Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Wednesday, Aug. 5, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President, Chief Executive Officer, and Chairman of the Board - Mihael Polymeropoulos
  • Chief Financial Officer - Kevin Patrick Moran
  • General Counsel - Daniel McGuire

TAKEAWAYS

  • Total Revenue -- $50.5 million, representing a 4% decrease primarily driven by lower HETLIOZ sales resulting from generic competition and shipment timing.
  • Fanapt Net Product Sales -- $36.0 million, growing 23% year over year due to increased volume following commercial expansion into the treatment of bipolar I disorder.
  • HETLIOZ Net Product Sales -- $5.6 million, a 66% decrease from last year reflecting generic market entry and the timing of $7 million in orders shipped late in the quarter.
  • PONVORY Net Product Sales -- $7.9 million, increasing 12% year over year as the company continues commercialization efforts in multiple sclerosis.
  • NEREUS Net Product Sales -- $1.0 million, following the product's commercial launch in May 2026 as a direct-to-consumer offering via a web portal.
  • Total Prescription Growth -- 31% for Fanapt, driven by increased market penetration and a weekly prescription high of over 2,700 in May 2026.
  • New-to-Brand Prescriptions -- 32% growth for Fanapt versus the prior year, with management reporting a 300% increase since the bipolar I disorder approval in 2024.
  • Operating Expenses -- $114.3 million, an increase of $23.2 million from last year due to higher R&D for the VQW and NEREUS programs and SG&A spending for product launches.
  • Net Loss -- $62.5 million for the quarter, compared to $27.2 million in the prior year, reflecting accelerated investment in clinical trials and commercial supply manufacturing.
  • Cash and Marketable Securities -- $170.0 million as of June 30, 2026, which management expects will fund operations through at least the end of 2027.
  • Full Year 2026 Revenue Guidance -- $240 million to $290 million, representing approximately 23% growth at the midpoint compared to full year 2025.
  • Fanapt and BYSANTI Guidance -- $150 million to $170 million combined, reflecting expected growth of 36% for the franchise versus 2025 Fanapt revenue.
  • NEREUS Revenue Guidance -- $10 million to $30 million for the full year 2026, with revenue growth tied to upcoming personal promotion efforts.
  • Other Net Product Sales Guidance -- $80 million to $90 million, encompassing projected sales for HETLIOZ and PONVORY.
  • NEREUS Inventory Stocking -- $15.2 million gross initial stocking by wholesalers, though $12.6 million was constrained due to uncertainties in initial patient demand and potential returns.
  • Deferred HETLIOZ Revenue -- $7 million, for orders shipped on June 29 that arrived on July 1, which will be recognized in the third quarter of 2026.
  • Sales Force Expansion -- ~300 representatives for the Fanapt franchise, resulting in face-to-face prescriber calls increasing by more than 30% year over year.
  • BYSANTI Data Exclusivity -- Protected through Feb. 20, 2031, with multiple patents extending through May 31, 2044.
  • Imsidolimab PDUFA Date -- Dec. 12, 2026, for the treatment of Generalized Pustular Psoriasis, following the Biologics License Application filing.
  • Lilly Milestone Payment -- $10 million, paid in the first quarter of 2026 following the approval of NEREUS in the U.S.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Moran stated, "the decrease [in HETLIOZ sales] was attributable to a decrease in volume as a result of continued generic competition in the US," noting that generic entry has impacted the product for over three years.
  • Moran noted that it is likely Vanda's 2026 cash burn will be greater than the cash burn in 2025, due to the high costs associated with advancing four Phase 3 programs and manufacturing commercial supplies.

SUMMARY

Management reported a strategy focused on commercial expansion as Fanapt continues to grow in the bipolar I disorder market and NEREUS enters its initial launch phase. The company stated that operating expenses are expected to moderate later in 2026 and more significantly in 2027 as major Phase 3 clinical trial activities and commercial supply manufacturing conclude. Vanda is currently managing several late-stage pipeline readouts across multiple therapeutic areas, including social anxiety disorder and sleep disorders, while preparing for the anticipated second-half launch of BYSANTI. Guidance for the full year 2026 reflects increased revenue expectations driven by the psychiatry franchise and the contribution of newly launched products.

