Hello, everyone, and welcome to this latest in a series of fireside chats here at the H.C. Wainwright 4th Annual BioConnect Investor Conference. For those who don't know me, I'm Ram Salvaraju. I'm a managing director and senior health care equity research analyst in Wainwright's equity research department. I am joined by the next company, Vanda Pharmaceuticals, which is traded on the NASDAQ under the ticker symbol VNDA. And we cover Vanda with a buy rating and 12-month price target of $21 a share. I'm joined here on stage by Kevin Moran, Vanda's chief financial officer. Kevin, it's a pleasure to have you with us.

Thanks so much for having us, Ron.

So for those folks who don't know, Vanda is obviously a storied company in the biopharmaceutical industry, one of several that has fought bruising battles with the FDA and lived to tell the tale, but also very much a diversified commercial stage entity with significant footprints in in neuropsychiatry, various chronic inflammatory and autoimmune diseases, not to mention, of course, areas like sleep disorders. And now, of course, branching out into gastroenterology with the recent approval of Neureus for motion sickness and a very interesting trial that we're gonna talk about at some length that is focusing on characterizing tradipotent, neurokinin-1 receptor antagonist, in addressing and modulating the side effects associated with glucagon-like peptide-1 receptor agonist drugs, GLP-1-RAs, which, of course, as everyone knows, are mainstays of weight loss therapy in this and many other countries. So, Kevin, perhaps you could talk through how Vanda is positioned commercially today in terms of the breadth and the depth of the marketed product portfolio, the diversification across therapeutic areas, and the revenue base that this currently represents and what your expectations are for it in the near future.

Yep, great, thanks, Rahm. And again, thanks, Rahm, and thanks to the entire HCW team for having us here. Very excited to be here and speak with you guys. Just to table set a bit here, for 2025, we had three products in market. So we had FNAPT, which is an atypical antipsychotic, approved for both bipolar and schizophrenia. We had Hetlios, which is approved for two orphan indications here in the US, non-24-hour sleep-wake disorder, or non-24, and nighttime sleep disturbances and Smith-McGinnis syndrome, and then PONVORI, which is approved for multiple sclerosis. Those three products generated, you know, a little more than $200 million in revenue last year, and our guidance initially for those products for this year was 230 to 260 million, so representing some nice growth on a year-over-year basis, most of it driven by the expected FNAF revenue growth that we've seen as a result of our expansion into bipolar disorder. As we've turned towards 2026, we've also had two recent drugs approved. Nereus, which Ron mentioned was approved at the end of last year for motion sickness. And then Basanti, which is also approved for bipolar and schizophrenia, and is actually the active metabolite of FNAPT that we expect to launch later this year. As a result of the introduction of Nereus guidance for the year, we've increased our revenue range to be 240 to 290 million for the year. and that does not include a contribution from Basanti that we expect to again launch later this year. Characterizing those a bit further, you know, FINAPT obviously has represented the most significant growth asset for us over the last few years. And with the approval of Basanti, we expect that psychiatry franchise to continue to be the largest contributor of our revenue growth for the next few years. A couple things to point out there is when we launch Basanti later this year, there's going to be at least a two-prong approach to our commercial strategy there, which is launching Basanti as both a novel, atypical antipsychotic first-line treatment in the space, but also executing a switch strategy where we look to migrate patients that are currently on FNAPT over to Basanti. And then one other key element of that is, that I've spoken at some length on is, our gross-to-net dynamics on FNAPT, given that it's been in the market for quite some time, are that we see a gross-to-net percentage in the neighborhood of 50%, And that's primarily driven by Medicaid URAs, Medicaid rebates that are due just given the length of time the drug has been on the market and the pricing dynamics there. With Basanti's launch, we'll get a reset on those Medicaid dynamics. And as a result of that, we expect our gross to net percentage on Basanti to be more in the mid 30% range. So a very significant improvement on pricing dynamics. And then the last piece that I would highlight there is with our nearest approval and now launch, we've introduced revenue on the nearest side, a guidance of 10 to 30 million for the year. And the reason for the, I would say the broadness of that range is obviously we just launched, don't have a great deal of actual data to base that on. And as we begin to see data come in, we'll be able to refine those estimates as we move forward. But we think there's a very significant revenue opportunity for nearest on the motion sickness side, not even getting to the readout later this year on nausea and vomiting and GLP-1, where there's 70 million people in the US impacted by motion sickness, more than 10 million seeking treatment, and Dramamine, which is kind of the most commonly used drug in that class, three million doses on a monthly basis. So if we're able to make even a small dent in the market size there, where the nearest motion sickness opportunity could be very substantial. And then lastly, on the nearest side, we've recently announced our pricing, our WAC price on that is $255 per dose for the 85-MIG dose, but available cash pay for patients that wanna pay out of pocket at $85 a dose. And so the approach there is largely gonna be a direct-to-consumer-driven approach where we're running advertising, bringing patients to treatment, and having them pay cash pay out of pocket to obtain the drug.

