Vanda Pharmaceuticals Inc. Q2 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the Vanda Pharmaceuticals Inc. Second quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. I would now like to hand the conference over to your speaker today, Kevin Moran, Vanda’s Chief Financial Officer. Please go ahead.

Thank you, Joel. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals second quarter 2021 performance. Our second quarter 2021 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.

Thank you very much, Kevin. Good afternoon, everyone and thank you for joining us. We're excited to share our second quarter 2021 performance and our upcoming clinical milestones. 2021 is supposed to be an exciting year for Vanda with several late-stage clinical programs that have the potential for significant short-term value creation as well as long-term advancement. In addition to our ongoing commercial launch of HETLIOZ for Smith-Magenis syndrome, we're looking forward to the completion of our Phase III gastroparesis study and reporting the top line results by the end of the year. On commercial performance, we see continued growth year-over-year. In the second quarter of 2021, total net product revenue for HETLIOZ and Fanapt was $67.9 million, a 9% increase compared to the second quarter of 2020. Net product revenue for HETLIOZ saw a 10% increase in the second quarter of 2021 compared to the second quarter of 2020 and net product revenue for Fanapt saw a 15% increase compared to the second quarter of 2020. HETLIOZ demand made by the prescriptions received continue to far exceed the scripts. We're keen to improve access to data; we've engaged with a number of payers to catch ways to improve access.

Thank you, Mihael. I'll begin by summarizing our financial results for the first six months of 2021 before turning to discuss the second quarter of 2021. Total revenues for the first six months of 2021 were $130.6 million, a 9% increase compared to $120.2 million for the same period in 2020. HETLIOZ net product sales of $83.9 million were the primary contributor and driver of our revenues for the first six months of 2021 and saw a 9% increase compared to the same period in 2020. Fanapt net product sales of $46.7 million for the first six months of 2021 reflect an 8% increase compared to the same period in 2020.

Thank you very much, Kevin. At this point, we'd be happy to answer any questions. And I understand my audio has not been good, but please listen in.

Our first question comes from Olivia Brayer with Bank of America. Your line is open.

Hi, guys. Congrats on the quarter and thanks for the questions. My first one is around payer positioning now that we're several quarters into the SMS launch. I know getting on formulary has obviously been a hurdle for HETLIOZ in non-24. But are you seeing a similar level of pushback in SMS? Or have there been any sort of advantages to being that second indication for HETLIOZ that could maybe help patients get faster access to therapy? And then I have one follow-up on Tradipitant.

Yes, Olivia, thank you very much for the question. And first of all, I will say that we are very focused on patient access. We care a lot that every patient that has been prescribed gets the chance to try HETLIOZ and continue. I will answer briefly and I will let Kevin elaborate a little bit. But first, HETLIOZ is on the formulary of, I would say, postural plans today, and that is for non-24. For SMS, it is a bit early, given the cycle of the evaluation inclusion and their utilization management criteria. But so far, I do not find any particular strong resistance by payers on covering patients with Smith-Magenis syndrome. However, we continue to see something we have reported in prior quarters, a significant resistance on non-24 where the demand is much higher, and we're talking about on-label indications. It could be various reasons, but the most common one is the misperception with payers that the indication does not necessarily include non-24. The FDA published a lengthy 14-page document last year signed by Dr. Woodcock, which clarifies and confirms that the indication for HETLIOZ is non-24 without any qualification. Having said that, we are engaged with payers to find ways to improve access. And I will ask Kevin if you have anything to add to that.

Yes, thanks, Mihael. Just to reiterate, we are very focused on improving patient access and reducing patient burden, looking for ways to collaborate with the payers to increase that patient access, and just highlighting that our prescription demand is far in excess of our prescriptions filled, which just means that this also represents an opportunity for patients to get access to the drug and for us to continue to look to grow the business.

Okay, great. Thanks, guys. And I know we're coming up on the gastroparesis data and filing for Tradipitant. But I do think there's a lot of interest around the extended access program and how much of that patient data will eventually be looked at by the FDA. So I guess the question is, how much of that EAP data could feasibly be included in the initial filing? And is there a certain minimum length of time on therapy to make the cut for that initial portion of the submission? And then maybe just as a quick follow-up on that, whether there are other opportunities through the review process in which you could add more safety data from that expanded access program as more patients take part in the program?

Yes, very nicely. First of all, we're dealing with the interest of patients who are concluding the three-month treatment either in the double-blind randomized pool of this study or the open-label, and their interest to continue on the drugs. In their words, any of these patients, they're describing the experience as life-altering. Now, in terms of numbers, we have at least a dozen patients that have fully applied for the expanded access program. The majority of them have been already reviewed by the FDA and approved. The initial approval for each one of these patients is a period of six months, and several patients are coming up to the six-month mark, including patients that have been approved. Beyond that, to extend up to two years. I believe our study will be complete in 12 months in seeking extension beyond the 12 months very shortly. In terms of the NDA applications, we're collecting the data and we will be submitting all this data to the application. So that would mean that at least for several of the patients, by the submission, we will have 12 months of safety data. Certainly, there is an opportunity within the middle of the NDA review to submit updated safety data. We expect all the patients that allow the expanded access program and others that may come will continue to produce safety data, which actually will bolster the safety that they submitted to the agency.

Okay, great. Thank you very much.

Thanks.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Vanda management for closing remarks.

Yes, thank you very much. Thank you all for joining us, and we look forward to talking to you about our progress in future calls. Thank you.

Okay. This concludes today's conference call. Thank you for participating. You may now disconnect.