What happened

Shares in Vanda Pharmaceuticals (NASDAQ:VNDA) were up 10% at noon EDT after the company reported first-quarter results that were better than expected and it updated investors on the progress it's making with its drug pipeline. 

So what

Vanda Pharmaceuticals' most important drug is Hetlioz, a treatment for non-24, a sleep-wake disorder affecting roughly 80,000 Americans.

A passenger jet climbing into the sky.

One of Vanda Pharmaceuticals' drugs could turn out to be a treatment for jet lag. Image source: Getty Images.

In the first quarter, Hetlioz sales totaled $25.4 million, up 2% from the fourth quarter of 2017 and 26% from the first quarter of 2017. The sales growth reflects an ongoing trend of year-over-year double-digit increases, and since Q1 2015, Hetlioz sales are up 238%.

The company also reported that sales of Fanapt, a schizophrenia drug, clocked in at $18.2 million in the first quarter, a 5% increase from Q1 2017.

Altogether, Vanda Pharmaceuticals revenue increased 17% year over year to $43.6 million in the quarter, and net income improved to a $3 million profit from a $7.7 million loss one year ago. Revenue was $2 million higher than expected, and non-GAAP earnings per share of $0.14 were $0.31 better than estimated.

Management also updated investors on its pipeline. After reporting positive phase 3 results for Hetlioz in jet lag syndrome earlier this year, the company expects to file for FDA approval in that indication soon. It also expects to begin a phase 3 study of another drug, tradipitant, for chronic pruritus in atopic dermatitis later this year.

Furthermore, it expects data from a phase 3 study of Hetlioz in Smith-Magenis syndrome and data from a midstage study of tradipitant for gastroparesis, or delayed gastric emptying, before the end of 2018.

Now what

There's an unmet need for sleep treatments for Smith-Magenis syndrome patients, so a phase 3 win leading to a label expansion would be welcome. The biggest needle-mover, however, would be an approval of Hetlioz in jet lag syndrome. According to the company, about 20 million Americans who travel to destinations across multiple time zones could benefit from Hetlioz.

Overall, Vanda anticipates Hetlioz and Fanapt sales will total at least $180 million this year, and full-year operating expenses will be below $173 million. Considering that the company is leveraging growing demand for profitability, along with the possibilities that Hetlioz' label could expand and that tradipitant could eventually reach the market, adding shares of Vanda to portfolios could be smart. 

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.