Vanda Pharmaceuticals (VNDA) Q1 2019 Earnings Call Transcript

Vanda Pharmaceuticals (VNDA 2.82%)
Q1 2019 Earnings Call
May. 01, 2019, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Vanda Pharmaceuticals first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, today's conference is being recorded. I'd now like to introduce your host for today's conference, Mr. Jim Kelly, executive vice president and chief financial officer.

Sir, please go ahead.

Jim Kelly -- Executive Vice president and chief financial officer

All right. Thank you, Liz. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' first-quarter 2019 performance. Our first-quarter 2019 results were released this afternoon and are available on the SEC 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. Mihales Polymeropoulos, our president and CEO. Following my introductory remarks, Mihales will update you on our ongoing activities, I will then comment on our financial results before opening the line for your questions.

Before we proceed, I'd 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 that involve risks, changes in circumstances, assumptions and uncertainties. These risks are described in the risk factors and management's discussion and analysis of financial condition in results of operations sections of our annual report on Form 10-K for the fiscal year ended December 31, 2018, which is available on the SEC's EDGAR System and on our website. We encourage all investors to read these reports and our other SEC filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or publicly revise 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. Mihales Polymeropoulos.

Mihales Polymeropoulos -- President and Chief Executive Officer

Thank you, Jim. Good afternoon. During the first quarter, we had continued to build on our momentum in 2018. As we continue our pursuit of innovative therapies, we will leverage our strong capital position to enhance our future growth prospects and our commitment to driving long-term value creation.Let us begin with an update on tradipitant and the status of our current dispute with the FDA.

To remind you, in February of this year, we filed a complaint in federal court contesting the FDA's imposition of a partial clinical hold that does not allow for Vanda to conduct studies of tradipitant beyond three months in duration. As previously discussed, the hold was imposed not because of findings in the extensive tradipitant safety database, but because of an administrative insistence to conduct an unnecessary nine-month study in non-rodents and specifically dogs. Extensive studies of tradipitant have already been completed. Tradipitant has been studied in more than 3,000 animals, including mice, rats, rabbits and dogs for durations up to two years and at doses of more than 300 times human dose multiples on a milligram per kilogram with no relevant safety findings.

Similarly, tradipitant has been studied in more than 600 patients in clinical studies for up to three months in duration with no significant findings. Following the court's grant of a request from the FDA for voluntary remand to cure its own potential mistake, the FDA provided its remand response to Vanda on Friday, April 26, 2019. The response indicates that after reevaluation, the FDA believes that a partial clinical hold continues to be appropriate. While we are disappointed that the FDA is insisting on a partial clinical hold, we believe that we have provided sufficient information regarding the safety of tradipitant to justify its continued study in patients beyond 12 weeks in accordance with applicable law and FDA regulations, and we intend to continue to vigorously pursue our interests in the matter.

On Monday, April 29, 2019, Vanda and the FDA filed a joint motion for an extension of time to propose a scheduling order, thereby extending the deadline until May 3, 2019 for Vanda and the FDA to agree upon and file a proposed scheduling order. We remain focused on resolving this unnecessary FDA requirement and are evaluating a number of options that will allow us to expedite potentially bringing tradipitant to market. Besides working with the FDA to remove the partial clinical hold, we're also evaluating the conduct of 12-month long clinical trials in other geographies where the regulators may not impose the same requirement. While drug safety is and always will be our top priority, we can achieve our safety goals without the widespread testing of animals taking place today.

Forcing companies to conduct experiments that add no value to public safety or scientific understanding is of no benefit to our patients or society, and we will continue to encourage the FDA to reassess its stance. Extensive scientific literature supports Vanda's position that the conduct of yet another dog study of nine-month duration given the existing safety database will hardly add any predictive safety value to inform clinical trials. Turning to our HETLIOZ business. We continue to see growth in patients on treatment driven by our efforts to create broader awareness and recognition of Non-24 among sighted individuals, and this is our HPI initiative, as well as we're continuing our efforts to facilitate treatment of blind patients with Non-24.

