Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2024 Earnings Call Transcript

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2024 Earnings Call Transcript February 13, 2025

Vanda Pharmaceuticals Inc. beats earnings expectations. Reported EPS is $-0.08, expectations were $-0.14.

Operator: Hello, and thank you for standing by. At this time, I would like to welcome you to the Q4 2024 Vanda Pharmaceuticals Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, I would now like to turn the conference over to Mr. Kevin Moran, Vanda’s Chief Financial Officer. Go ahead, sir.

Kevin Moran: Thank you, Jerico. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals’ fourth quarter and full year 2024 performance. Our fourth quarter and full year 2024 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 conference 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 Tim Williams, 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.

There 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 most recent annual report on Form 10-K, as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, 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. 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 Polymeropoulos: Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda Pharmaceuticals’ fourth quarter and full year 2024 results. As we discussed in our press release earlier this afternoon, strong revenue growth for Fanapt is putting us on a significant growth trajectory for 2025 and beyond, supported also by the commercial performance of Hetlioz and Ponvory. The Fanapt long-acting injectable program, the new drug application for Vantrela, middle seperidone for bipolar disorder and schizophrenia, along with its development for major depressive disorder, have the potential to drive future growth in our psychiatry portfolio for many years to come. Vantrela’s new drug application for motion sickness was filed with a potential approval this year while we are pursuing approval in gastroparesis and the development of Tradipitant to improve solubility of GLP-1 analog Wegovy.

Our anti-inflammatory portfolio, anchored by Ponvory, was strengthened with the addition of imsidolimab from Anaptis, an IL-36 receptor inhibitor for the treatment of generalized pustular psoriasis. We plan to file a BLA later this year while we are exploring registration in Europe and Japan as well as the development of this novel drug for other inflammatory disorders with an unopposed action of the IL-36 system. In 2024, we returned to revenue growth driven by the commercial launches in bipolar disorder and multiple sclerosis and advanced our development pipeline with a number of projects at or near marketing applications. All this was achieved by the hard work, ingenuity, and efficiency of our organization and its wonderful people. I will now turn to Fanapt.

Fanapt was approved in the second quarter of 2024 for the acute treatment of bipolar I disorder. Vanda initiated the commercial launch of Fanapt in this indication in the third quarter of 2024. In the fourth quarter, as compared to the fourth quarter of 2023, new patient starts, as reflected by new-to-brand prescriptions or NBRx, increased by over 160%, and Fanapt net product sales increased by 18%. A dedicated specialty sales force of approximately 200 persons has been promoting Fanapt, supported by a speaking program to improve peer-to-peer awareness. Given the successful trajectory and consistent with other peers, we are currently in the process of further expanding our sales force to 300 representatives, which will allow for an increase in both reach and frequency.

In January of 2025, we began our direct-to-consumer advertising to increase general consumer awareness of Fanapt. We expect product adoption to continue as more prescribers develop treatment experiences and identify candidate patients. Vanda also initiated a phase three program for the long-acting injectable (LAI) formulation of Fanapt in the fourth quarter of 2024. The long-acting injectable, once-a-month Fanapt, is evaluated in relapsed prevention syndrome for schizophrenia, where the oral formulation has already been shown to be successful and is already included in the Fanapt prescribing information. While all projects so far have been developed in double-blind, placebo-controlled studies, and while Vanda and FDA have agreed on this design, an IRB (institutional review board) has objected to a placebo-controlled design for schizophrenia maintenance.

We are evaluating with the FDA ways to proceed outside of a placebo-controlled study, which could include a bridging study with the oral formulation. This evaluation is not specific to Vanda, and the outcome of this design will likely be required of others. Vanda plans to initiate a study for the Fanapt long-acting injectable as a once-a-month injectable for the treatment of hypertension to address both treatment resistance and treatment compliance. In the course of our extensive clinical program with Fanapt for over twenty years, we have now identified an unexpected but robust benefit in treating hypertension with Fanapt, specifically in a large meta-analysis of placebo-controlled studies. We have identified a rapid and sustainable effect in reducing systolic and diastolic blood pressure, especially among people with baseline hypertension.

