndrome, we're looking forward to the completion of our Phase III gastroparesis study and reporting the top line results by the end of the year. On commercial performance, we see continued growth year-over-year. In the second quarter of 2021, net product revenue for HETLIOZ and Fanapt were 67 million, a 9% increase compared to the second quarter of 2020. Net product revenue for HETLIOZ serves a 1% increase in the second quarter of 2021 compared to the second quarter of 2020 and net product revenue for Fanapt saw a 15% increase compared to the second quarter of 2020. HETLIOZ demand [Phonetic] concerns received continued our exceed this gets filled. But keen to improve access to the [Phonetic] this end, we have engaged with a number of ways to based analysis. Now, on the Smith-Magenis Syndrome, nighttime sleep disturbances approval and launch. In December 2020, the FDA approved the oral capsule formulation of HETLIOZ and the new liquid formulation HETLIOZ LQ for the treatment of adults and children respectively with nighttime sleep disturbances in Smith-Magenis Syndrome. While we're still engaged in commercial launch of the HETLIOZ capsule and HETLIOZ LQ liquid formulations, we're [Phonetic] the early results. We continue to connect with SMS families for our at various stage of discussing the treatment option with their physicians. We are now implementing the second phase of our commercial launch, which is intended to lead to larger number of diagnosed and undiagnosed individuals in the similar fashion to our Non-24 efforts. [Phonetic] with combination of direct-to-consumer advertising and our specialized in personnel scores. While it is difficult at this time to estimate for the adoption of HETLIOZ by SMS patients, we're excited about the emerging opportunity as we continue to deploy a number of [Phonetic] clinically of approximately 15,000 SMS patients in the year. Given the genetic tests available for SMS, a significant number of patients are already diagnosed and these are expected to be the first cancer treatment. It is estimated that between 80% to 100% of patients with SMS suffer from nighttime sleep disturbances, for which HETLIOZ is the only approved treatment. We are expect that the number of [Phonetic] treatment with you will continue to increase in the second half of the year and that clinical awareness will lead to a reduction. The paper describing our study in Smith-Magenis Syndrome, the largest of it's kind was this week in the journal in [Phonetic] magazine. These [Phonetic] the largest of [Phonetic] patient with SMS enrolled, the delicate confirm patients with SMS in a double blind II period crossover study and demonstrated favorable effects that I can [Phonetic] in a number of primary and secondary endpoints including sleep quality and sleep duration measures. The results presented this paper consistent with the [Phonetic] is a circadian regulator. As we resume in activity in most of our clinical programs, I would like to highlight our progress in some of these key programs. First, the Phase III study of Tradipitant gastroparesis nearing completion with 95% of the target of 200 patient [Phonetic]. We expect results of this study by the end of the year. Following the completion of the study, we plan it with the FDA for a pre-NDA meeting and discuss are coming up soon. As we have previously coming period would be need the current Phase III study and be the last [Phonetic] required for NDA program. As a reminder, the ongoing Phase III study aims to enroll gastroparesis with per idiopathic or diabetic etiology. The study is 12-week double blind placebo-controlled study. We will measure the effects of tradipitant and improving the symptoms of gastroparesis. The Phase III study follows the successful completion of a 4-week Phase II randomized study in the same proculation. The results of that study were published in the journal Gastroenterology in January of 2021. Additionally, more than a dozen study expense going to continue with tradipitant post completion of the clinical study through expanded access program. We have worked in collaboration with patient, the doctors and the FDA to ensure that they can receive the treatment with the [Phonetic]. Gastroparesis is a severe unmet medical condition with only one approved treatment option in the last 3 years. Our estimates for the size of the commercial opportunity for a gastroparesis therapy are based on several key assumptions, one, the estimated prevalence of gastroparesis in the US is about 6 million patients. The majority of whom remain undiagnosed. Second, at present, there are more than 600,000 patients estimated to have a confirmed diagnosis of gastroparesis and finally based on IQVIA data, there are 300,000 prescriptions of oral metoclopramide per month in the US. Given only limited treatment options and the early response as we witnessed the recruitment through direct-to-consumer advertising to dividend gastroparesis achieved a significant market share, which we believe will create an opportunity for Vanda to address an important unmet medical leap and represent a potentially transformational commercial opportunity for the company. Going into the second half of the year, the completion of the gastroparesis study represents our imminent and significant clinical milestone. However, there are a number of additional programs represent near-term value and I will briefly discuss. Firstly HETLIOZ. We have previously discussed, our clinical programs with HETLIOZ, we started in delayed sleep phase disorder or DSPD, autism spectrum disorder and Pediatric Non-24-Hour Sleep-Wake Disorder, all of which are ongoing. The most advanced of these programs is DSPD, which exacts what believes to be an important value creation opportunity for Vanda the high probability [Phonetic] success. DSPD is likely the most prevalent, circadian rhythm sleep disorder, affecting approximately 1% of the population and 7% to 10% of patients with disorders of initiating or maintaining sleep. The prevalence of late phase disorder is highest in adolescents and young adults with what estimate between 3% and some as high as 7%. We believe that HETLIOZ could have the significant benefit of the classic insomnia drugs to patients by addressing the underlying cause and the internal clock and therefore improving sleep of the appropriate time. Classic insomnia drug provide a small sleep benefit with known side effects noted in underlying issue [Phonetic] DSPD study has started randomizing patients in a number of clinical sites approved in the United States and we will be able to provide greater detail on timelines as we understand, the rate of the equipment over the next few months. And observational open label treatments of the effects of HETLIOZ in patients with autism spectrum disorder and sleep disorders, is scheduled to begin imminent. Sleep disruption is commonly seen people with autism is this proceed with increased burden of disease and impact on function. There is currently no FDA approved treatment for sleep disturbance in autism.