  • Management expects operating expenses to begin decreasing by the end of 2026 and "more substantially through 2027" as development programs for NEREUS, BYSANTI, and Imsidolimab reach completion.
  • CEO Polymeropoulos reported that a previous study for NEREUS in preventing vomiting for GLP-1 therapy users showed that while 60% of patients on placebo vomited, "only about 30 percent of the patients with NEREUS did so."
  • The company is progressing through a formal hearing process with the FDA regarding HETLIOZ for jet lag disorder, with a five-day hearing scheduled before an administrative law judge in Dec. 2026.
  • Management confirmed that personal promotion for NEREUS by the existing sales force is expected to commence later in 2026 to augment the current direct-to-consumer web portal strategy.
  • Imsidolimab received orphan drug designation in Japan and a positive recommendation for the same status in the European Union for the treatment of Generalized Pustular Psoriasis.
  • CEO Polymeropoulos noted that the Phase 3 study of VQW-765 for social anxiety disorder was powered based on Phase 2 results that showed a significant reduction in anxiety measures and a clear dose-response curve.
  • Management reported that HETLIOZ remains the market share leader in its category despite facing three years of generic competition in the U.S.

INDUSTRY GLOSSARY

  • ASO: Antisense oligonucleotide, a type of therapy that can modulate gene expression.
  • BLA: Biologics License Application, a request for permission to market a biologic product in the United States.
  • DSPD: Delayed Sleep Phase Disorder, a circadian rhythm sleep-wake disorder.
  • GPP: Generalized Pustular Psoriasis, a rare and potentially life-threatening inflammatory skin disease.
  • GLP-1: Glucagon-like peptide-1, a class of drugs primarily used for diabetes and weight management that can cause gastrointestinal side effects.
  • NBRx: New-to-brand prescriptions, representing patients starting a therapy for the first time.
  • PDUFA: Prescription Drug User Fee Act, which sets the target deadline for the FDA to complete its review of a drug application.
  • TRx: Total prescriptions, including both new patients and refills.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to the Second Quarter 26 Vanda Pharmaceuticals Incorporated Earnings Conference Call. I am Frans, and I will be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press *1 on your telephone keypad. If you would like to withdraw your question, please press *1 again. Thank you. I would now like to turn the call over to Vanda's chief financial officer. Kevin Patrick Moran. Please go ahead.

Kevin Patrick Moran: Thank you, France. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' second quarter 26 performance. Our second quarter 26 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 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 Daniel McGuire, our general counsel. Following my introductory remarks, Mihael will update you on our ongoing activities. I will then comment on our financial results before we open 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, which 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 ks, 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. 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: Good afternoon, everyone. Thanks for joining us today. Vanda Pharmaceuticals second quarter 26 Earnings Conference Call. We are pleased with the continued strong growth of Fanapt and the enthusiastic response to NEREUS as it becomes available to patients. With BYSANTI approved and on track for launch in the second half of 2 thousand 26, a December 2026, PDUFA date for Imsidolimab and multiple late stage clinical trial results expected before year end, we believe Vanda is well positioned for meaningful commercial expansion and pipeline value creation. As our phase 3 programs launch preparations in commercial supply manufacturing, near completion. We expect operating expenses to begin moderating later this year and more significantly in 2027.

We believe that our current resources together with anticipated project revenues provide a solid foundation to advance our objectives through at least the end of 2 thousand 27. During 2025 and 2026, we have advanced multiple phase 3 programs continued execution of the commercialization of Fanapt and PONVORY and prepared for the commercial launches including manufacturing, commercial supplies of NEREUS, BYSANTI, and Imsidolimab. As these activities conclude, we expect operating expenses to begin decreasing by the end of 26 and more substantially through 2027. Based on our current cash position, and anticipated revenues, we expect to have sufficient resources to fund operations through at least the end of 2 thousand 27.