We're working toward the commercial launch of HETLIOZ for jet lag in the second half of 2019. As a reminder, the supplemental NDA PDUFA date is August 16, 2019. Vanda also expects to meet with the FDA in the third quarter of 2019 to confirm the regulatory path forward for HETLIOZ in the treatment of patients with SMS and expects to file a supplemental NDA in the third quarter of 2019. We also have plans to initiate a Phase 2 clinical study of HETLIOZ for delayed sleep phase disorder specifically in patients who have a mutation in their CRY1 gene in the third quarter of 2019.

As Vanda continues to advance HETLIOZ for patients with Non-24 and in the treatment of other health issues, we're confident in our ability to provide the benefits of HETLIOZ to an even greater number of individuals in the coming months and years. On Fanapt, we're still focused on driving awareness among psychiatrists that treat patients with schizophrenia. In parallel, we're continuing our clinical program on Fanapt, preparing for a randomized study of Fanapt in bipolar disorder which is planned to begin in 2019 and a pharmacokinetic study of the long acting injectable formulation which is ongoing. I will now turn to tradipitant.

In 2018, we initiated a Phase 3 study of tradipitant in atopic dermatitis and reported positive results of tradipitant in the Phase 2 study of patients with gastroparesis. For atopic dermatitis, we're currently recruiting patients in a 500-patient Phase 3 study to evaluate the efficacy and safety of tradipitant in an eight-week period during which patients will receive tradipitant 85 milligrams twice a day or placebo in a randomized fashion. We're evaluating a number of endpoints, including patient-reported measures of Worst Itch through daily diaries, as well as objective measures that include SCORAD, EASI and IGA. At this time, we expect that this study will be completed and top line results will be reported by mid-2020.

We also have plans to initiate the second Phase 3 study in atopic dermatitis likely by the first quarter of 2020. For gastroparesis, we reported positive Phase 2 study results with success in a number of endpoints, particularly on measures of patient-reported daily nausea and the measure of nausea-free days. We're encouraged by these results and plan to present this data at the upcoming DDW conference in San Diego later this month. We also plan to initiate a Phase 3 study in gastroparesis during the second quarter of this year to confirm these findings.

We will meet with the FDA in the coming weeks to discuss our planned Phase 3 program during our end-of-Phase 2 meeting. Finally, we have recently initiated a third indication program for tradipitant for the treatment of patients with motion sickness. This current protocol involves the induction of motion sickness by sea travel to patients with history of motion sickness. The study is nearing completion, and we will report results by end of the third quarter of this year.

With that, I will now turn the call to Jim to discuss our first-quarter financial results.

Jim Kelly -- Executive Vice president and chief financial officer

Thank you, Mihales. Total net product sales for the first quarter of 2019 were 47.7 million, a 10% decrease or 5.3 million compared to 53 million in the fourth quarter of 2018 and a 9% increase compared to 43.6 million in the first quarter of 2018. As I will describe in more detail on a product-by-product basis, the sequential decline in net product sales is fully accounted for by inventory changes in the fourth quarter of 2018 and the first quarter of 2019. The combined value of the inventory increase in the fourth quarter of 2018 was 2.5 million and the combined value of the inventory decrease in the first quarter of 2019 was 2.7 million.

The inventory change contribution to the first quarter 2019 sequential revenue change was 5.2 million of the 5.3 million total. Absent these inventory changes, our commercial performance was effectively flat from quarter-to-quarter. HETLIOZ net product sales were 29 million in the first quarter of 2019, an 11% decrease compared to 32.4 million in the fourth quarter of 2018 and a 14% increase compared to 25.4 million in the first quarter of 2018. The HETLIOZ patients on therapy number continues to grow quarter-over-quarter.

Of note, in early 2019, we saw a greater-than-expected decline in our HETLIOZ patients on therapy as compared to the fourth quarter of 2018. While we have seen this early first-quarter decline in prior years, the magnitude was greater this year. This early first-quarter decline has since reversed and patient demand has subsequently grown consistent with our full-year 2019 plans. As of March 31, 2019, the specialty pharmacy channel held less than two weeks of inventory as calculated based on trailing demand.