I will now turn on Fanapt. The ongoing clinical development programs should including Bipolar disorder, Parkinson's disease, psychosis in the long-acting injectable formulation, schizophrenic because if any are also in various stages of preparation and execution. The full phase of the study bipolar one disorder with iloperidone includes sites in both the United States and Europe. The study has quickly started randomized patients in the US that we plan to begin randomized patients in Europe later this summer. On this is psychosis we're planning 2 studies, a Phase II open label and if 2 cohort, followed by a larger, randomized, placebo-controlled Phase III study. So if, trying to evaluate the team employability Fanapt in the treatment of in Parkinson's disease. 20 to 40% of people with Parkinson's disease are [Phonetic] psychosis. Almost 1 million people in the US with Parkinson's disease with [phonetic] for Parkinson's disease psychosis and basically then this impact from the patients and their caregivers. This means important unmet medical need. The Phase II cohort open label study of 24 patients has received approval to proceed by the FDA, and is expected to commence soon. Studies with the long-acting injectable formulation Fanapt are ongoing very expected to lead [phonetic] schizophrenia in 2022. In addition, the clinical pharmacologic study of the active metabolite of iloperidone is ongoing as well. On a dividend and beyond the gastroparesis program, the oldest study for tradipitant phase with COVID 19 pneumonia is growing. While it's tradipitant motion taking the study is on hold due to pandemic related travel restrictions. VQW-765 is an alpha-7 nicotinic agonist with in a program to [phonetic] the effects of performance anxiety and that study is currently [phonetic]. The primary objective of this study is to evaluate the effect of a single dose of 10 milligrams VQW relative to placebo in change of anxiety as measured by the effective to distressed scale during a clear source of [phonetic] PSST. The PSST is [phonetic] in a lab setting and has been accepted by the FDA for developing new treatment for anxiety related disorders. Subjective units of [phonetic] validated self-assessment for a good exactly this quarter was introduced to 100. It is to measure the intensity of [phonetic] PSST assessment. We will be talking more about said side and the performance Anxiety study in future discussions. In conclusion, the second quarter of 2021 was another strong quarter for Vanda and we're looking forward to a number of important milestones in second half of the year. Launch of HETLIOZ for nighttime sleep disturbance, SMS is progressing well and we're pursuing collaborations with payers to further facilitate access to HETLIOZ, but we also continue to look forward the results of our tradipitant gastroparesis study later this year and a number of life cycle management programs in our pipeline that are to continue Vanda's value creation well into the future. Upcoming goals to produce results that is approaching what we believe to be is transformation postpone with a significant revenue opportunity. I will now turn the call back to Kevin to discuss financial results for the second quarter and also that we'll be happy to address any questions you may have. Kevin.

