On February 13, 2019 Vanda Pharmaceuticals Inc. (Vanda) (Nasdaq: VNDA) reported financial and operational results for the fourth quarter and full year ended December 31, 2018 (Press release, Vanda Pharmaceuticals, FEB 13, 2019, View Source [SID1234533291]).
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"The combination of strong commercial performance and positive clinical results has set 2018 apart as a transformative year for Vanda," said Mihael H. Polymeropoulos, M.D., Vanda’s President and CEO. "The tradipitant clinical programs in gastroparesis and atopic dermatitis have emerged as potentially significant drivers of future growth with the possibility of bringing new treatment options to millions of patients."
Key Financial Highlights:
Total net product sales from HETLIOZ and Fanapt were $53.0 million in the fourth quarter of 2018, an 8% increase compared to $49.1 million in the third quarter of 2018 and a 20% increase compared to $44.3 million in the fourth quarter of 2017.
HETLIOZ net product sales were $32.4 million in the fourth quarter of 2018, an 8% increase compared to $29.9 million in the third quarter of 2018 and a 30% increase compared to $25.0 million in the fourth quarter of 2017.
Fanapt net product sales were $20.6 million in the fourth quarter of 2018, a 7% increase compared to $19.2 million in the third quarter of 2018 and a 7% increase compared to $19.3 million in the fourth quarter of 2017.
Cash, cash equivalents and marketable securities (Cash) were $257.4 million as of December 31, 2018, representing an increase to Cash of $113.9 million during 2018.
Research and Development Highlights:
Tradipitant – Clinical Development
In December 2018, Vanda announced positive results from a Phase II clinical study (2301) of tradipitant in gastroparesis. Gastroparesis patients treated with tradipitant demonstrated significant improvement in nausea and most of the core gastroparesis symptoms.
Vanda expects to meet with the U.S. Food and Drug Administration (the FDA) to further define and confirm the path towards approval of tradipitant in the treatment of patients with gastroparesis, including the planned initiation of a Phase III clinical study in the second quarter of 2019.
Enrollment in the Phase III clinical study (EPIONE) of tradipitant in atopic dermatitis is ongoing. Results are expected in the first half of 2020. A second Phase III clinical study is expected to begin in the first quarter of 2020.
In January 2019, Vanda initiated a Phase II clinical study of tradipitant in motion sickness. Study results are expected in the second quarter of 2019.
HETLIOZ (tasimelteon)
In December 2018, Vanda announced positive results from a clinical study of HETLIOZ in Smith-Magenis Syndrome (SMS). SMS patients treated with HETLIOZ demonstrated significant improvement in overall sleep quality and overall total nighttime sleep duration.
Vanda expects to meet with the FDA in the second quarter of 2019 to confirm the regulatory path forward for HETLIOZ in the treatment of patients with SMS and expects to file a supplemental New Drug Application (sNDA) in the third quarter of 2019.
In December 2018, Vanda announced that the FDA had accepted the HETLIOZ sNDA for the treatment of jet lag disorder with a Prescription Drug User Fee Act target action date of August 16, 2019.
Vanda plans in the third quarter of 2019 to initiate a Phase II clinical study of HETLIOZ in delayed sleep phase disorder (DSPD) in patients who have a mutation in the CRY1 gene which is believed to be causative in a subset of patients with the disorder.
Fanapt (iloperidone)
Enrollment is ongoing in a pharmacokinetic study for the once-a-month long acting injectable (LAI) formulation of Fanapt. A randomized clinical study of the LAI formulation in schizophrenia is planned to begin in 2019.
A randomized study of Fanapt in bipolar disorder is planned to begin in 2019.
VTR-297 (histone deactetylase (HDAC) inhibitor)
Enrollment is ongoing in a Phase I clinical study (1101) of VTR-297 in hematologic malignancies.
Tradipitant – Partial Clinical Hold and FDA Dispute
In April 2018, Vanda submitted a protocol amendment to the FDA, proposing a 52-week open-label extension (OLE) period for patients who had completed the tradipitant Phase II clinical study (2301) in gastroparesis. In May 2018, based on feedback from the FDA, Vanda amended the protocol limiting the duration of treatment in the 2301 study to a total of three months, while continuing to seek further dialogue with the FDA on extending the study duration to 52-weeks. As a part of this negotiation process, in September 2018, Vanda submitted a new follow-on 52-week OLE protocol to the FDA (2302) for patients who had completed the 2301 study. While waiting for further feedback, no patients were ever enrolled in any study beyond 12 weeks.