In the first quarter of 2019, the units dispensed to patients by the specialty pharmacies exceeded units sold by Vanda to the specialty pharmacy channel. The impact of this inventory destocking in the first quarter of 2019 was approximately 2.2 million. As noted on our call in the fourth quarter of 2018, we saw inventory stocking of approximately 2.1 million in that period. Adjusting for the combined impact of Q1 2019 and Q4 2018 inventory changes, the sequential dollar demand for HETLIOZ grew by approximately 3% or 800,000 in the first quarter of 2019 as compared to the fourth quarter of 2018.

This reflects the positive impact from the price increase taken on HETLIOZ in January 2019, offset by a 2% decline in total units dispensed to patients in the first quarter of 2019 when compared to the prior quarter. Fanapt net product sales of 18.8 million in the first quarter of 2019 reflect a 9% decrease compared to 20.6 million for the fourth quarter of 2018 and a 3% increase compared to 18.2 million in the first quarter of 2018. As of March 31, 2019, wholesalers have decreased inventory on hand when compared to year-end 2018. The impact of this inventory destocking in the first quarter of 2019 was approximately 600,000.

As noted on our call in the fourth quarter of 2018, we saw inventory stocking of approximately 400,000 in that period. Adjusting for the combined impact of Q1 2019 and Q4 2018 inventory changes, the sequential dollar demand for Fanapt declined by 5% or 900,000 in the first quarter of 2019 as compared to the fourth quarter of 2018. This reflects a positive impact from the price increase taken on Fanapt in January 2019, offset by a 10% decline in total units sold by wholesalers into the pharmacy channel in the first quarter of 2019 when compared to the prior quarter. We believe a better metric for patient demand in the period are the Fanapt prescription numbers as reported by IQVIA which reflects a 5% decline as compared to the fourth quarter of 2018.

On a non-GAAP basis for the first quarter of 2019, Vanda recorded a non-GAAP net income of 3 million compared to a non-GAAP net income of 6.6 million in the first quarter of 2018. On a non-GAAP basis for the first quarter of 2019, Vanda recorded non-GAAP operating expenses, excluding cost of goods sold, stock-based compensation and intangible asset amortization, of 41 million compared to 33.1 million for the first quarter of 2018. The 3.5 million year-over-year increase in non-GAAP R&D expense was primarily the result of increased spend on EPIONE, the ongoing Phase 3 clinical study of tradipitant in atopic dermatitis and the tradipitant motion sickness Phase 2 study that was initiated in the first quarter of 2019. The 4.5 million year-over-year increase in non-GAAP SG&A was the result of increased spend on our HETLIOZ commercialization efforts and corporate, administrative and legal activities.

We expect non-GAAP operating expenses to continue to rise as we continue through 2019 driven primarily by R&D activities. We start 2019 with a strong commercial business and capital position to fund the continued development of our innovative programs as we seek to drive future growth. Vanda's cash, cash equivalents and marketable securities, referred to as cash, as of March 31, 2019, were 267.8 million compared to 257.4 million as of December 31, 2018, representing an increase to cash of 10.5 million during the first quarter of 2019. Vanda reiterates its prior 2019 financial guidance and expects to achieve the following financial objectives in 2019: net product sales from both HETLIOZ and Fanapt of between 215 and 225 million, HETLIOZ net product sales of between 137 and 143 million, Fanapt net product sales of between 78 and 82 million.

Year-end 2019 cash is expected to be greater than 260 million. I will now turn the call back to Mihales.

Mihales Polymeropoulos -- President and Chief Executive Officer

Thank you very much, Jim. At this time, we'll be happy to answer any questions you may have.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Chris Howerton with Jefferies. Your line is now open.

Chris Howerton -- Jefferies -- Analyst

Great. Thanks for taking the questions. So I think the first question I have is just maybe an understanding question. So for the scheduling order that has a deadline for Friday, what exactly would be the outcome of the scheduling order? What can we learn from those proceedings? Like what would be a scheduling order and what would be the outcome we can expect to see?

Mihales Polymeropoulos -- President and Chief Executive Officer

Well, I would say nothing material. It will be what it says. It is a scheduling order where the two parties will present a calendar. It will be agreed upon the parties and the court.

But of course, our intent is to put an aggressive calendar and move quickly to discuss the merits of the case.