Let's hope the cruise ship industry recovers pretty soon from this hunt, I think. But, you know, with respect to neuropsych, I think it's important for folks to take account of the fact that this has been one of the most in vogue disease areas, both from an investment perspective as well as an M&A standpoint. I'd be remiss if I didn't point out several recent high-profile transactions, including the acquisition of Cerevel by AbbVie for $8.7 billion, the acquisition of Karuna by Bristol-Myers Squibb for $14.1 billion. And of course, most recently, only last year, the acquisition of intracellular therapies, a commercial stage neuropsychosocial company by J&J for $14.6 billion. So clearly, you folks are targeting your efforts in the right place with all of this concentration in neuropsych.

Now, you've covered a great deal of ground already, Kevin, but I wanted to see if you wouldn't mind drilling down a little bit further into FNAPT, particularly as this pertains to prescription volumes numbers of unique and repeat prescribers and some of the key drivers of demand kinetics for this product yeah absolutely so what we see on that side on the FNAP business is there's about 10,000 TRX is per month on FNAP just give some sense of context from a year-over-year basis we've seen prescription growth in the last year in the mid 20s to mid 30s on a quarterly basis and what we've guided to this year would be again the the midpoint range of range would be 160 million what that implies is that we see sequential quarterly growth in the low to mid teens which is generally consistent with what we saw from a sequential quarterly growth in the last year so basically if we kind of keep doing what we're doing we should be able to to see that growth um in 2026. um as we you know the other uh kind of metric that i highlight there is we've seen a dramatic increase in nbrx's over the same period of time these are new to brand and prescription, so new FNAP patient starts. And that increase has been in the range of, I believe it was 78% Q1 to Q1 in our most recently reported data, and for Q4 to Q4, it was over 100% increase. So very significant increase in the MBRX business being generated. And again, as we touch on the potential transition to Basanti, we'd expect to see the continued growth from an overall business of volume in the psychiatry portfolio. But the other things that are very exciting about the potential growth of Bisanti beyond 2026 are again, the net pricing dynamics. So when we look at our revenue growth for 2027, if we assumed it was just FNAPT and we saw growth at a similar trajectory to what we're expecting to see in 2026, that would put us in the 200 million or so revenue range. But if you were to pick up all of that volume and convert it to Basanti volume, just given the net pricing assumptions that we talked about, that number would be in the high 200 millions, closing it on 300 million, just if you're able to execute a switch. Obviously the switch we'd expect would not happen instantaneously at the end of the year, more over a period of time, but obviously that just shows you how large of an impact the net pricing dynamic could have. And then to further layer on top of that is in the first quarter of next year, we're expecting our phase three readout of Basanti and MDD, and MDD is the largest kind of TAM in terms of market sizes that we're pursuing. The schizophrenia market is estimated to be in the three million patients in the US, the bipolar market maybe twice to slightly larger than that, and the MDD market in the 20 million or so patient range. So obviously the much larger patient population, also much more accessible from a marketing perspective in terms of the receptivity to DTC and other, you know, marketing campaigns. So, you know, very excited about the prospects for FNAPT this year, continuation of the TRX trends that we've seen, NBRX trends that we've seen, and then kind of segueing into, you know, very excited for the longer-term horizon with Basanti, continuation of those trends, pricing favorability, potential for the label expansion, and then also from a runway perspective, whereas FNAPT has an LOE expected at the end of 27, you know, Basanti has its latest expiring an orange book listed patent at 2044. So obviously we're hopeful we'll be working at Basanti for a very long time to continue to grow the revenue and the existing indications and potentially an MDD if we're able to have good data there.

So in particular, just before we leave the neuropsych aspect because clearly there are a lot of other points about the company that we wanna discuss today. Maybe you can just elaborate for us on the timeline for the development of the iloperidone long acting injectable and maybe talk through a little bit at why that is likely to be such a value add if you can complete it successfully, simply because the LAI segment is the fastest growing in neuropsych overall, when you look at the atypical antipsychotic class, and also because it's probably the highest value, and clearly has receptivity among prescribers. And the second aspect, you mentioned this a few times already, the applicability of Bisanti in MDD, when do you anticipate having that data and ultimately potentially getting that label expansion?