The effect size is comparable to effective antihypertensives. While the exact mechanism is not known, we believe that this effect is likely due to the mixed alpha, serotonin, and dopamine receptor antagonist observed with Fanapt. We plan to initiate a study to evaluate this effect with a once-a-month injectable Fanapt LAI in people with treatment-resistant hypertension. It has been reported that medication non-adherence in hypertension is a significant public health risk, and as such, if we are successful in our studies, Fanapt LAI could become the first medication to address this large public health need. Additionally, Vanda submitted a marketing authorization application in Europe in the fourth quarter of 2024 for Fanapt, and that is with the European Medicines Agency, for bipolar I disorder and schizophrenia.

I will now turn to Vantrela, known as Milsaperidone. Vanda expects to submit a new drug application for Vantrela for the treatment of acute bipolar I disorder and schizophrenia to the U.S. Food and Drug Administration in the first quarter of 2025. Exclusivity, including pending patent applications, could extend into the 2040s. Vantrela is an active metabolite of iloperidone and has been extensively studied. In the last year, we have met with the FDA and agreed upon the clinical and manufacturing requirements, and we are now prepared to submit a new drug application in the coming weeks. Vanda initiated a phase three clinical study for Vantrela as a once-a-day adjunctive treatment for major depressive disorder in the fourth quarter of 2024. Results are expected in 2026.

I will now move on to Hetlioz. Vanda has initiated clinical programs in pediatric insomnia and delayed sleep phase disorder, and these programs are ongoing. Vanda’s MAA for Hetlioz and Hetlioz LQ for Smith-Magenis syndrome is now pending with the European Medicines Agency. In addition, Vanda is continuing to pursue the approval of Hetlioz in sleep-onset insomnia and the treatment of jet lag. Vanda has completed successfully multiple studies in these indications that have demonstrated substantial evidence of efficacy and a positive benefit profile. Vanda has requested an FDA hearing on the insomnia indication, and an appeals court is expected to rule in the coming months on the jet lag application. Ponvory. Vanda initiated the commercial launch of Ponvory for the treatment of relapsed forms of multiple sclerosis in the third quarter of 2024.

A new specialty sales force is now promoting Ponvory for this indication across the United States. We believe that Ponvory’s profile, when appreciated, will drive the preferences of prescribers and patients. The sales force is supported by a new speakers program for peer-to-peer awareness. Investigation of new drug applications for Ponvory in the treatment of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024. Ponvory has been previously shown to be effective in treating acute episodes of psoriasis as well as preventing relapse. This study was conducted by Actelion before Vanda’s acquisition of the product, and the results have been published. Vanda is now finalizing the development program that could lead to a new drug application filing in this indication.

The new drug application for Tradipitant for the treatment of motion sickness was submitted to the FDA in the fourth quarter of 2024. This application is supported by three positive studies in the prevention of motion-induced vomiting in actual sea travel conditions. We expect an FDA decision later this year. Vanda has recently initiated a clinical trial to study Tradipitant in the prevention of vomiting induced by a GLP-1 analog, Wegovy, that is semaglutide, in the fourth quarter of 2024. A frequent and at times severe treatment-emergent adverse event with GLP-1 analogs is nausea and vomiting, which requires slower titration and delayed onset of effect. We are evaluating whether Tradipitant can prevent Wegovy-induced nausea and vomiting, and if it does, it could become a very useful product during GLP-1 analog treatment initiation.

Vanda has now accepted the opportunity for a hearing with the FDA on the approvability of the NDA for Tradipitant for the treatment of symptoms of gastroparesis. Vanda has identified a number of faults in the FDA review that led to a complete response letter, and we believe that if allowed to be reviewed by experts, they would also raise the conclusion that Tradipitant can be a useful product in treating symptoms of gastroparesis. In the meantime, more than fifty patients are currently treated with Tradipitant through the expanded access program, and many additional ones are being evaluated to initiate treatment. Imsidolimab. In February 2025, Vanda announced it entered into an exclusive global license agreement with Anaptis Bio, Anaptis, for the development and commercialization of Imsidolimab, that is an IL-36 receptor antagonist monoclonal antibody.

Vanda expects to initiate and complete the technology transfer activities in 2025 and to immediately begin preparing the biologics license application (BLA) and MAA for generalized pustular psoriasis (GPP) for the US and European Union. Generalized pustular psoriasis is a rare, severe skin disorder that is often caused by recessive mutations in the IL-36RN gene, a regulator of the IL-36 activity. The role of such mutations in heterozygous state, which are far more common, is not yet appreciated, but it may play a significant role in the pathogenesis and progression of other inflammatory skin conditions. We plan to file a BLA later this year while we are exploring registration in Europe and Japan and as well as the development of this novel drug for other inflammatory disorders with an unopposed action of the IL-36 cytokine system.