Chris Howerton -- Jefferies -- Analyst

Got it. So basically, the scheduling order just dictates the procedural happenings within the legal proceeding. Is that what I heard you say?

Mihales Polymeropoulos -- President and Chief Executive Officer

Correct.

Chris Howerton -- Jefferies -- Analyst

OK. Got it. OK. And then I think a lot of the questions that are on investor's mind and certainly mine as well is that certainly applaud your efforts to kind of put forward critical issues in the drug development field, but I think it'd be helpful to us to kind of contextualize the strategy of opposing the partial clinical hold and how that really generates value for tradipitant and the company.

So maybe just kind of fleshing out that strategy and how we as outsiders can kind of see the value proposition of the strategy.

Mihales Polymeropoulos -- President and Chief Executive Officer

Certainly. That is a very fair question, and we do hear that from our investors as well. Just to start from the very top, we're a science-driven company that we innovate to better people's lives. And while this is the goal and this is how we intend to provide value for the patients and certainly value to the company and its shareholders, how we do this is very important to Vanda, that we operate within the bounds of law and within the bounds of ethical principles and scientific conduct.

And this request by the FDA is outside of legal bounds, it is outside of ethical bounds and it is outside of scientific conduct. The conduct of a animal experimentation without a justification and without belief that it will add value to the knowledge and the goal of the experiment is not only unethical, it is illegal under the Animal Welfare Act. So the FDA has put us in a very difficult position to either be strong-armed to do something that is unjustified or do something that is illegal. Now having said all that and while it does matter a lot of how you conduct research, we're very focused to make sure we bring this very much-needed product to patients as soon as possible.

And what I have to tell you and our shareholders is that we are actually very impressed and stunned by the response from some of our patients that have been on the tradipitant studies. Talking to them, we hear their horror stories and we hear from at least some of them their recovery stories when they are on tradipitant and the need that they have for this drug. These patients are very anxious to return to treatment, both in clinical studies, as well as eventually enjoy the drug in the market when it reaches it. But these patients are also instructing us that this should not be done at any cost, and they agree with the company that the FDA's insistence on a useless animal study is a waste of their time and it's a waste of animal resource and the company's resources.

You will see these patients becoming very active in this entire process in the coming weeks.

Chris Howerton -- Jefferies -- Analyst

OK. OK. Well, that's helpful. And maybe just one other question.

This might be more appropriate for Jim. Given the cash position of the company and the guidance to increase that cash position toward the end of this year, would you ever consider a corporate strategy of share buybacks? And what are your thought process around that particular idea?

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. Before Jim comments on that, as you can see from our plans that we have been very transparent talking about, the company has a lot of plans of how to deploy the cash and we have been able to do that. At this time, we don't have any cash back plan, but I will let Jim give his answer.

Jim Kelly -- Executive Vice president and chief financial officer

Yes. Well, it's accurate to say that we do not have a share repurchase plan in place today, but I think that you're correct and we have certainly had this dialogue with other shareholders that this is something that we both take very seriously, this idea and are actively certainly considering.

Chris Howerton -- Jefferies -- Analyst

OK. All right. Well, thanks so much for taking the questions. I appreciate the color, and I'll hop back in the queue.

Operator

Our next question comes from the line of Joel Beatty with Citi. Your line is now open.

Joel Beatty -- Citi -- Analyst

Hi. Thanks for taking the question. So the first one is on Smith-Magenis. What do you plan to discuss with FDA at the upcoming meeting before filing the sNDA? What still needs to be agreed upon with them?

Mihales Polymeropoulos -- President and Chief Executive Officer

Well, to discuss what is it that we plan to file and reach an agreement that this is adequate. And to remind you, the efficacy claim will be based on two studies, the randomized crossover study that we reported in December, as well as an open-label study that was conducted a year prior and reported.

Joel Beatty -- Citi -- Analyst

OK. Got it. And I guess a follow-up to that. Has FDA agreed on the trial design of those studies or are there any outstanding issues regarding the filing that you're hoping to get agreement on?

Mihales Polymeropoulos -- President and Chief Executive Officer

No. We had discussed this in our prior calls. No, the FDA has seen these protocols and has made comments on these protocols, but we do not have any explicit agreement that these protocols and their results will suffice for an NDA filing.