Yeah, so starting first with the LAI, so as Ram mentioned there, we're in the process of running a phase three study for the FNAP long-acting injectable in schizophrenia. Recruitment is underway. We haven't provided a timeline for yet when we expect clinical trial results there, but it is something that we continue to work through and continue to focus on. We have had some issues with our recruitment in the European market, which has led to some of the the inability to provide a firm timeline on when we expect clinical trial results there. But assuming we're able to bring that product to positive clinical trial results and successful regulatory outcome, as Ron mentioned, the market opportunity there is very large. The current treatment options that are available in the LAI space are all some variation of Risperidol. And whereas in the tablet portion of the market, there's a number of options available for patients currently in the LAI space, there's a much more limited set of options available. And so bringing a novel long-acting injectable treatment to the market, we think could present for a very significant revenue opportunity for the company and to be very differentiated from what else is available for patients in that space. The other thing, just to touch on the LAI side, that's a bit of a point of interest is, there's the possibility that we develop a long-acting injectable formulation of Basanti as well at some point in the future. And certain of the properties of Basanti could lend itself to a less frequent, in a longer duration treatment option, instead of it being once a month or once every six weeks, it could be once every two months or once every three months or something to that effect. So that's something that we also remain focused on and hope to continue to develop as we move forward. On the MDD side, so again, as I mentioned, we've got phase three results that are expected in the first quarter of 2027. We, when we developed FNAPT for bipolar disorder, we only ran one phase three trial, which at the time we received kind of a lot of questions about whether we thought that was gonna be sufficient to support approval, and it ultimately was, and obviously there's been some more recent developments on the FDA's receptivity to single phase three trial programs. And so we're hopeful that with positive results in our MDD phase three study reading out next year, that could be something where we're looking to submit an SNDA sometime later in the year next year and potentially have that label expansion on the market it, you know, as early as 2028. And again, given that we're, you know, hopeful that the Basanti runway here is gonna extend far into the, you know, into the 2044 timeframe, potentially as late as, we'll have a long time to be working on the commercialization, not just in the currently approved schizophrenia and bipolar indications, but again, you know, qualifying this with successful phase three results and regulatory approval, you know, a long time to fully maximize the value of the MDD market for Basanti as well.

And, you know, this is something that was obviously successfully done, at least in part with Kaplida, Lumetaparone being focused on both schizophrenia and depression. So clearly there's some precedent there. I wanted to touch upon very briefly Tazimelteon, because obviously this is a legacy product. There are multiple generics of it on the market, but I think this is perhaps an underrated potential contributor to the revenue base still. But maybe just talk us through what your expectations are for branded Tazimelteon sales, the degree of contribution to the overall revenue base that you anticipate in 2026 and how that could ultimately evolve over the course of the next two to three years.

Yep. And the reminder here is that, uh, Hetlios, um, we, uh, had an unfavorable ruling in the Delaware district court at the end of 2022, uh, that allowed three generics to enter the market, uh, you know, as early as the beginning of 2023. So we're now, you know, three years on to generic competition in the market our revenue prior to that that court decision was in the neighborhood of 170 million annualized and last year we came in just over 70 million for revenue for 2025 and although obviously that's a you know significant decrease from the 170 it's actually incredibly durable revenue for three years post loss of exclusivity uh product and that's attributable to you know patient loyalty and that we'd established you know in the 10 years of uh of commercialization efforts that we we'd done you know prior to the LOE what we've seen over the last few years is really you know generally pretty consistent patient volume aside from you tend to see a little bit of a drop in the first quarter consistent with insurance disruptions that you expect to see across industry a small recovery and then kind of a flattening that leads to a you know again a small amount of erosion from a year-over-year basis and that's what I'd continue to expect in 2026 and and potentially beyond obviously the market conditions could change in the future but that's what we've been able to to you know execute on these last few years and it's such that hetlios still remains uh the the largest product in the market from uh you know hetlios slash tazimeltian perspective um when we look at our revenue guidance for the year there's a revenue contribution from what we've characterized as other products which in this case means uh hetlios and pomvori of 80 to 90. the pomvori trajectory last year was just below 30 million um and so you know what kind of underlies that 80 to 90 million is you know modest growth on the ponvori side and kind of continued durability you know on the hetlio side um again that we expect to see you know absent a change in market conditions hopefully for for several more years to come and then the last piece that i would say to that is um as ram as you know uh we have by no means kind of surrendered on the hetlio's front and this is both in the oral formulation where we have active litigation on the patent side that we are hopeful could lead to a successful outcome and potentially resumption of certain commercial activities on the oral capsule front. But we also have the Hetlios liquid formulation, which is not subject to these generic challengers. It is the only product in the market. And we're currently running a program for Hetlios LQ in pediatric insomnia where there's currently no approved products available, and that's a very significant challenge facing, you know, obviously the children that suffer from it and their parents. And so we continue to pursue making Helios available to all patients who could benefit from it, you know, and are active in that on many fronts.