Kevin Moran -- Senior Vice President, Chief Financial Officer and Treasurer

Thank you, Mihael. I'll begin by summarizing our financial results for the first 6 months of 2021 before turning to discuss the second quarter of 2021. Total revenues for the first 6 months of 2021 were 130.6 million, a 9% increase compared to 120.2 million for the same period in 2020. HETLIOZ net product sales of 83.9 million for the primary contributor and driver of our revenues for the first 6 months of 2021 and saw a 9% increase compared to the same period in 2020. Snap net product sales of 46.7 million for the first 6 months of 2021 reflect an 8% increase compared to the same period in 2020. For the first 6 months of 2021, Vanda recorded net income of $18.3 million compared to net income of 9.2 million for the same period in 2020. Net income for the first 6 months of 2021 included an income tax provision of 4.7 million as compared to an income tax provision of $3.1 million in the same period in 2020. In this cash, cash equivalents and marketable securities referred to as cash as of June 30, 2021 or $396.5 million representing an increase of 56.6 million compared to June 30, 2020. Turning now to our quarterly results. Total revenues for the second quarter of 2021 were $67.9 million and 9% increase compared to 62.2 million for the second quarter of 2020. HETLIOZ net product sales were $44.5 million for the second quarter of 2021, a 7% increase compared to 41.6 million in the second quarter of 2020. Fanapt net product sales in the second quarter of 2021 were $23.4 million, a 13% increase compared to 20.6 million in the second quarter of 2020. Fanapt net product sales in the second quarter of 2021 were essentially flat as compared to $23.3 million in the first quarter of 2021. Fanapt prescriptions in the second quarter of 2021 as reported by equity Exponent were increased by 1% compared to the first quarter of 2021. For the second quarter of 2021, Vanda recorded net income of $9.7 million compared to net income of 8.7 million for the second quarter of 2020. Net income for the second quarter of 2021 included an income tax provision of 3 million as compared to an income tax provision of 2.4 million for the same period in 2020. Operating expenses in the second quarter of 2021 were 55.5 million, compared to operating expenses of $53 million in the second quarter of 2020. The $2.5 million increase was primarily driven by higher R&D expenses related to the late-stage tradipitant HETLIOZ and Fanapt development programs, partially offset by lower SG&A expenses related to awareness and branded DTC campaigns. Vanda expects to achieve the following financial objectives in 2021. Net product sales from both HETLIOZ and Fanapt of between 270 and 300 million HETLIOZ net product sales of between 180 and 200 million. Fanapt net product sales of between 90 and 100 million. Year-end 2021 Cash of greater than $400 million. Of note, our HETLIOZ net product sales guidance is based on our currently approved FDA indications for Non-24 and nighttime sleep disturbances and SMS.

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

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Thank you very much, Kevin. At this point, we'd be happy to answer any questions. And I understand my audio be have not been great. But, please let me know [Phonetic].

Questions and Answers:

Operator

Thank you. [Operator Instructions]. And our first question comes from Olivia Brayer with Bank of America. Your line is open.