Joel Beatty -- Citi -- Analyst

Got it. OK. And then a question regarding the animal studies. Can you discuss the alternatives that you've proposed in place of the animal studies requested by FDA?

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. The animal studies, the reason for them is to predict the occurrence of a safety issue in human clinical trials. And the FDA by imposing the partial clinical hold, what it does is it does not allow us to collect 12-month human safety data which are part of a customary safety database that you submit during an NDA filing. So theoretically, if regulators in other geographies that we are pursuing now would allow us to conduct these studies and continue beyond three months, that could allow on itself for us to have the 12-month safety database at the time of NDA filing.

Now having said that, the FDA, regardless the existence of a safety database of a convincing benefit/risk profile of the drug, may still require such a study. That is why it is very important to resolve this issue now. An alternative would be that if this issue was not resolved at the time of NDA filing, Vanda will file with the data in hand. And if the data is limited to three months' data, we certainly would do that.

Now of course, the FDA doesn't have to accept a filing and approve the drug with three months' data, but we think there are ways around that that it can be reasonably accepted and a risk management program could be implemented to ensure safety while the drug is on the market.

Operator

Our next question comes from the line of Jason Butler with JMP Securities. Your line is open.

Roy Buchanan -- JMP Securities -- Analyst

Hye, it's Roy in for Jason. The first question is on the tradipitant animal toxicology studies again. I think you pretty much answered this by your previous comments, but I just want to ask bluntly. What's the company's willingness to run the animal toxicology studies to preserve time lines to approval? It sounds like it's zero, but just to get that answer.

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. Let's be clear on this. Vanda went to the FDA about a year ago, and when we were told that we cannot continue because a nine-month dog study was not conducted as per guidance, we rightfully so asked for a justification. After a number of delays, eventually in December, they told us the same thing, that the justification is that there is a guidance.

And now upon the response, well, I cannot give you a lot of color. The FDA responded but did not provide a justification of why this nine-month dog study will add value in predicting safety for human studies. So if the FDA had come back two days ago and saw this from their database analysis that, indeed, this study has validity, meaning it has a positive predictive value and a negative predictive value, we would immediately conduct the study. Now of course, they have not provided that and we cannot conduct the study.

To remind you, we have also presented to the FDA a plan to conduct a study, that was before the December partial clinical hold, conduct a nine-month dog study, but watch clinically and with laboratory measure the animals and limit certain types of animals, if needed, for moribund conditions or the emergence of adverse event. The FDA rejected this as well. And to be very clear to our shareholders, Vanda believes that animal toxicology studies are necessary during clinical drug development, but they have to be justified, they have to be sequenced, you have to learn from them. And only and if their positive and negative predictive value is validated, that is the only time these studies should be conducted.

So that is exactly why at this time we have not initiated such a study.

Roy Buchanan -- JMP Securities -- Analyst

OK. Great. And a question on HETLIOZ and Smith-Magenis, what's been gating -- if you had the data at the end of last year, what's been gating from getting from the data to the discussion with the FDA?

Mihales Polymeropoulos -- President and Chief Executive Officer

Well, it is clinical study report preparations and preparing for the pre-NDA meeting. So it's pretty much time to prepare for that meeting.

Roy Buchanan -- JMP Securities -- Analyst

OK. Great. Thank you.

Operator

Our next question comes from the line of Derek Archila with Stifel. Your line is now open.

Derek Archila -- Stifel Financial Corp. -- Analyst

So I guess I have two for Mihales and then one for Jim. So first one for Mihales. I guess in the PR you talk potentially about filing a tradipitant NDA even if the lawsuit is not resolved. I mean, that would imply that the lawsuit's of a pretty long duration.

So I guess what I'm wondering is, at what point does it make sense from a fiduciary standpoint to just run the study. And then I guess maybe putting it a different way, at what point will the projected cost and time of the litigation be equivalent to the cost of the study that the FDA actually wants you to run? The second question for Mihales would be just any color on the terms of enrollment for the tradipitant atopic dermatitis study, where we stand on that? I know when we expect data, but just kind of get a sense of where the enrollment stands. And then Jim, just on HETLIOZ growth, any granularity you could provide around the growth and where it's coming, the split between the sighted and blind? I guess where are we in terms of the proportion of patients for each group? That would be great.