Fanapt showed continued strong momentum in the second quarter of 2 thousand 26 with total prescriptions TRx up 31% and new to brand prescriptions NBRx up 32% versus the second quarter of 2 thousand 25. Since commercial expansion following the approval of bipolar I disorder, Fanapti has seen significant growth with TRx up 62% and BRx up 300%. Versus the second quarter of 2 thousand 24. BYSANTI received US Food and Drug Administration approval for the treatment of bipolar I disorder and schizophrenia in the first quarter of 26 and is expected to launch in the second half of 2 thousand 26.

BYSANTI is protected by data exclusivity through February 20, 2031 and multiple patents, the latest of which expires on May 31, 2044. In May 2026, early commercial launch of NEREUS was initiated as a direct to consumer offering via the web portal nereus.us. Personal promotion is expected to commence later in 2026. Vantage's ongoing late stage clinical studies are progressing rapidly and are expected to generate top line results in 2026 or early 27, including the fetus phase 3 study of NEREUS for the prevention of vomiting in patients receiving GLP-1 receptor agonist therapies with results expected in 2026. The phase 3 study of VQW 65 for the treatment of adults with social anxiety disorder with results expected in 2026.

The phase 3 study of HETLIOZ for the treatment of delayed sleep phase disorder, DSPD, with results expected in 2026. Finally, the phase 3 study of BYSANTI as a once daily adjunctive treatment for major depressive disorder with results expected in the first half of 2 thousand 27. The biologic license application, BLA, for Imsidolimab in generalized postural psoriasis. Is under review by the FDA with a prescription drug user fee act target action date of December 12, 2026. The results of the pivotal clinical study was published earlier in April 28, 2026 in the New England Journal of Medicine. Evidence.

In May 2026, we announced that Japan's Ministry of Health Labor and Welfare granted orphan drug designation to Imsidolimab for the treatment of GPP. In July 2026, we announced that the committee for orphan medicinal products at the European Medicines Agency had adapted a positive opinion recommending orphan drug designation for Imsidolimab for the treatment of GPP. In July 2026, we announced that the FDA had granted rare pediatric disease designation for VCA-894A our investigational antisense oligonucleotide therapy for the treatment of Charcot-Marie-Tooth disease type 2S, or CMT2S, a serious and progressive inherited neurological disorder. We continue to progress the FDA formal hearing regarding HETLIOZ for use in the treatment of jet lag disorder.

The proceeding, a rare administrative hearing process granted after the DC circuit set aside the FDA's prior refusal to approve the application is advancing according to schedule and is expected to culminate in a 5-day hearing before the administrative law judge in December 2026. With that, I will turn now to Kevin to discuss our financial results. Kevin?

Kevin Patrick Moran: Thank you, Mihael. I will begin by summarizing our financial results for the first 6 months of 26 before turning to discuss the second quarter of 2020 6. Total revenues for the first 6 months of 26 were 102.2 million, essentially flat as compared to $103 million for the same period in 2025. The first 6 months of 26 included increased Fanapt revenue, as a result of the continued commercialization efforts for Fanapt in bipolar I disorder, increased PONVORY revenue, and revenue contribution from the newly launched NEREUS. Offset by decreased Hetlioz revenue as a result of generic competition and timing of shipments to customers at the end of the second quarter of 2020 6.

Total revenues for the first 6 months do not include approximately $7 million of HETLIOZ revenue, for orders shipped on June 29, 2026 that arrived on July 1, 2020 Let me break this down now by product. Fanapt net product sales were 65.5 million for the first 6 months of 26, 24% increase compared to 52.8 million in the same period in 2025. This increase to net product sales relative to the first 6 months of 2025 attributable to an increase in volume, partially offset by a decrease in price net of deductions. Turning to Hetlioz.

Hetlioz net product sales were 21.5 million for the first 6 months of 2020, a 42% decrease compared to 37.1 in the same period in 2025. The decrease was attributable to a decrease in volume as a result of continued generic competition in the US and the timing of shipments to customers at the end of the second quarter of 2020 6. Hetlioz net product sales for the first 6 months of 2020 do not include orders totaling approximately $7 million in revenue that were shipped on June 29 and arrived on July 1. Orders will be recognized as revenue in the third quarter of 26.