Finally, on early-stage program highlights, VKW765, an alpha-7 nicotinic acetylcholine receptor partial agonist, is currently in clinical development for the treatment of acute performance anxiety in social situations. We have previously reported results from a phase two study with encouraging outcomes in a model of acute performance anxiety. We plan to meet with the FDA in the coming months at an end-of-phase-two meeting and plan to initiate a phase three program in social anxiety disorder in 2025. The IND application for VCA894A, an antisense oligonucleotide in the treatment of Charcot-Marie-Tooth disease axonal type 2S, an inherited peripheral neuropathy for which there is no available treatment, was accepted by the FDA in 2024. The phase one clinical study for VCA894A is expected to enroll this single patient by mid-2025.

In December 2024, Vanda announced that the FDA has granted orphan drug designation for VGT1849A, a selective antisense oligonucleotide-based JAK2 inhibitor for the treatment of polycythemia vera, a form of a rare hematologic malignancy that is estimated to affect one in two thousand Americans. I will just review the key regulatory milestones: Tradipitant NDA for motion sickness submitted in Q4 2024, Fanapt MAA in Europe for bipolar I disorder and schizophrenia submitted in Q4 2024, Hetlioz MAA in Europe for Smith-Magenis syndrome submitted in Q4 2024, Vantrela new drug application for bipolar I disorder and schizophrenia expected to be submitted in Q1 2025, and Imsidolimab BLA for generalized pustular psoriasis expected to be submitted in 2025.

With that, I’ll turn now to Kevin to discuss our financial results.

Kevin Moran: Thank you, Mihael. I’ll first discuss the results for the full year 2024 before turning to the fourth quarter of 2024. Total revenues for the full year 2024 were $198.8 million, a 3% increase compared to $192.6 million for the full year of 2023. As Mihael mentioned, this increase was primarily due to increased Fanapt revenue as a result of the bipolar commercial launch and the introduction of Ponvory revenue following our acquisition of the product in December of 2023, partially offset by decreased Hetlioz revenue as a result of generic competition. Let me now break this down by product. Fanapt net product sales were $94.3 million for the full year 2024, a 4% increase compared to $90.9 million for the full year 2023.

The increase in net product sales relative to the full year 2023 was attributable to increased volume and increased price net of deductions. Hetlioz net product sales were $76.7 million for the full year 2024, a 23% decrease compared to $100.2 million for the full year 2023. The decrease relative to the full year 2023 was the result of continued generic competition in the US. Hetlioz net product sales as reported for the first quarter of 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the first quarter of 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers as of March 31, 2023. For the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and continue to remain elevated throughout 2024.

Going forward, Hetlioz net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers, or may be variable depending on when specialty pharmacy customers need to purchase again. Further, Hetlioz net product sales will likely decline in future periods, potentially significantly, related to continued generic competition in the US. Additionally, the company constrained Hetlioz net product sales for the years ended December 31, 2024, and 2023 to an amount not probable of significant revenue reversal. As a result, Hetlioz net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Ponvory net product sales were $27.8 million for the full year 2024 and include approximately $3 million of variable consideration that may be subject to dispute but that the company believes is not probable of significant revenue reversal. As a reminder, we completed the acquisition of the US and Canadian rights to Ponvory in December of 2023. As such, this represents the fourth full quarter of Ponvory revenue recognition at Vanda and significant progress in diversifying our product mix with innovative and value-generating products. For the full year 2024, Vanda recorded a net loss of $18.9 million compared to net income of $2.5 million for the full year 2023. The net loss for the full year 2024 included an income tax benefit of $4 million compared to an income tax provision of $3.8 million for the full year 2023.

Of note on the tax side, the company assesses the need for a valuation allowance against the deferred tax asset each quarter through the review of all available positive and negative evidence. The company generated a pretax loss for the year ended December 31, 2024. If the company continues to generate pretax losses and/or if the company’s projections indicate pretax losses in future periods, the conclusion about the appropriateness of the valuation allowance could change in a future period. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change. Operating expenses for the full year 2024 were $239.4 million compared to $206.6 million for the full year 2023. The $32.8 million increase was primarily driven by higher SG&A expenses related to spending on Vanda’s commercial products as a result of the commercial launches of Fanapt in bipolar I disorder and Ponvory in multiple sclerosis, and legal and other corporate activities, as well as higher intangible asset amortization expense due to the amortization reported on the Ponvory intangible asset.