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. On your first question, just to clarify, this is not about cost of the study. These studies cost between 500,000 to $1 million. So it is not about trying to save money.

It is about doing the right thing. And again, it is not a question of whether we pursue to resolve this or let it go. It is very important for our shareholders also to understand that Vanda seeks to achieve the right balance between how we conduct studies and the timely availability of drugs to patients who need them. And we understand that benefit/risk ratio.

And we will do everything we can not to jeopardize delivery of our products to patients. But I think as a community of pharmaceutical companies and investors, we need to make sure that we don't just follow our regulator out of convenience or fear. Our regulators get better to serve all of us with a dialogue when we do speak out about issues that need to be discussed. In fact, I do know for certain that the leadership of the FDA appreciates Vanda's stance.

It may be inconvenient at the time, but Vanda is raising the right questions, not only whether you should use certain animals for certain period of time. It is a larger question of public safety. And that question is, are the studies that we are relying upon on drug safety are the right studies? Have we been too lax not involving ourselves in new studies that can actually improve safety of drugs? The paramount concern of Vanda is having safe products. And I know that this is shared with all our colleagues in other biotech and pharmaceutical companies, certainly the U.S.

public and certainly the FDA. Sometimes the regulators can be a little behind in adapting what is the right thing to do. And here what we're pointing out is that this extra study that many companies have been strong-armed to do in the context of Vanda adds no value. And this is not our analysis.

This is not our words. This is large scientific literature by people who really care. I'm referring to a database of 150 compounds from large pharmaceutical companies that examined the predictive value of animal studies when it happens and how much value does it add. And of course, all of you can go read these studies.

But the bottom line is that taken together, those studies that predict safety, 94% of the time predicted safety in the first month of the animal study. And in the presence of the studies we have already done and what we know about clinical safety, it will be predicted from that publication that the likelihood of adding any additional predictive value with a nine-month dog study is about 1%, a percentage point that should never be justified by the FDA to require companies to do that. And Vanda is not the only company that is actually treated this way. You can see that some companies even in your coverage horizon and shareholders may be holding, they have experienced the same issue for drugs that otherwise would be deemed safe and effective for years at NDA filing that the FDA is turning their back because they have a checklist of some unnecessary studies are to be done.

We're actually asking your support, while we understand your anxiety and we share the anxiety of getting this drug to patients because our patients need it. We're not going to jeopardize that and you should be sure about that. But at this time, we hear our shareholders loud and clear. We hear that some of you may be disappointed by the turn of events, but we certainly would appreciate your support.

Operator

And our next question comes from the line of Esther Rajavelu with Oppenheimer. Your line is now open.

Esther Rajavelu -- Oppenheimer and Company -- Analyst

Hey, guys. Thank you for taking my question. I just have two quick ones. Following up on one of the previous questions on the share repurchase, when would you be in a position to announce your decision on whether to do a repo or not?

Jim Kelly -- Executive Vice president and chief financial officer

If somebody who could put their phone on mute, I think they might be traveling. I appreciate it. And before I answer, I'd also throw out that I believe that Derek was going to perhaps ask a follow-up question. If he was, I'd certainly encourage him to get back in the queue.

So apologies if he was cut off there. Esther, to your follow-up question regarding the concept of share repurchase program, we are committed to creating value for our shareholders and fall on many different paths to do so including through this type of path that we'll give consideration to. These types of decisions are always being contemplated. So I wouldn't view it in the context of a deadline for a decision, but rather something that you actively always consider.

Esther Rajavelu -- Oppenheimer and Company -- Analyst

Got you, I think. And then my next question is, can you maybe talk about the addressable market opportunity for gastroparesis with a label for a shorter duration versus a label for chronic use?

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. So first of all, we discussed about the market before. And we believe to be true from the publication of Rey, et al. of the iceberg epidemiological profile of gastroparesis where under 1 million patients would be diagnosed clinically or with laboratory means of gastroparesis, but 6 million or larger number of people suffering from gastroparesis.