During the second quarter of 2020 6, there was destocking of inventory by certain of our specialty pharmacy customers, primarily as a result of the previously mentioned shipment issue. Of note, for the second quarter of 2020 6, HETLIOZ continued to be the leading product from a market share perspective despite generic competition now for over 3 years. Turning to Ponvory. Ponvory net product sales were 14.1 million for the first 6 months of 26, an 11% increase compared to 12.7 million for the same period in 2025. Of note, an amount of variable consideration related to PONVORY net product sales are subject to dispute, of which approximately 3 million was recognized for the 3 months ended December 31, 2024.

And finally, turning to Nirius. NEREUS became commercially available in the US in May 2026. NEREUS net product sales were $1 million for the first 6 months of 2026. NEREUS is sold using both the traditional wholesaler channel and also by prescription directly through the nereus.us website. Revenue recognized during the first 6 months of 2026 primarily related to units sold through the wholesaler channel. During the second quarter of 2020 6, there was an initial stocking of NEREUS by wholesalers of $15.2 million. We constrain NEREUS net product sales to an amount probable of significant revenue reversal.

The constrained revenue of $12.6 million relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers. As a reminder, NEREUS launched commercially in the US in the second quarter of 2020 6 with the direct to consumer offering via the web portal, nereus.us. Personal promotion using our existing salesforce is expected to commence later in 2026. For the first 6 months of 26, Vanda recorded a net loss of $111.1 million compared to a net loss of $56.7 million for the same period in 2025.

The net loss for the first 6 months of 2026 included income tax expense of $300 thousand as compared to an income tax benefit of $15.6 million for the same period in 2025. As a reminder, the company recorded a onetime noncash income tax charge in the fourth quarter of 25 to establish a valuation allowance against all of Vanda's deferred tax assets. Tax expense is expected to be nominal going forward until such time that a valuation allowance is no longer required. Operating expenses for the first 6 months of 2026 were $216.3 million compared to $182.82 million for the same period in 2025.

The $34.1 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the continued commercialization efforts for Fanapt in bipolar I disorder and PONVORY in multiple sclerosis, the NEREUS commercial launch the upcoming BYSANTI commercial launch, and higher R&D expenses primarily related to our VQW, Fanapt, and BYSANTI programs partially offset by lower expenses on our Imsidolumab program. The first 6 months of 2025 included an upfront payment to AnaptysBio for the exclusive global license agreement for the development and commercialization of imsidolumab.

On the commercial side, starting in 2024, we commenced the host of activities as a result of the commercial launches of Fanapt in bipolar I disorder and PONVORY in multiple sclerosis. And more recently, the launch of NEREUS and upcoming launch of BYSANTI. We maintain strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships, with the goal of supporting long term market leadership and future commercial launches. Vanda's cash, cash equivalents, and marketable securities referred to as cash as of June 30, 2026 was $170 million. Representing a decrease of $93.8 million compared to December 31, 2025, and a decrease of $32.3 million compared to March 31, 2026.

The change in cash during the second quarter of 2020 as compared to the first quarter of 26 was driven by the net loss in second quarter of 2020 6, excluding the impact of noncash charges such as stock based compensation and amortization of our intangible and right of use assets. As well as timing of cash received from customers for revenue, and related payments of rebates to payers, the timing of cash paid to third parties for services related to operating expenses and inventory production.

The decrease compared to the balance as of December 31, 2025 was also driven by the onetime milestone payment of $10 million made to Eli Lilly in the first quarter of 26 for the approval of Nirius in The US. As a reminder, payments made in advance of production are capitalized as a prepaid expense, Commercial products, are capitalized as inventory on our balance sheet after production, while precommercial products are generally expensed as incurred as research and development costs. The timing of production of precommercial products, including the imsadolumab program, may result in future variability of our r and d expense and cash payments. Turning now to our quarterly results.