During 2024, we commenced a host of activities as part of our commercial launches of Fanapt in bipolar I disorder and Ponvory in multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may increase in future periods as a result of the continued ongoing commercial efforts around Fanapt in bipolar I disorder and Ponvory in multiple sclerosis. Vanda’s cash, cash equivalents, and marketable securities, referred to as cash, as of December 31, 2024, was $374.6 million, representing a decrease of $1.6 million compared to September 30, 2024, and a decrease of $13.6 million compared to December 31, 2023. Turning now to our quarterly results. Total revenues for the fourth quarter of 2024 were $53.2 million, a 17% increase compared to $45.3 million for the fourth quarter of 2023, and a 12% increase compared to $47.7 million in the third quarter of 2024.

The increase as compared to the fourth quarter of 2023 was primarily due to the introduction of Ponvory revenue following our acquisition of the product in December of 2023, and increased Fanapt revenue. Fanapt net product sales were $26.6 million for the fourth quarter of 2024, an 18% increase compared to $22.6 million in the fourth quarter of 2023. The increase in Fanapt revenue between the fourth quarter of 2024 and the fourth quarter of 2023 was primarily attributable to an increase in volume, which was driven by increased prescription demand or TRxs as reported by IQVIA Xponent, and inventory stocking at the wholesalers. Historically, Fanapt’s inventory at wholesalers has ranged between three and four weeks on hand as calculated based on trailing demand.

As of the end of the fourth quarter of 2024, Fanapt inventory at wholesalers was just above four weeks. Fanapt prescriptions in the fourth quarter of 2024 increased by approximately 9% compared to the fourth quarter of 2023, and Fanapt new patient starts in the fourth quarter of 2024, as reflected by new-to-brand prescriptions or NBRx, increased by over 160% compared to the fourth quarter of 2023. Fanapt net product sales in the fourth quarter of 2024 increased by 11% compared to $23.9 million in the third quarter of 2024. Fanapt prescriptions in the fourth quarter of 2024 increased by approximately 7% compared to the third quarter of 2024. Turning now to Hetlioz. Hetlioz net product sales were $20 million for the fourth quarter of 2024, a 5% decrease compared to $21.1 million in the fourth quarter of 2023.

The decrease in net product sales relative to the fourth quarter of 2023 was attributable to a decrease in price net of deductions, partially offset by an increase in volume. Hetlioz net product sales in the fourth quarter increased by 12% as compared to $17.9 million in the third quarter of 2024. And finally, turning to Ponvory. Ponvory net product sales were $6.5 million in the fourth quarter of 2024, an increase of 11% compared to $5.9 million in the third quarter of 2024. The increase in net product sales was attributable to an increase in volume of units sold, partially offset by a decrease in price net of deductions. The increase in volume in the fourth quarter of 2024 was partially attributable to a temporary inventory destocking in the third quarter at the specialty distributors and pharmacies due to the transition of distribution from Janssen to Vanda.

As a reminder, we completed the acquisition of the US and Canadian rights to Ponvory in December of 2023. For the fourth quarter of 2024, Vanda reported a net loss of $4.9 million compared to a net loss of $2.4 million for the fourth quarter of 2023. The net loss for the fourth quarter of 2024 included an income tax benefit of $1.6 million as compared to an income tax provision of $0.7 million for the fourth quarter of 2023. Operating expenses in the fourth quarter of 2024 were $63.5 million compared to $52.4 million in the fourth quarter of 2023. The $11.1 million increase was primarily driven by higher SG&A expenses related to spending on Vanda’s commercial products as a result of the commercial launches of Fanapt in bipolar I disorder and Ponvory in multiple sclerosis, and legal and other corporate activities, partially offset by a decrease in R&D expense, primarily driven by lower spend on our Tradipitant development programs.

Operating expenses in the fourth quarter of 2024 increased by $4.8 million as compared to $58.7 million in the third quarter of 2024. This increase was primarily driven by higher R&D spend due in large part to increased expenses on our psychiatry programs and increased spending on Vanda’s commercial products as a result of the commercial launches of Fanapt in bipolar I disorder and Ponvory in multiple sclerosis. During 2024, we commenced a host of activities as a result of the commercial launch of Fanapt in bipolar disorder and Ponvory in multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may increase in future periods as a result of the continued ongoing commercial efforts around Fanapt in bipolar I disorder and Ponvory in multiple sclerosis.