To remind you, Esther, that gastroparesis today, the last drug approved by the FDA was 40 years ago. And that was metoclopramide, Reglan. Reglan is approved for short-term use, up to three months because of a black box warning. And the FDA does understand that.

And the FDA does understand that there is no chronic treatment available. Now we believe that if we were to launch with a three-month label and a risk management program, that certainly will be a more narrow label than we would like to. But certainly within a certain period of time, that requirement of a REMS program most probably will go away. So we do not see that the risk management plan will restrict access to patients or will reduce our market opportunity.

Esther Rajavelu -- Oppenheimer and Company -- Analyst

Gotcha. Thank you very much. I'll come back in.

Operator

And we do have a follow-up question from the line of Derek Archila. Your line is now open.

Derek Archila -- Stifel Financial Corp. -- Analyst

Hey, thanks for getting me back in here. So Mihales, just a follow-up on the first question I asked. I guess so it seems that if the study costs 500,000 to $1 million, you'd be willing to spend more on the litigation. Is that what I'm hearing based on your answer? And then just the other two questions, just I wanted to get a sense of the enrollment for the tradipitant atopic derm study, where we stand and then the split from where the HETLIOZ growth is coming from.

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. On your first question, I would say what we want to spend is zero. We don't want to spend any money. And the regulator's stance is just wasteful and unacceptable.

And we hope they can see that there is no justification for what they ask. Your second question, Derek, was --

Jim Kelly -- Executive Vice president and chief financial officer

Atopic derm enrollment.

Mihales Polymeropoulos -- President and Chief Executive Officer

Oh, the enrollment about atopic dermatitis. We have not discussed the numbers as you know. I do appreciate you want to get a little more color. The enrollment is going well.

In the last three months, it has accelerated through the team's efforts of making awareness to more general public, but also increasing the number of sites. So we feel comfortable that the time lines we have reported of first half of 2020 results, that will be met.

Jim Kelly -- Executive Vice president and chief financial officer

And then you had the follow-up about the split of the business for HETLIOZ, the growth coming from HPI relative to the PDP business. When we look back over the last four quarters, so starting in Q1 of this year and then going back three more, what I can tell you is that the mix of new patient additions, the ratio of sighted patients relative to blind patients has been very stable. And what you should take from that is that our engine to serve these patients by meeting with psychiatrists or our traditional awareness programs for blind individuals continue to be active and strong. One thing that we saw just trend-wise is, you might remember at mid last year we did have some planned turnover in our field force around midyear.

And then we did active recruiting to refill those spots. It's about 40 spots. And what I can share is that while we were in that transition period, clearly, that impacts the ability to generate new scripts. Those spots have been full.

And then as we look at the trajectory of productivity of our field team, we're impressed. And it's really those trends that lead to our affirming of financial guidance for this year.

Derek Archila -- Stifel Financial Corp. -- Analyst

Thanks guys.

Operator

Our next question comes from the line of Jason Butler with JMP Securities. Your line is open.

Roy Buchanan -- JMP Securities -- Analyst

It's Roy again. I just had a follow-up. Mihales kind of touched on it in answer to Derek's first question. But have you experienced any strong support or pushback from other biotech companies around the animal tox study? I mean is it possible to expand this effort, bring on other parties, other companies?

Mihales Polymeropoulos -- President and Chief Executive Officer

Yes. I'm not going to be able to comment on that. But certainly, we appreciate the support of those who want to support this effort.

Operator

And I'm showing no further questions in queue at this time. I'd like to turn the call back to Dr. Polymeropoulos for closing remarks.

Mihales Polymeropoulos -- President and Chief Executive Officer

Thank you very much for joining us and your support. Thank you.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Jim Kelly -- Executive Vice president and chief financial officer

Mihales Polymeropoulos -- President and Chief Executive Officer

Chris Howerton -- Jefferies -- Analyst

Joel Beatty -- Citi -- Analyst

Roy Buchanan -- JMP Securities -- Analyst

Derek Archila -- Stifel Financial Corp. -- Analyst

Esther Rajavelu -- Oppenheimer and Company -- Analyst

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