Total revenues were $50.5 million for the second quarter of 2020 6, a 4% decrease compared to $52.6 million for the second quarter of 2020 5, and a 2% decrease compared to $51.7 million in the first quarter of 26. The decreases as compared to the second quarter of 2020 5 and the first quarter of 26 primarily due to a decrease in HETLIOZ revenue as a result of generic competition and the timing of shipments to customers at the end of the second quarter of 2020 6 partially offset by growth in FNAF revenue as a result of the bipolar commercial launch.

Revenues for the second quarter of 2020 6 do not include approximately $7 million of HETLIOZ revenue, for orders shipped on June 29 arrived on July 1. Let me now break this down by product. FNAP net product sales were $36 million for the second quarter of 2020 6. A 23% increase compared to $29.3 million in the second quarter of 2020 5. And a 22% increase compared to $29.6 million in the first quarter of 26. Fanapt total prescriptions or TRx, as reported by IQVIA Xponent, the second quarter of 2020 6 increased by 31% compared to the second quarter of 2020 5 and 11% compared to the first quarter of 26.

The increases to net product sales relative to the second quarter of 2020 and first quarter of 26 were primarily attributable to increases in volume. Fanaptan new patient starts in the second quarter of 2020 6 as reflected by new to brand prescriptions or NBRx increased by 32% compared to the second quarter of 2020 5 and by 10% compared to the first quarter of 26. Historically, FNAF's inventory at wholesalers has ranged between 3 and 4 weeks on hand as calculated based off trailing demand.

As of the end of the second quarter of 2020 6, FNAF's inventory at wholesalers was slightly above 4 weeks on hand, was generally consistent with the level of inventory weeks on hand as of the first quarter of 26 and the fourth quarter of 25, but slightly above the historic range. Turning to Hetlioz. HETLIOZ net product sales were $5.6 million for the second quarter of 2020 6, a 66% decrease compared to $16.2 million in the second quarter of 2020 5, and a 65% decrease compared to $15.9 million in the first quarter of 26.

The decrease in net product sales relative to the second quarter of 2020 5 was the first quarter and the first quarter of 26 was primarily attributable to a decrease in volume due to generic competition and timing of shipments to customers at the end of the second quarter. Hetlioz net product sales in the second quarter of 2020 6 do not include orders totaling approximately $7 million in revenue that were shipped on June 29 and arrived on July 1. Orders will be recognized as revenue in the third quarter of 26.

As mentioned in the discussion of results for the first 6 months of 26, Hetlioz net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy from period to period. During the second quarter of 2020 6, there was destocking of inventory by certain of our specialty pharmacy customers primarily as the result of timing of shipments. Going forward, Hetlioz net product sales may reflect lower unit sales as a result of the reduction of the elevated inventory levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Turning to PONVORY. PONVORY net product sales were $7.9 million for the second quarter of 2020 6.

An increase of 12% compared to $7.1 million in the second quarter of 2020 5 and an increase of 27% compared to $6.2 million in the first quarter of 26. Specialty distributor and specialty pharmacy inventory on hand levels during these periods were in line with normal ranges. Additionally, as we have previously discussed, an amount of variable consideration related to PONVRI net product sales is subject to dispute, of which approximately $3 million was recognized for the 3 months ended December 30, 2024. And finally, turning to Nirius. NEREUS became commercially available in The US in May 2026 NEREUS net product sales were $1 million for the second quarter of 2020 6.

Nerius is sold using both traditional wholesaler channel and also by prescription directly through the nerius.us website. Revenue recognized during the second quarter of 2020 6 primarily related to units sold through the wholesaler channel. The second quarter of 2020 6, there was an initial stocking of Nirius by wholesalers of $15.2 million, constrain Nirius net product sales to an amount not probable of significant revenue reversal. The constrained revenue of $12.6 million relates to the uncertainties of patient demand and product returns related to the elevated inventory levels on hand at wholesalers. As a reminder, Nirius launched commercially in the US in the second quarter of 2020 6 with the direct to consumer offering via the web portal, nearius.us.

Personal promotion using our existing salesforce is expected to commence later in 2026. For the second quarter of 2020 6, Vanda's recorded a net loss of $62.5 million compared to a net loss of $27.2 million for the second quarter of 2020 5. The net loss for the second quarter of 2020 6 included income tax expense of $100 thousand as compared to an income tax benefit of $7.7 million for the second quarter of 2020 5.