With regards to the launches of Fanapt in bipolar I disorder and Ponvory in multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we expect to continue to build out our full commercial infrastructure with the impact of these commercial efforts expected to contribute to revenue growth in 2025 and beyond. We have already seen significant progress in our commercial activities. Several lead indicators suggest a strong initial market response to our commercial launch of Fanapt in bipolar I disorder, with new patient starts increasing by over 160% in the fourth quarter of 2024 as compared to the fourth quarter of 2023. Our Fanapt sales force continues to expand. Currently, our sales force has grown to over 200 persons, and we have now initiated a further expansion, as Mihael has mentioned.

In addition to our Fanapt sales force, we have established a specialty sales force to market Ponvory for neurology prescribers around the country. This expansion has allowed us to significantly increase our reach and frequency with prescribers. We have now had over 700 Fanapt prescriber programs completed in 2024, and the Ponvory Prescriber Awareness Program continues to expand with over four times as many programs completed in the fourth quarter of 2024 compared to the third quarter of 2024. Before turning to our financial guidance, I would like to remind folks that with Fanapt, Hetlioz, and Ponvory already commercially available, the Tradipitant NDA for motion sickness submitted to the FDA, the Vantrela NDA for bipolar I disorder and schizophrenia expected to be submitted in the coming weeks, and a BLA for Imsidolimab expected to be submitted later this year, Vanda could have six products commercially available in 2026.

Turning now to our financial guidance. Vanda expects to achieve the following financial objectives in 2025: Total revenues from Fanapt of between $210 million and $250 million. This revenue range would imply revenue growth in 2025 of between 6% and 26% as compared to full year 2024 revenue. It’s worth commenting that the quarterization of revenue in 2025 will be impacted by several items, including the Medicare benefit redesign portion of the Inflation Reduction Act, which went into effect as of January 1, 2025. The implementation of the benefit redesign is expected to negatively impact gross-to-net for the Medicare payer segment of our products, more significantly on Fanapt and Hetlioz. Note that this change is not linked specifically to Vanda, but is industry-wide, which will have varying impacts on pharmaceutical companies.

Insurance plan transitions as patients adjust to new insurance plans to start the year may cause some disruption in the first quarter. This is also a typical industry-wide occurrence. As I previously mentioned, Fanapt’s inventory levels as of December 31, 2024, were higher than typical levels based on trailing demand. If wholesalers adjust their inventory to historical levels, this could have a short-term negative impact on revenue in the period in which the destocking occurs. Given the conditional investments Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and potentially outsized commercial investments, Vanda is not providing 2025 cash guidance at this time. We will continue to evaluate its ability to provide cash guidance in future periods.

It is worth noting that the quarterization of cash balances will be impacted by several items, including payments totaling $15 million, which were made to Anaptis in the first quarter of 2025 upon entering the global license agreement for Imsidolimab, fees and costs associated with the filing of our applications with regulatory agencies in the US and Europe, including the Vantrela NDA for bipolar I disorder and schizophrenia, and the standard timing of certain items paid in the first quarter each year. Given the significant progress made during 2024 on establishing our commercial infrastructure and commercial investments we expect to make in coming periods, Vanda is providing 2030 revenue targets. For the psychiatry portfolio alone, Vanda is targeting annual revenue in excess of $750 million in 2030, assuming the potential approval of Vantrela for the treatment of acute bipolar I disorder and schizophrenia in early 2026, the potential approval of Vantrela for the treatment of MDD, and the potential approval of Fanapt LAI.

Vanda is also targeting total annual revenue in excess of $1 billion in 2030. It is worth noting that the revenue economics for Vantrela are expected to be significantly favorable relative to the current revenue economics for Fanapt. The potential market opportunity for our growing psychiatry portfolio is significant and necessitates the increased investments we are currently making to enhance the commercial profile of Fanapt, bring Vantrela and Fanapt LAI to market, and expand the Vantrela label to include major depressive disorder. With that, I’ll now turn the call back to Mihael.

Mihael Polymeropoulos: Thank you, Kevin. At this time, we’d like to answer any questions you may have.

