Good afternoon, and welcome to the Quarter One 2025 Vanda Pharmaceuticals Incorporated Earnings Conference Call. I am Franz, 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. I would now like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Thank you, Francis. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals' first quarter 2025 performance. Our first quarter 2025 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. Before we proceed, I would like to remind everyone that various statements that we make on this call 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. The 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.

Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's first quarter 2025 results. Vanda has entered a new growth phase with multiple commercialized products and a rich innovative pipeline. Fanapt's commercial growth has accelerated, reaching multi-year highs with weekly prescriptions surpassing 2,000 at the end of April, as an increasing number of prescribers are adding Fanapt to their therapeutic armamentarium. Our recent new drug application filings for Tradipitant and Bysanti are a testament to our productive research and development pipeline. The addition of Imsidolimab alongside PONVORY has established an anti-inflammatory front size that we believe has significant growth potential. These accomplishments have been possible because of our talented employees who for the first time surpassed 400 in number, a 22-year high. Some of the key operational highlights starting with commercial activities. On 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's indication in the third quarter of 2024. In the first quarter of 2025, as compared to the first quarter of 2024, total prescriptions increased by approximately 14% and Fanapt net product sales increased by 14%. Additionally, new patient starts, as reflected by new to brand prescriptions, increased by nearly threefold in the same period of time. Fanapt total prescriptions for the week of April 25 reached the milestone of 2,000, making Fanapt one of the fastest growing atypical antipsychotics. Vanda has also announced an expansion of its psychiatry sales force to approximately 300 representatives. On HETLIOZ, through the first quarter of 2025, it continues to retain the largest portion of market share, despite generic competition for over two years. On PONVORY, Vanda initiated a commercial launch for the treatment of relapsed forms of multiple sclerosis in the third quarter of 2024. In April 2025, new patient prescriptions reached a new record high since the initiation of Vanda's commercial launch. Vanda has reinforced the PONVORY sales leadership team and announced an expansion of its PONVORY sales force to approximately 40 representatives. I will turn to regulatory and clinical development highlights. Tradipitant's new drug application for motion sickness was accepted for filing by the U.S. Food and Drug Administration with a Prescription Drug User Fee Act target action date of December 30, 2025. Fanapt market authorization applications for Bipolar I disorder and schizophrenia were submitted to the European Medicine Agency in the fourth quarter of 2024. The HETLIOZ Market Authorization Application in Smith-Magenis was submitted to the EMA in Q4 of 2024. Bysanti's new drug application for Bipolar I disorder and schizophrenia was accepted for filing by the FDA with a PDUFA target action date of February 21, 2026. Imsidolimab's biologic license application for the treatment of generalized pustular psoriasis is expected to be submitted to the FDA in 2025. Some clinical highlights on Fanapt. First on schizophrenia, a Phase III program for the long-acting injectable formulation of Fanapt for the treatment of schizophrenia relapse prevention is ongoing. Hypertension, that's a program we first discussed in the prior quarter. Vanda has initiated a study for Fanapt long-acting injectable as a once-a-month injectable for uncontrolled hypertension and plans to begin enrolling patients soon. Bysanti, milsaperidone, the new drug application for Bysanti for the acute treatment of Bipolar I disorder and the treatment of schizophrenia was accepted for filing by the FDA with a PDUFA target action date of February 21, 2026. Exclusivity for Bysanti, including pending patent applications, could expand into the 2040s. Bysanti is a new chemical entity which was initially identified as an active metabolite of iloperidone. Vanda discovered that milsaperidone, when administered orally, quickly interconverts to iloperidone. In clinical studies, milsaperidone and iloperidone have been shown to be bioequivalent at both low and high doses, administered both in single and multiple dose studies. The results of these clinical studies will be presented in late May at the 2025 American Society of Clinical Psychopharmacology Annual Meeting in Scottsdale, Arizona. The Bysanti Phase III clinical study for its once-daily adjunctive treatment for major depressive disorder is ongoing, with results expected in 2026. HETLIOZ clinical programs in pediatric insomnia and delayed sleep phase disorders are ongoing. Vanda's marketing application authorization for HETLIOZ and HETLIOZ LQ for Smith-Magenis syndrome in Europe is expanding with the European Medicines Agency. An investigational new drug application for PONVORY has been submitted and accepted by the FDA in the fourth quarter of 2024 for the treatments of psoriasis and ulcerative colitis. Tradipitant for the treatment of motion sickness is currently under review, with the NDA accepted for filing by the FDA with the PDUFA target action date set for December 30, 2025. In the fourth quarter of 2024, Vanda initiated a clinical study to study Tradipitant in the prevention of vomiting induced by a GLP-1 analog. Results are expected in the third quarter of 2025. In February 2025, Vanda announced it entered into an exclusive global license agreement with Anaptys for the development and commercialization of Imsidolimab, an IL-36R antagonist monoclonal antibody. A BLA for generalized pustular psoriasis is expected to be submitted to the FDA in 2025. Some highlights of the early-stage programs include VQW-765, the alpha-7 nicotinic acetylcholine receptor partial agonist currently in clinical development for the treatment of acute performance anxiety in social situations. Vanda expects to initiate the Phase III program in 2025. The investigational new drug application for VCA-894A in the treatment of sarcoma-related disease, axonal type 2S and inherited peripheral neuropathy was accepted by the FDA in 2024. Previously in 2023, VCA-894A was granted orphan drug designation for the same indication. The Phase I clinical study for VCA-894A is expected to enroll patients by mid-2025. With that, I'll turn now to Kevin to discuss our financial results.