Operating expenses in the second quarter of 2020 6 were $114.3 million compared to $91.1 million in the second quarter of 2020 The $23.2 million increase was primarily driven by higher R and D expense related to our VQW and Nirius programs, and higher SG&A expenses related to spending on Vanda's commercial products as a result of the continued commercialization efforts for Fanapt in bipolar I disorder and Ponviria multiple sclerosis. The nearest commercial launch and upcoming BYSANTI commercial launch.

On the commercial side, starting in 2024, we commenced a host of activities as a result of the commercial launches of Fanapt in Bipolar I disorder PONVORY in multiple sclerosis and more recently the launch of NEREUS and upcoming launch of BYSANTI. We maintain strategic investments in our commercial infrastructure, including increased brand visibility, through targeted sponsorships with the goal of supporting long term market leadership and future commercial launches. With regards to the launches of Fanapt in bipolar I disorder and PONVORY in multiple sclerosis, I mentioned, these launches were initiated in 2024, and we continue to enhance our commercial infrastructure the second quarter of 2020 6.

With the impact of these commercial efforts contributing to revenue growth for these products in 2026 and expected to continue to contribute to revenue growth for these products in coming periods. We have seen significant growth in our commercial activities, including the following. Several lead indicators suggesting a strong and continued market response to our commercial activities related to FNAP for bipolar I disorder. Total prescriptions or TRx is increasing by approximately 31% in second quarter of 2020 6 as compared to the second quarter of 2020 5. In May 2026, a weekly TRx number for FNAP reaching an 11-year high of over 2.7 thousand prescriptions.

New patient starts as reflected by NBRx increased by 32 percent in the second quarter 26 as compared to the second quarter of 2020 5. Since the commercial expansion following the approval of bipolar I disorder Fanapt has seen significant growth with TRx up 62% and NBRx up 300%. As compared to the second quarter of 2020 4. Of particular note, Fanapta is 1 of the fastest growing atypical antipsychotics in the market throughout 2025 and into the second quarter of 2020 based on several prescription metrics. Our Fanapt sales force expanded to approximately 300 representatives in the second half of 25, This expansion has allowed us to significantly increase our reach and frequency with prescribers.

To that end, the number of face to face calls in the second quarter of 2020 6 was more than 30% higher than the number of face to face calls in the second quarter of 2020 5. FNAF performance remains the focus of our commercial initiatives and encourages us to invest in this differentiated medicine and the franchise extending launch of Vasanti in the second half of 26. Before turning to our financial guidance, I would like to remind folks that with Fanapt, Hetlioz, Pomvori, and now NEREUS already commercially available and with Basanti recently approved for bipolar I disorder and schizophrenia, and a biologics license application for imsadolumab is now under review by the FDA.

Vanda could have 6 approved products by the end of 26. Turning now to our financial guidance. Vanda is reiterating its full year 2026 total revenue guidance and expects to achieve the following financial objectives in 2026: Total revenues from Fanapt, BYSANTI, Hetlioz, PONVORY, and NEREUS of between $240 and $290 million. The midpoint of this revenue range of $265 million would imply revenue in 2026 of approximately 23% as compared to full year 2025 revenue. Fanapt and BYSANTI net product sales of between $150 and $170 million, The midpoint of this revenue range would imply combined Fanapt and BYSANTI revenue growth in 2026 of approximately 36% as compared to full year 2025 Fanapt revenue.

Note that based on the expected launch timing of BYSANTI, we have included the BYSANTI revenue contribution in this guidance range. Other net product sales of $80 and $90 million, And finally, NEREUS net product sales of $10 and $30 million. Note that NEREUS launched commercially in the US in the second quarter of 2020 6, with the direct to consumer offering via the web portal nerius.us. Personal promotion using our existing salesforce is expected to commence later in 2026. Previously communicated, Vanda is not providing 2026 cash guidance at this time. However, it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025.