Olivia Brayer -- Bank of America -- Equity Research supervisor

Hi guys, congrats on the quarter and thanks for the questions. My first one is around payer positioning. Now that we're several quarters into the SMS launch, I know getting on formulary has obviously been a hurdle for HETLIOZ in Non-24. But are you seeing a similar level of push back in SMS or or have there been any sort of advantages to being that second indication for HETLIOZ that that could maybe help patients get faster access to therapy and then I have one, one follow-up on tradipitant?

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Yeah, Olivia. Thank you very much for the question. First of all, I will say that that we're very focused on patient access. We care a lot that every patient that is being prescribed get the chance to try to HETLIOZ and continue. I will answer briefly, I will let Kevin elaborate a little bit. First, HETLIOZ is on the formulary of I would say, plans today and that is for non-24. For SMS, It is a bit early, given the cycle of the PND communities which evaluate the inclusion utilization management criteria. But, so far, do not find any particular strong resistance by payers on the [phonetic]. However, we continue to see something we have reported in prior quarters, a significant resistance on non -24 where the demand it is much higher than this this creates field and we're talking about on label indications. There is reasons, but the most common one is the misperception with payers, so the indication, it does not necessarily include Non-24. But [phonetic] settled with a lengthy 14-page document that the FDA and the last 20 and signed by Dr. Woodcock we're actually it clarifies and confirms that the indication we have just is Non-24 without any qualification some this liquidity have internal that we are engaged with payers to find ways to improve access and I will ask Kevin, if you have anything to add to that.

Kevin Moran -- Senior Vice President, Chief Financial Officer and Treasurer

Yeah. Thanks, Mihael. And just to reiterate, very focused on improving patient access and reducing patient burden looking for ways to collaborate with the payers to increase that patient access and just highlighting that our prescription demand is far an excess of our prescription filled which just means that this will also represents an opportunity for patients to get access to the drug and for us to continue to look to grow the business.

Olivia Brayer -- Bank of America -- Equity Research supervisor

Okay, great, thanks guys. And I know we're coming up, obviously on the gastroparesis data and filing for tradipitant. But, I do think there is a lot of interest around the expanded access program, and how much of that patient data will eventually be looked at by the FDA?. So, I guess the question is how much of that FDA data could feasibly be included in the initial filing and is there a certain minimum length of time on therapy to make the cut for that initial portion of the submission and then maybe just as a quick follow-up on that Is whether there are other opportunities through the review process in which you could add more safety data from that expanded access program as more patients take part in the program?.

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Yeah, very much Olivia. First of all, we are just [phonetic] 3 with the interest of patients are concluding the 3 month, either in the double-blind randomized full the study or the open label in their interest to continue on the drugs and in the words, any of these patients are describing the does the experience, life-altering. Now in terms of numbers, we have at least a dozen patients that have fully applied for the expanded access program and the majority of them have been already reviewed by the FDA and approved. The initial approval for each one of these patients is a period of 6 months and several patients coming up to the 6-month mark, including patients that have been approved beyond that to extend 2 years in a our first will be complete in the 12 months in seeking extended beyond the 12 month very shortly.

In terms of the NDA applications we are collecting the data and we will be submitting all this data to the application, so that would mean that at least for several of the basins by the move some. We will have 12-month safety data and certainly there is an opportunity within the middle of the FDA's review to need updated safety data. So we expect, all these patient that are now the expanded access program and others that may come, we will continue to produce safety data, which actually will bolster the safety that we submitted to the agency.

Olivia Brayer -- Bank of America -- Equity Research supervisor

Okay, great, thank you very much.

Operator

Thank you. I'm not showing any further questions at this time, I would now like to turn the call back over to Vanda management for closing remarks.

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Yes, thank you very much. I thank you all for joining us and we look forward talking to you about our progress in future calls. Thank you. [Operator Closing Remarks].

Duration: 29 minutes

Call participants:

Kevin Moran -- Senior Vice President, Chief Financial Officer and Treasurer

Mihael H. Polymeropoulos -- President and Chief Executive Officer

Olivia Brayer -- Bank of America -- Equity Research supervisor

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