Thank you, Mihael. I will begin by summarizing our first quarter 2025 financial results. Total revenues for the first quarter of 2025 were $50 million, a 5% increase compared to $47.5 million for the first quarter of 2024. The increase, as compared to the first quarter of 2024, was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. Let me now break this down by product. Fanapt net product sales were $23.5 million for the first quarter of 2025, a 14% increase compared to $20.6 million in the first quarter of 2024. The increase in Fanapt revenue between the first quarter of 2025 and the first quarter of 2024 was primarily attributable to an increase in volume, which was driven by increased total prescriptions as reported by Acquia Exponent. Fanapt total prescriptions in the first quarter of 2025 increased by approximately 14% compared to the first quarter of 2024. And Fanapt's new patient starts in the first quarter of 2025, reflected by new to brand prescriptions, increased by nearly threefold compared to the first quarter of 2024. Turning now to HETLIOZ. HETLIOZ net product sales were $20.9 million for the first quarter of 2025, a 4% increase compared to $20.1 million in the first quarter of 2024. The increase in net product sales relative to the first quarter of 2024 was attributable to an increase in price net of deductions, partially offset by a decrease in volume. Of note, through the first quarter of 2025, HETLIOZ continues to retain the largest portion of market share despite generic competition for over two years now. HETLIOZ net product sales have been impacted by changes in inventory stocking at specialty pharmacy customers from period to period. 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 it may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ net product sales may decline in future periods potentially significantly related to continued generic competition in the U.S. Additionally, the company constrained HETLIOZ net product sales for the first quarter of 2025 and 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. Finally, turning to PONVORY. PONVORY net product sales were $5.6 million for the first quarter of 2025, a decrease of 18% compared to $6.8 million for the first quarter of 2024. The decrease in net product sales, as compared to the first quarter of 2024, was attributable to a decrease in volume. As a reminder, PONVORY net product sales for the three months ended December 31, 2024, included approximately $3 million of variable consideration that is subject to dispute, but that the company believes is not probable of significant revenue reversal. As a reminder, we completed the acquisition of the U.S. and Canadian rights to PONVORY in December of 2023 and initiated the commercial launch of PONVORY in the third quarter of 2024. As such, this represents the second full quarter of PONVORY revenue recognition since the initiation of commercial launch activities and significant progress in diversifying our product mix with innovative and value-generating products. For the first quarter of 2025, Vanda recorded a net loss of $29.5 million compared to a net loss of $4.1 million for the first quarter of 2024. The net loss in the first quarter of 2025 reflects expenses associated with the payment of $15 million related to the exclusive global license agreement with Anaptys for the development and commercialization of Imsidolimab and increased commercial activities associated with the launches of Fanapt and PONVORY. From an income tax perspective, the net loss for the first quarter of 2025 included an income tax benefit of $7.9 million, compared to an income tax benefit of $0.5 million for the first quarter of 2024. Of note on the tax side, the company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence. The company generated a pretax loss for the quarter ended March 31, 2025. If the company continues to generate pretax losses or if the company's projections indicate pretax loss in future periods, the conclusion about the appropriateness of the valuation allowance could change in the future. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change. Turning now to operating expenses. Operating expenses in the first quarter of 2025 were $91.1 million, compared to $56.7 million in the first quarter of 2024. The $34.4 million increase was primarily driven by higher R&D expenses associated with the payment of $15 million related to the exclusive global license agreement with Anaptys for Imsidolimab, higher SG&A expenses related to spending on Vanda's commercial products, and expenses associated with legal and other corporate activities. During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt in Bipolar I disorder and PONVORY in multiple sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. SG&A expenses may continue to increase in future periods as a result of the ongoing commercial efforts around Fanapt and PONVORY. Vanda's cash, cash equivalents, and marketable securities referred to as cash as of March 31, 2025, was $340.9 million, representing a decrease of $33.7 million compared to December 31, 2024. The decrease to cash reflects the payment of $15 million during the first quarter of 2025, related to the exclusive global license agreement with Anaptys for Imsidolimab. With regards to the launch of Fanapt and PONVORY, as I mentioned, these launches were initiated in 2024, and we expect to continue the build-out of our full commercial infrastructure with the impact of these efforts expected to contribute to revenue growth in 2025 and beyond. We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong market response to our commercial launch of Fanapt for Bipolar 1 disorder, including new patient starts as reflected by NBRx increasing by nearly threefold in the first quarter of 2025, compared to the first quarter of 2024. In the first quarter of 2025, compared to the first quarter of 2024, total prescriptions increased by approximately 14%. As Mihael mentioned, of particular note, for the week of April 25, 2025, Fanapt reached the milestone of 2,000 weekly TRxs, making Fanapt one of the fastest growing atypical antipsychotics in the market on a 13-week to 13-week basis. Our Fanapt sales force continues to expand. As of the end of the first quarter of 2024, our sales force numbered approximately 50 representatives. Currently, we have approximately 250 representatives and we have now initiated another phase of expansion, which is expected to grow our sales force to approximately 300 representatives by the middle of this year. These expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, face-to-face calls in April of 2025 were 43% higher than the monthly average of calls in the first quarter of 2025. Again, face-to-face calls in April 2025 were 73% higher than the monthly average of face-to-face calls in the fourth quarter of 2024, and face-to-face calls in April 2025 were more than 500% higher than the average in the first quarter of 2024. In addition to our Fanapt sales force, we have established a specialty sales force to market PONVORY to neurology prescribers around the country. We are currently in the process of growing that sales force to 40 representatives by the middle of this year and have recently reinforced the PONVORY sales leadership team. In April 2025, new patient prescriptions grew to a record high since the initiation of Vanda's commercial launch. We have now completed over 1,100 Fanapt prescriber awareness programs, and the number of programs completed in the first quarter of 2025 was 29% higher than in the fourth quarter of 2024. PONVORY prescriber awareness programs continue to expand, with 38% more programs completed in the first quarter of 2025 compared to the fourth quarter of 2024. Before turning to our guidance, I would remind folks that with Fanapt, HETLIOZ, and PONVORY already commercially available, the Tradipitant NDA for motion sickness accepted for filing by the FDA, the milsaperidone (Bysanti) NDA for Bipolar I disorder and schizophrenia accepted for filing by the FDA, and a BLA for Imsidolimab expected to be submitted later this year, Vanda could have six products commercially available by 2026. Turning now to our financial guidance, Vanda is reiterating its 2025 total revenue guidance and updating its 2025 financial guidance to include year-end 2025 cash. Vanda expects to achieve total revenues from Fanapt, HETLIOZ, and PONVORY of between $210 million and $250 million. Year-end 2025 cash is expected to be between $280 million and $320 million. This revenue range would imply revenue growth in 2025 of between 6% and 26%, compared to full year 2024 revenue. It is worth commenting that the quarterization of revenue in the remainder of 2025 will be impacted by several items, including the Medicare benefit redesign portion of the Inflation Reduction Act, which went into effect at the beginning of this year. 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 an industry-wide change that will have varying impacts on pharmaceutical companies. With Fanapt and PONVORY, both in the early stages of commercial launch, Fanapt for Bipolar I disorder and PONVORY for multiple sclerosis, revenue for the year is likely to be back weighted as these products continue to grow. Our expectation is that Fanapt will grow on a quarterly basis, with the trajectory accelerating as we move later into the year. This growth could potentially be offset by variability or a decline in HETLIOZ revenue. The year-end 2025 cash guidance reflects the impact of the conditional investments that Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and potentially outsized commercial investments, which could continue to increase depending on the success of these commercial strategies. From a quarterization perspective, the cash burn could be higher in earlier periods as we make these conditional investments that will result in increased revenue in future periods. 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 Bysanti and Fanapt LAI to market, and expand the Bysanti label to include major depressive disorder. With that, I'll now turn the call back to Mihael.