During 2025 and 2026, we advanced multiple phase 3 programs, continued execution on the commercialization of Fanapt and PONVORY, and prepared for the commercial launches, including manufacturing commercial supplies of Nirius, BYSANTI, and Imsidolimab. These activities resulted in significantly increased operating expenses in 2025 and 2026. As these activities conclude, Vanda expects operating expenses to begin decreasing by the end of 26 and more substantially throughout 2027. Based on its current cash position of $170 million as of June 30, 2026, and anticipated future revenues, Vanda expects to have sufficient resources to fund operations through at least the end of 27. With that, I will now turn the call back to Mihael.

Mihael H. Polymeropoulos: Thank you very much, Kevin. At this point, we will be happy to answer your questions. Thank you.

Operator: And we will now begin the question and answer session. If you would like to ask a question during this time, please press 1 on your keypad to join the queue. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from Raghuram Ram Selvaraju from H. C. Wainwright. Please go ahead.

Yanzi: Hi. Thank you for taking my question. This is This is Lin Tsai, sitting in for Ram. I have 2 questions. The first is with respect to the NEREUS launch experience. So I am curious, you know, with about 3 months of, experience here, where are you seeing the biggest drop off in the patient funnel And what metrics should investors watch to judge whether the 26 failed to finish near the low or the high end of the $10 million to $30 million range.

Kevin Patrick Moran: Yeah. Thanks for the question, Lin. So as we look at the Nirius launch, we are obviously very early in the launch phase here. We initiated our launch activities in May. First, with the nereus.us platform. And DTC campaigns following that. As we head into the back half of the year, going to be initiating personal promotion with our Salesforce, which we expect to support, you know, the activities that we are seeing out there in the field.

You know, as far as metrics go for what folks should be looking for there, I think that, you know, as we continue to report going forward, the sales engagement and the visits that we see with doctors and the receptivity to the product in the market is going to be important. To seeing what trends we see as far as revenue goes.

And then similarly to what we discussed in the prior quarter call, some of the important levers here as far as the revenue trajectory and modeling it out, will be the, you know, patient acquisition metrics as well as refill metrics and the pills per fill metrics, which obviously, early in the launch year, we are starting to get some data, but it is fairly minimal. So we will continue to be tracking that closely to determine kind of where in the revenue range we expect to fall in future periods.

Yanzi: Thank you so much. And 1 more about HETLIOZ. So following the July 20, pre-hearing conference and the August 3, evidentiary disclosure deadline, what became clear about the hearing for that overall? And which issue is most likely to drive the outcome? Do you think it would be something like interpretation of sites from 3.1 thousand and 3.11 thousand endpoint validity? Or something else?

Mihael H. Polymeropoulos: Yes. Thanks for the question. I have our General Counsel here, McGuire, to explain a little bit about the process. The pre hearing was more of a process call than actually looking at the facts, Daniel?

Daniel McGuire: Yes. that is right. And so, obviously, it is never a good idea to speculate about the outcome of litigation or litigation strategy. But you know, we are confident in our ability to present our case to the administrative law judge. The process will continue throughout the year. And, we are you know, hoping obviously for a favorable recommendation from the judge, early in 2027.

Operator: Your next question comes from Madison El-Saadi from B. Riley Securities. Please go ahead.

Madison: Hi. Thanks for taking our question. A couple from us. Maybe sticking with the NEREUS campaign. What exactly does the personal promotion start? How many reps are we talking And does that spend sit inside the OpEx moderation you guided to relatedly now that you are guiding to the OpEx to come down later in 2026 and 2027, is that more related to R&D or SG&A? And then what drove the Q2 R&D expense? Thanks.

Kevin Patrick Moran: Yeah. Thanks, Madison. So first on the NEREUS launch side, as we have spoken about before, we have a Salesforce to support our FNAP franchise, you know, and soon to be BYSANTI franchise in the neighborhood of approximately 300 representatives. As well as Salesforce in the neighborhood of 50 supporting our Pomvori efforts. And so we will be using some element of those 2 Salesforce's to be detailing, you know, NEREUS in the future. it is yet to be determined exactly kind of what the structure is, but we have sufficient resources between those 2 teams, to reach the prescribers that we are looking to reach.