Q&A Session

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Our first question comes from the line of Charles Duncan from Cantor Fitzgerald. Please go ahead.

Charles Duncan: Hey. Good afternoon, and team. Congrats on a good year of seeing the commercial turn as well as a ton of things going on with the pipeline. So lots of productivity. I had a question first on commercial and then pipeline. With regard to Fanapt, I guess, I’m wondering as you see that queue-on-queue growth, where do you think you’re picking up traction and what types of prescribers? And then I wanted to ask you about that three hundred reps, the fifty percent growth in the Salesforce. I’m wondering if you think that’ll be sufficient to, you know, I guess, compete with potentially larger pharma companies coming in and marketing, you know, obviously, Caplyta, but also perhaps changes in the future with Caplyta.

Mihael Polymeropoulos: Yeah. Thank you very much, Charles. So in terms of where the growth is coming from, the prescribers that are coming to Fanapt are prescribers that have patients with bipolar disorder. And this is a difference from the smaller group of psychiatrists and psychiatric nurses that show schizophrenia patients. So it seems that the growth is exclusively coming outside of schizophrenia. In terms of the size of the sales force, as you know very well, this is a highly promotionally sensitive class of drugs. And we have very recent examples of successful commercialization from some of our peers. Whether this is the right size Salesforce, I would venture to say likely, it’s gonna be on the lower side. But, certainly, you want to build rapidly but at the same time, don’t jeopardize the quality and very important training of the Salesforce.

Now we do see the potential competition by more deep-pocketed Big Pharma. Of course, BMS, with Caplyta at this time, they will be primarily focused on the only indication that they have, schizophrenia, and that is not our main focus. Now, in terms of J&J, if they complete the acquisition of Intracellular, certainly there’s gonna be a lot of strength, but it seems that people there will be in patients with major depression if they succeed in securing the approval in that indication, which seems quite possible given the very nice data they have.

Charles Duncan: Eric, good. Mihael, that’s helpful. It makes sense. With regard to the DTC that you started in January, I assume that’s targeting then the bipolar patients. And do you think that those patients are amenable to picking up the messaging of the DTC and perhaps bringing that to their prescribers and talking about Fanapt?

Mihael Polymeropoulos: Yeah. Thank you. Yes. The target is specifically for people with bipolar I disorder. And, certainly, we don’t have to guess on the effectiveness. In that, before us, there have been others, almost every other drug recently in the category, they have advertised to DTC, which increases not just awareness, but also confidence of support of the drug among patients, but we’re also finding it is actually intriguing to prescribers themselves. So we believe that is a very effective way to increase awareness. And I would point out that Vanda has a significant track record in efficiently launching a DTC campaign and buying media. And I think that’s gonna become very important in the coming months. I would like to underscore Kevin suggested that, you know, at this time, do not give a cash guidance.

And this is primarily driven by trying to gauge what is the right size direct-to-consumer, and you buy as you go. So we, unlike some large companies, we’re not doing device. At this time, we buy on demand. And we’re very carefully evaluating the return on our investment. So it is a measured approach, but we are prepared to make a significant investment provided a good ROI on the other side.

Charles Duncan: Thank you for that information. On Vantrela, if I could, ask a quick question. I’m intrigued with the one per day MDD study that you started towards the end of last year. I’m wondering if you have specific information on either Fanapt or Milsaperidone that suggests that it may have activity in MDD as well as perhaps depressed patients with bipolar. What is the kind of rationale behind that phase three?

Mihael Polymeropoulos: Yeah. So of course, you know that we have a lot of experience on Fanapt, iloperidone, with twice a day, but we also have experience in the utilization across different doses. So our studies have been primarily done on the higher dose side, twelve milligrams a day divided dose, or twenty-four milligrams a day as a divided dose. But our observation so far suggests that a large number of patients have been prescribed a monthly dose which reflects a total in the day of approximately twelve milligrams on average. And we know that based on the pharmacokinetics and steady-state levels, that once a day twelve milligrams does not present any significant issues of peak to trough and tolerability. And the combination of all this suggested to us that a once-a-day administration of Vantrela will be a good approach in major depressive disorder. And as you can guess, it happens also to be likely more convenient than a twice-a-day dosing.