Thank you very much, Kevin. At this point, we will be happy to answer any questions you may have.

And your first question comes from Andrew Tsai from Jefferies.

Hey, thanks. Good afternoon. Thanks for taking my questions. I appreciate the updates. I wanted to stick on the theme of pipeline today. So, I noticed that the Phase III MDD data for milsaperidone or Bysanti could read out in 2026. So, I'm just curious what kind of placebo adjusted change on MADRS or HAMD would you want to see for a competitive profile?

Yes. Thank you, Andrew. We have not pre-specified a margin. Of course, there are a number of antidepressant drugs, and the variability on HAMD response or MADRS does not necessarily mean a drug is better than another, because there is a tremendous degree of variability in major depression studies. But the primary endpoint will be change from baseline as compared to placebo.

And secondly, you're starting a social anxiety study Phase III for 765. Any color around the study design and how you power that study? And when could we get data for that?

Yes. I'm not going to be able to answer this time the question about when to get data. This study is set to begin sometime later this year, likely in Q3. In terms of design, I would refer you to the design of the study that we've conducted before and it is soon to be published. The paper has been accepted. And it is a classic design that you may have seen with others who develop similar drugs using the Trier test in Trier-naive patients.

Great. And my last question is on Tradipitant for gastroparesis. It sounds like you do have correspondences with the FDA lately. What is your latest strategy and messaging around why this should be approved and when can we hear next steps? And then, lastly, in the best-case scenario, do you refile the drug for review again, or is the FDA going to make another PDUFA type decision later this year when you meet with them?

Yes. Thanks, Andrew. It is still the same review cycle that we received the complete response letter in September of last year. As specified within the statute, we were given the opportunity for a hearing. That process, unfortunately, is very complex because an opportunity hearing by the FDA does not mean you get a hearing. It means that the review division will propose to the commissioner whether to have a hearing or not. The commissioner will decide whether to have a hearing, and if yes, he will conduct it. This process is not commonly taken. In fact, to our knowledge, the FDA has held no hearings for a long period for the approval of new drugs. A new filing is not required. We have requested to begin this process. Hopefully, we will hear soon whether the review division will propose to the commissioner to have a hearing or not, and then the commissioner will take that advice and make a decision.

And your next question comes from Charles Duncan from Cantor Fitzgerald.

Okay. Thanks, Kevin or Mihael and team. Congrats on a nice Fanapt number. I had a couple of questions on that and then for the pipeline. With regard to Fanapt, I've actually noticed some direct-to-consumer a direct-to-consumer campaign while catching the Stanley Cup playoffs. And I'm wondering if you could give us a sense of, first of all, how long that will run and kind of how do you measure a return on the investment? Are you gaining traction with that, and is it primarily for bipolar or schizophrenia patients? I imagine the former.

Yes. Indeed, in the first quarter, we initiated a direct-to-consumer campaign that addresses bipolar disorder in one commercial and PONVORY in a second. We have also made a concerted effort to increase the awareness of the Vanda brand that helps a lot with recognition by prescribers, patients, and key opinion leaders. We've been receiving very good feedback, and it is validating what people in this field already know, that this is a promotionally sensitive market, especially bipolar disorder, and therefore, direct-to-consumer awareness campaigns are fruitful.

Yes. It would seem to be the case with the new to brand key performance metrics. So, congrats on that. Second question is on Bysanti and the upcoming ASCP presentation. I guess I'm wondering what would you focus attention on that? I don't believe we've seen any data yet on Bysanti or milsaperidone. So, what is it that you anticipate being able to take away from that presentation with regard to the call it bioequivalence?

Yes. As we described earlier, the discovery that Vanda made as we studied this active metabolite of iloperidone, milsaperidone. We realized that we know almost no other example of a drug that behaves like this. There is a quick interconversion in the body, so that milsaperidone is metabolized to iloperidone and vice versa. We tested this hypothesis and conducted two critical studies that are really the core of the submission of this new drug application. We have discussed this with the FDA, and these are the studies that will be published at the Scottsdale Conference. In these studies, you'll see two designs. One of them is a single acute dose crossover study, and the second one is multiple doses to steady state to the maximum dose and then a crossover study. With this, we complete the package that not only confirms that the two products are bioequivalent with each other at a low dose, but also confirms that at the high dose, they are bioequivalent as well, which indirectly suggests linearity.

Very helpful. Looking forward to that presentation. Last question is more strategy, and that is I'm intrigued with the EMEA filings for both Fanapt, as well as HETLIOZ. And I guess, I'm kind of wondering, how do you see the market opportunity in Europe for the antipsychotic market and the unmet need, and your ability to market the drug over there? Have you received the 120-day questions that would probably be right on the edge, but have those come in yet?

Yes, as you know with the timing, the 120-day questions have arrived, and we're just actively working through them right now. In terms of the expected response in Europe, the pricing and reimbursement in Europe is very tough for antipsychotics. However, there is a good appetite for long-acting injectables, but you can't get there without having first the approval in the indication with the oral formulation. So, we see this as a two-step process. I remind you that we have had a strong presence in Germany with our own marketing and sales force for the last 10 years for non-24 use. We have quite a good understanding of Germany's dynamics, although we interact with other countries as well, but Germany is the focus given its more favorable reimbursement environment.

And your next question comes from Raghuram Selvaraju from H.C. Wainwright.

Good afternoon. This is Dan on for Ram. Congrats on the earnings beat and thanks for taking our questions. So, what is likely to be the total market opportunity for Bysanti in major depressive disorder? And do you think it would compete directly against Tradipitant successfully? I'd like to ask a follow-up if I could.

Definitely, it is in the same space. The designs of this study and the CAPLYTA studies are very close to each other. It is about treatment-resistant depression and then adjunct treatment with Bysanti. I would point out that we're testing a once-a-day dosing, whereas, for bipolar and schizophrenia acute indications, we have used twice-a-day dosing. The population will be similar to that of CAPLYTA, and the once-a-day convenient dosing will be advantageous. We think there may be advantages to the Fanapt profile compared to CAPLYTA and other competitors, especially related to tolerability regarding Akathisia that you see with drugs like Bralor or peripheral neuropathy.

Thank you. And next, for the follow-up, when might the lipid ester formulations of the Bysanti go to the clinic as a long-acting injectable formulation?

Thanks. The first long-acting injectable, which is now initiating the Phase III study, is the Fanapt long-acting injectable. The milsaperidone (Bysanti) long-acting injectable is still in the formulation phase. As we noted in the prior release, the fact that Bysanti has a terminal hydroxyl group makes it amenable to the development of lipid esters. Various lengths of these lipid esters have translated to various lengths and duration of the drug in the blood, which could allow for doses once a month, maybe three months, and we've seen with other drugs six months.

There are no further questions at this time. I would now like to turn the call back over to Vanda Management for the closing remarks. Please go ahead.

Thank you all for joining us, and we'll see you at a future call.