On December 19, 2018, the FDA imposed a partial clinical hold (PCH) on the two proposed studies, stating that Vanda is required first to conduct additional chronic toxicity studies in canines, monkeys or minipigs before allowing patients access in any clinical protocol beyond 12 weeks. The PCH was not based on any safety or efficacy data related to tradipitant. Rather, the FDA informed Vanda that these additional toxicity studies are required by a guidance document.
On February 5, 2019, Vanda filed a lawsuit against the FDA in the United States District Court for the District of Columbia, challenging the FDA’s legal authority to issue the PCH, and seeking an order to set it aside.
Vanda does not expect the PCH to have any material impact on its ongoing clinical studies in atopic dermatitis and motion sickness or the planned Phase III study in gastroparesis. At present, the PCH has not had any impact on the potential timing of an NDA filing or approval for these indications. Vanda will continually reassess this situation as events unfold.
Non-GAAP Financial Results
Non-GAAP net income was $13.7 million for the fourth quarter of 2018, or $0.26 per share, compared to a Non-GAAP net income of $1.4 million, or $0.03 per share, for the fourth quarter of 2017. Vanda Non-GAAP net income was $38.4 million for the full year 2018, compared to a Non-GAAP net loss of $3.4 million for the full year 2017.
Vanda provides Non-GAAP financial information, which it believes can enhance an overall understanding of its financial performance when considered together with GAAP figures. Refer to the sections of this press release entitled "Non-GAAP Financial Information" and "Reconciliation of GAAP to Non-GAAP Financial Information" for more detailed information regarding Non-GAAP financial information.
2019 Financial Guidance
Conference Call
Vanda has scheduled a conference call for today, Wednesday, February 13, 2019, at 4:30 PM ET. During the call, Vanda’s management will discuss the fourth quarter and full year 2018 financial results and other corporate activities. Investors can call 1-866-688-9426 (domestic) or 1-409-216-0816 (international) and use passcode 1579398. A replay of the call will be available on Wednesday, February 13, 2019, beginning at 7:30 PM ET and will be accessible until Wednesday, February 20, 2019, at 7:30 PM ET. The replay call-in number is 1-855-859-2056 for domestic callers and 1-404-537-3406 for international callers. The passcode number is 1579398.
The conference call will be broadcast simultaneously on Vanda’s website, www.vandapharma.com. Investors should click on the Investor Relations tab and are advised to go to the website at least 15 minutes early to register, download, and install any necessary software or presentations. The call will also be archived on Vanda’s website for a period of 30 days.
Non-GAAP Financial Information
Vanda believes that the Non-GAAP financial information provided in this press release can assist investors in understanding and assessing the ongoing economics of Vanda’s business and reflect how it manages the business internally and sets operational goals. Vanda’s "Non-GAAP Selling, general and administrative expenses" and "Non-GAAP Research and development expenses" exclude stock-based compensation. Vanda’s "Non-GAAP Net income (loss)," "Non-GAAP Net income (loss) per share" and "Non-GAAP Operating expenses excluding Cost of goods sold" exclude stock-based compensation and intangible asset amortization.
Vanda believes that excluding the impact of these items better reflects the recurring economic characteristics of its business, as well as Vanda’s use of financial resources and its long-term performance.
These Non-GAAP financial measures, as presented, may not be comparable to similarly titled measures reported by other companies since not all companies may calculate these measures in an identical manner and, therefore, they are not necessarily an accurate measure of comparison between companies.
The presentation of these Non-GAAP financial measures is not intended to be considered in isolation or as a substitute for guidance prepared in accordance with GAAP. The principal limitation of these Non-GAAP financial measures is that they exclude significant elements that are required by GAAP to be recorded in Vanda’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management in determining these Non-GAAP financial measures. In order to compensate for these limitations, Vanda presents its Non-GAAP financial guidance in connection with its GAAP guidance. Investors are encouraged to review the reconciliation of our Non-GAAP financial measures to their most directly comparable GAAP financial measure.