Charles Duncan: For sure. Look forward to that. Final question, Imsidolimab. Congrats on the recent in-licensing. I’m intrigued with that program. BLA later on this year, but I think Anaptis, and I’m not gonna ask you to defend Anaptis, but I think they spoke about a BLA as early as October 2023, as having already been filed. So I’m wondering if you have a sense of what the delay in filing and if a pre-BLA has been conducted, or is that all the kind of stuff that you’ll do once you fully accept all the information from it.

Mihael Polymeropoulos: Yeah. I cannot comment on the first part of the question, but a pre-BLA meeting with the FDA on the GPP indication has been conducted. And upon review of this information, we’re confident that we have in hand what needs to be had for filing. So, of course, we’re only a few days away. But I would say Anaptis is a great partner of this. Transition is ongoing quickly of materials. So we’re confident we’ll be able to file this BLA within this year. And I have to say, Charles, that maybe we get an opportunity at a future call. We are intrigued by the mechanism of action. And we believe that the IL-36 cytokine system is perhaps not fully explored therapeutically in a number of autoimmune inflammatory conditions.

And of course, we understand the role in keratinocytes and generalized pustular psoriasis. As I pointed out in my discussion, GPP is caused by two bad genes, a recessive disorder. But, of course, there is a much larger portion of the population that are heterozygous carriers of a null mutation, which under some circumstances may lead to a relatively unopposed action of IL-36. And there are theories of what this population may be. There may be a class of people with atopic dermatitis or psoriasis, or actually other inflammatory conditions where IL-36 is important in monitoring intruders at barrier tissues. But, you know, more to be discussed in the future.

Charles Duncan: Big pipeline. Lots going on. Thanks for taking the questions. Congrats on the progress.

Mihael Polymeropoulos: Thank you, Charles. Our next question comes from Raghuram Selvaraju from H.C. Wainwright. Please go ahead.

Ram Selvaraju: Hi. Thanks so much for taking my questions, and congrats on all the progress. First of all, I wanted to start with a question around your anticipated timing for the development of the iloperidone long-acting injectable. So specifically, I wanted to ask when you anticipate enrolling the first patient in that pivotal program and how long you expect enrollment to take, as well as if you can provide any kind of updated outlook on the competitive landscape given the fact that this appears to be changing quite rapidly, although it’s obviously also reflective of a steadily expanding broader total addressable market. Thank you.

Mihael Polymeropoulos: Yeah. Thank you very much for the question. And I, you know, I at the bottom, I would say agree with you that there appears to be a lot of need and large commercial opportunity around injectable antipsychotics, and especially new entrants of molecules that have not been translated from oral to a long-acting injectable, like Fanapt. In terms of the program, we are ready to go. And in fact, that program can be initiated imminently. The initial treatment period is about a twelve-week period of stabilization before we lead to the re-randomization relapse prevention. And what I mentioned, Ram, is that the question from the IRB was that they felt no one should be running placebo-controlled studies on a relapse prevention mode.

You know, and they offer that, you know, placebo people may be at some risk. We disagree with that, but nonetheless, it is the IRB. And we are in total agreement with the FDA on what protocol is needed, and in fact, we are in agreement that this study, if successful, which we expect it to be, is the pivotal study required for registration. So we are actually waiting. We’ve launched this question to the FDA, and they’re working, I guess, on their policy side to see what this shift in the IRB means, and what type of study may be required. But be this, it may, the placebo is the most involved study, and we could end up with a more simple design, where there is a bridging of sorts with the oral formulation. So no matter what it is, we can start the study very quickly.

Now in terms of time into enrollment, as you know, that’s hard to evaluate given the difficulty recruiting in general. But this study is a long study. Recruitment and large could take up to one year. And that means, I think we’ve discussed before, that we will not expect results but in sometime in 2027.

Ram Selvaraju: Okay. And then with respect to the guidance that you provided today on potential revenue in 2025, can you confirm that even the upper end of that guidance range does not actually include projected contribution from Tradipitant in any indication or Imsidolimab? Is that correct?

Mihael Polymeropoulos: That is correct. The range guidance we’re giving is solely based on the commercialized products today in the commercialized indications. And, of course, we could be pleasantly surprised towards the upper end, depending on the Fanapt trajectory and upon Ponvory gaining speed. On Hetlioz, given its generic contribution, we have more tamed expectations.

Ram Selvaraju: To what extent do you anticipate there to be a significantly larger number of generic competitors, generic purveyors of tasimelteon by the end of 2025 versus the end of 2024?