On your second question around kind of what we are seeing from an expense trajectory perspective, so as we have gone through 2025 and 2026, we now have, you know, 4, phase 3 programs set to read out either before the end of the year or early in 2027. We have 3 potential launches with NEREUS, BYSANTI, and hopefully in the future, imsidolumab. And so the, you know, the obviously, the cost of running those phase 3 programs is not insignificant. And the commercial production in order to make sure that we have sufficient supply for the launch of those, products is also a significant investment.

So as we, you know, have now reached or are reaching the end of those activities with the readouts of the clinical trials, you know, kind of right in front of us, and the launch materials, you know, either made or being made shortly, those will be driving the most, you know, significant reductions in operating expenses as we head towards the end of 26 and into 2027. And, Madison, to the second part to your question there, the significant increase in r and d operating expenses during the period, again, was the ramp up of those programs that, you know, have kind of reached their, or are reaching their conclusion shortly.

And, also, for some of the products that are not yet approved, namely imsidolumab, any of the production activities that are associated with making that inventory, are expensed as incurred to r and d and that is just an accounting treatment of you can capitalize inventory once the product is approved. Whereas, generally, prior to approval, you expense that as r and d, and it would hit our r and d line item. So those are the significant drivers, in the current period. Got it. Thanks, Kevin. Appreciate it.

Operator: No further questions at this time. I would now like to turn the call back over to Vanda's management for the closing remarks. Please go ahead.

Mihael H. Polymeropoulos: Thank you very much all for joining I am sorry. Oh. Do we have another question? Sorry.

Operator: We do actually have a follow-up coming from Lin Tsai from Jefferies. Would you take the question?

Mihael H. Polymeropoulos: Yeah. Please, let Lin in.

Operator: Okay. Go ahead.

Andrew: So thanks so much for can you hear me okay? Yep. We can hear you. Oh, okay. Yes. So on the VQW-765 program, I was hoping maybe you guys could talk about your prior phase 2 data and maybe what exactly gives you confidence that you could succeed in phase 3 and maybe even why efficacy can look even better. In phase 3? Thanks.

Mihael H. Polymeropoulos: Yeah, thanks for the question. The phase 3 study that we are running now is similar in design with a phase 2 study. With a similar setup and similar primary endpoint. And we have reported prior results there. With 2 observations. 1, a significant effect in reducing anxiety measures in that setting. But also understanding of a dose response curve. So this phase 3 study we believe has been appropriately powered with the right number of patients that was informed by the phase 2 study. So again, minimal changes in the design no change in the dose, but increase in the size of the study to be powered according to the learnings from the phase 2 study.

Andrew: Great. Thanks so much. And then maybe 1 more if I can. I am wondering you know, if you could possibly talk about your, you know, your filing strategy or potentially timing for the GLP-1 induced vomiting for NEREUS. And then just kind of second to that, have you aligned with the FDA on the Phase 3 trial design? And then maybe just your latest and greatest on what you hope to see relative to the phase 2 findings.

Mihael H. Polymeropoulos: Yeah. So just to remind everyone on the call, last November, we reported a positive study on the effects of NEREUS in preventing vomiting. In people who take GLP-1 analogs in the design of administrative Wegovy at 1 milligram. Which is an advanced dose without any titration. And the results pretty much show that while 60% of the people on placebo, approximately, vomited in that design, only about 30 percent of the patients with NEREUS did so showing a significant protection. So the current design is a similar design where we aim to confirm the prior findings.

We believe that this body of evidence alongside with all the NEREUS experience this approved product will suffice for the filing of a supplemental NDA. We continue to communicate with the FDA on the statistical analysis plan on this study. And we will see how the results go and we will continue those conversations. Great. Thanks so much.

Operator: As of now, there are no further questions at this time. Again, I would now like to turn the call back over to Vanda's management. for the closing remarks. Please go ahead.

Mihael H. Polymeropoulos: I thank you all for your questions, and thank you for joining this call. Thank you.

Operator: Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. All participants may now disconnect. Thank you.