And now turning to Tredipotent, clearly you talked already about Nereus, which is the brand name for Tredipotent. That's the marketed indication in motion sickness, you know, which you're in the process of launching, but clearly Tredipotant has multiple other applications within gastroenterology. So perhaps you could talk first about the potential opportunity in gastroparesis and where that stands right now, because clearly you've locked horns with the FDA a few times on that one. And then also turn attention to the THETIS trial, which is, as I said at the beginning, the study that is assessing Tredipotant in combination with GLP-1-RAs with the aim of attenuating the nausea and vomiting GI side effects of those medications, which could have very significant implications because that's a $100 billion a year plus market. And also those medications are well known to have these kinds of side effects, which adversely impact patient compliance, patient adherence, and perhaps most importantly, efficacy.

Yep, absolutely. So first beginning with the gastroparesis side. So as kind of a reminder here, there's one drug approved for gastroparesis in the U.S. that's brand name Reglan or Metaclopramide, approved over 40 years ago. Comes with a black box warning for tardive dyskinesia, and it does in the neighborhood of 250,000 to 300,000 prescriptions on a monthly basis in the U.S., so very significant demand for that product. In the U.S., it's estimated that there's about 6 million people who suffer from gastroparesis, about 600,000 of whom have been diagnosed with gastroparesis. And then again, about 300,000, 250 to 300,000 people being treated with metoclopramide, presumably many or most of them for gastroparesis, right? So very significant market opportunity and very underserved patient population, given that's the only product available for those patients. As far as our development program goes, we had a positive phase two study that was followed up by a phase three study where we did not meet on the primary endpoint. But when looking at a number of confounders, accounting for those, the study was positive once you accounted for those. And then when we did a pooled analysis of our phase two and phase three study results, that also showed statistical significance. We submitted our application to the FDA and it was rejected in September of 2024. Separately from that, we've been in litigation with the FDA around the requirement for the agency to hold a hearing for non-approved products where there's a dispute of fact. And the courts have found in our favor recently on that issue and have rendered a decision such that the FDA is required to hold a hearing on the approvability of Hetlios for jet lag. Why that's relevant to this conversation is that Tredipotent for gastroparesis is likely on a similar path where we'll be looking to bring Tredipotent to a hearing with the agency on the approvability given the very substantial data set that we've prepared for an indication where there's very few treatment options available for patients. And Nereus has been shown to be effective and safe and approvable for the indication of motion sickness. So very excited to continue to bring that forward. Again, I think it's a great product that, you know, would love to have be available for those patients for gastroparesis if we're able to navigate kind of the regulatory legal, you know, framework that we're currently working through. On the GLP-1 side, so in November of last year, we had positive study results on a phase two program for vomiting in GLP-1, WGOVY specifically. and the study design was a two-week study design where patients took either placebo or tradipodent for a week prior to being treated with one milligram of Wagovi and then for another week after receiving the treatment and we measured a number of data points, including vomiting. The data set showed that patients that were on placebo had vomiting rates in the neighborhood of 60% where patients on Nereus had vomiting rates in the neighborhood of 30%. So obviously a very significant effect size in reducing vomiting for those patients. And we measured a number of other effects that also showed benefit for those patients. With those results in hand, we've very quickly moved forward with our phase three program, which we initiated earlier this year. We're actively recruiting and we've communicated that we expect results on that program by the end of this year. You know, once we have those results in hands, in hand, we'll certainly evaluate next steps on how to continue to bring this program forward. But as Rahm mentioned, you know, we think this obviously represents a very significant market opportunity. Just kind of any way you cut it, given the number of patients that are taking GOP-1s in the U.S. and around the world, the very significant incidence of vomiting and nauseating in those patients, the discontinuation rates that are seen because of those vomiting and nausea side effect incidents, and the potential that this product could both, you know, provide for better compliance for patients by reducing those symptoms, also potentially expedite the time to therapeutic treatment, given that we had patients in the trial on one milligram of Wagovi at week zero instead of titrating up to that dose over potentially nine weeks.

So just to note for those in the audience who are interested, our price target, our valuation assessment does not include any value for tradipotent outside the motion sickness indication, which as you said, is already approved, you're already marketing it. In addition, I would venture to say, it probably would be remiss of me not to note this fact, the origin of Tredipotent is pretty interesting. It was originally designed by Eli Lilly. Make of that what you will. I would like to turn to another aspect of the portfolio, which is coming up on a Pidufidate, which is Imsidolimab for generalized pustular psoriasis. Maybe walk us through why you folks felt that was such a compelling and interesting rare disease opportunity within INI and also tell us where you got the drug from and how it's differentiated from whatever else is currently out there which isn't much for GPP.

Yep absolutely so the background on that is that at the beginning of 2025 we in licensed imstidolamab from Anaptis who had brought the program through two phase three trials in generalized plustural psoriasis and had positive data in those in those trials. we then have moved forward with submitting our BLA which was accepted for the FDA by the FDA earlier this year and we were given a PDUFA data of December 12th so if we're able to receive an approval on that in December you know the hope would be that we'd be launching this product sometime in the early part first half of 2027 currently there is one product approved in this indication which is the Vigo which is a great product but we do think that Imsa dolomab has some differentiators that could potentially make it a preferred treatment option in the space, namely that in about a third of the cases of Spivigo, patients require a second dose in the acute setting, whereas we wouldn't expect that in the imsidolamab treatment option, so obviously if presenting and given the option of taking a drug one time versus potentially having to come back and take it twice, obviously prefer to just take it once. And the number of patients that are impacted by this, there's varying estimates in the you know low thousands up to as many as maybe 25 or 30 000 in the u.s um so clearly an orphan indication and one space that we've been very successful in the past so the reminder on hetlios there um is that you know it's an orphan indication for non-24-hour sleep-wake disorder also approved an orphan indication nighttime sleep disturbances and smith-mcginnis syndrome and we were incredibly successful in commercializing uh hetlios in that space um and obviously imcidolamab would be a very you know different product different setting But we think that our expertise, you know, in developing and commercializing orphan assets lends itself very well to a successful, you know, hopefully regulatory decision later this year and then commercial strategy for the years to come.

So just before we close, I wanted to see if you could offer our audience some perspectives on future strategic directions for Vanda, also the timeline to potential return to sustainable profitability, and any other closing comments you might have.

Yeah, so I would say as we look towards, you know, the guidance that we've provided this year has been limited to revenue guidance. We haven't guided to cash or OPEX for this year other than that I did mention in our prepared remarks that last year we burned about 110 million of cash. And that the expectations that we will likely burn more than that in the current year. And that's given, you know, the two commercial launches, potentially three, that are underway with Nereus in motion sickness, Basanti in bipolar and schizophrenia, and potentially msidolomob in GPP, as well as phase three readouts in Basanti and MDD, Nereus in GLP-1, another program that we didn't get a chance to talk about, VQW 765 and social performance anxiety. And so we've got, you know, tremendous success, which has led to tremendous investments that we want to make sure we properly fund. And so we're, in the near term, certainly very focused on making sure that we don't underfund any of these commercial assets, and that we don't underfund any of the potential R&D opportunities. So, yeah, so, you know, again, that's, these successes have led to us making sure that we're properly investing in the future success of, you know, these programs. And then the last thing I would just add, kind of in closing, is, you know, it's been a tremendous last six months. You know, again, we've gone from three products approved to now five, which for a company of our size size I think is you know relatively unheard of and with the possibility of a six on the horizon and so just incredibly excited for what you know I would say Basanti potentially brings in the future as kind of a foundational core revenue growth asset moving forward and then nearest you know again emotion sickness where we think that there's a very significant revenue possibility but also some potentially outsized upside with the you know potential you know progress on gastroparesis as well as the nausea and vomiting in GLP-1 so I think we're gonna have to leave it there Kevin I don't know how you managed to take a breath between sentences there's been a lot to cover but hopefully this has left

our audience with the distinct impression that this is a company with a lot of untapped horsepower under the hood a lot of upcoming interesting value inflection points and clearly the key aspect diversification and strength in commercial so Kevin thank you so much for being with us today and thank you to our audience for their attention thanks again