Mihael Polymeropoulos: At this time, we do not expect that field to change outside of the three approved ones.

Ram Selvaraju: Okay. And then the last question is with respect to broader reimbursement changes, any specific developments of note that you anticipate taking effect in 2025 that could significantly impact gross-to-net?

Kevin Moran: Hey, Ram. It’s Kevin. So on the main one, which we talked about in the scripted portion of it, is the introduction of the Medicare benefit redesign, which went into effect at the beginning of January. And the reminder there is previously where there was the donut hole concept and the manufacturer had a portion of that contribution until the patient had moved through the donut hole for the year. The benefit redesign has a different structure where for the catastrophic portion of the coverage, the manufacturer has a either ten or twenty percent contribution to that, with some exceptions for different types of manufacturers and different types of patient populations. So that went into effect at the beginning of January, as I mentioned, and was factored into our projections for 2025.

Ram Selvaraju: Okay. Thank you.

Kevin Moran: Thanks, Ram.

Operator: Our next question comes from the line of Andrew Tsai from Jefferies. Please go ahead.

Andrew Tsai: Hey. Thanks. Good afternoon. I appreciate all the updates. First question is about the 2030 guidance. What exactly compelled you guys to provide that guidance today? And then within that one billion dollar guidance, of course, seven fifty is coming from psychiatry. How much of that seven fifty is based on products or indications that have yet to be approved, as opposed to currently approved products? Thanks.

Mihael Polymeropoulos: Thanks, Andrew. Yeah. So maybe starting with the psychiatry portfolio first. Obviously, with Fanapt, you know, currently on the market, doing about a hundred million this year. And with the commercial investments we’re making, hoping to see growth as we obviously head into next year and beyond. But then even beyond that, we noted that included in that 2030 projection is the approval of Vantrela for bipolar I disorder and schizophrenia hopefully next year. And then potentially a label expansion there in MDD beyond that. As well as the approval of Fanapt in LAI. So, you know, the and the one thing I also made note of in the script that’s an important piece to that is that Milsaperidone is expected to have or Vantrela, rather, is expected to have very different economics than Fanapt currently has.

And at a minimum, that’s due to the price reset that we would experience under Medicaid with a new drug application being approved. So all of those obviously, we didn’t provide kind of a breakout of the contributions of those individual factors, but hopefully, that gives you a sense of what contributions would go into the seven fifty from existing product indications, future product indications. And then on the balance, obviously, with Hetlioz and Ponvory on the market, Hetlioz, you know, as Mihael has mentioned, where our expectations are a bit more tamed at least on the short term. And with Ponvory, you know, growing and hopefully even more so in the years to come. And also the possibility that we mentioned of an additional three products being on the market next year, including Milsaperidone, but also Tradipitant and Imsidolimab.

Those products also provide some of the bridge between the seven fifty and the billion.

Andrew Tsai: Thanks. And when we think about your overall business, where or when should we think the trough year is in terms of revenue and your total cash balance? Said another way, do you think the trough year already happened, or could it be somewhere in 2025 or a little bit later?

Kevin Moran: Yeah. No. No. Thanks for the question there, Andrew. So, obviously, with our reported revenue for this year being growth from the year before. So, you know, we saw growth from about a hundred and ninety-three million up to about a hundred and ninety-nine million. In the most recent year and our midpoint of our guidance being two thirty, which would imply about a fifteen percent growth on 2024. You know, I would say that the trough year as you kind of expressed it is over the shoulder, and our expectation is that we’re growing revenue from here both with the existing products indications, but obviously all the products and indications that we’re planning on bringing to the market in the short term and the long term.

Andrew Tsai: Okay. Thanks. And then last question is, for Hetlioz. If we stripped out the indications where generics you’re facing generics, you know, how much sales are you generating from the other formulations or indications where Hetlioz is not facing genericization? So I guess the liquid formulation and the EU component. How much are those sales currently? Thank you.

Kevin Moran: Yeah. So, Andrew, we haven’t gotten into a breakout by geography or by indication, so I can’t provide any further kind of color to that.

Mihael Polymeropoulos: Very good. Thank you.

Andrew Tsai: Thanks, Andrew.

Operator: There are no further questions at this time. I’ll turn the call back over to the team.

Mihael Polymeropoulos: Well, thank you very much for joining us on this call. We’ll see you on a future earnings call. Thank you.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect.