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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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03-0491827
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Trading Symbol
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Name of Exchange on Which Registered
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Common Stock, par value $0.001 per share
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VNDA
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The Nasdaq Global Market
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Large accelerated filer
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x
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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ITEM 1
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ITEM 2
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ITEM 3
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ITEM 4
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ITEM 1
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ITEM 1A
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ITEM 2
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ITEM 3
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ITEM 4
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ITEM 5
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ITEM 6
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•
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the ability of Vanda Pharmaceuticals Inc. (we, our, the Company or Vanda) to continue to commercialize HETLIOZ® (tasimelteon) for the treatment of Non-24-hour Sleep-Wake Disorder (Non-24) in the United States (U.S.) and Europe;
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•
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our ability to increase market awareness of Non-24 and the market acceptance of HETLIOZ®;
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•
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our ability to continue to generate U.S. sales of Fanapt® (iloperidone) for the treatment of schizophrenia;
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•
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the impact of the novel coronavirus (COVID-19) on our business and operations, including our revenues, our supply chain, our commercial activities, our ongoing and planned clinical trials and our regulatory activities;
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•
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our dependence on third-party manufacturers to manufacture HETLIOZ® and Fanapt® in sufficient quantities and quality;
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•
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our level of success in commercializing HETLIOZ® and Fanapt® in new markets;
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•
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our ability to reach agreement with the U.S. Food and Drug Administration (FDA) regarding our regulatory approval strategy, preclinical animal testing requirements or proposed path to approval for tradipitant;
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•
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our ability to prepare, file, prosecute, defend and enforce any patent claims and other intellectual property rights;
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•
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our ability to maintain rights to develop and commercialize our products under our license agreements;
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•
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our ability to obtain approval from the FDA for HETLIOZ® for the treatment of jet lag disorder;
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•
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the ability to obtain and maintain regulatory approval of our products, and the labeling for any approved products;
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•
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our expectations regarding the timing and success of preclinical studies and clinical trials;
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•
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the ability of our products to be demonstrably safe and effective;
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•
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limitations on our ability to utilize some or all of our prior net operating losses and orphan drug and research and development credits;
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•
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the size and growth of the potential markets for our products and the ability to serve those markets;
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•
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our expectations regarding trends with respect to our revenues, costs, expenses, liabilities and cash, cash equivalents and marketable securities;
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•
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the scope, progress, expansion and costs of developing and commercializing our products;
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•
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our ability to identify or obtain rights to new products;
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•
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our ability to attract and retain key scientific or management personnel;
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•
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the cost and effects of litigation;
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•
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our ability to obtain the capital necessary to fund our research and development or commercial activities;
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•
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regulatory developments in the United States (U.S.), Europe and other jurisdictions;
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•
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potential losses incurred from product liability claims made against us; and
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•
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the use of our existing cash, cash equivalents and marketable securities.
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ITEM 1
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Financial Statements (Unaudited)
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(in thousands, except for share and per share amounts)
|
March 31,
2020 |
|
December 31,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
64,950
|
|
|
$
|
45,072
|
|
Marketable securities
|
247,376
|
|
|
267,057
|
|
||
Accounts receivable, net
|
29,272
|
|
|
26,367
|
|
||
Inventory
|
1,320
|
|
|
1,140
|
|
||
Prepaid expenses and other current assets
|
17,828
|
|
|
14,500
|
|
||
Total current assets
|
360,746
|
|
|
354,136
|
|
||
Property and equipment, net
|
3,877
|
|
|
3,864
|
|
||
Operating lease right-of-use assets
|
10,875
|
|
|
11,180
|
|
||
Intangible assets, net
|
22,667
|
|
|
23,037
|
|
||
Deferred tax assets
|
86,641
|
|
|
87,680
|
|
||
Non-current inventory and other
|
3,719
|
|
|
3,851
|
|
||
Total assets
|
$
|
488,525
|
|
|
$
|
483,748
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
26,045
|
|
|
$
|
27,590
|
|
Product revenue allowances
|
33,177
|
|
|
31,915
|
|
||
Total current liabilities
|
59,222
|
|
|
59,505
|
|
||
Operating lease non-current liabilities
|
12,139
|
|
|
12,455
|
|
||
Other non-current liabilities
|
778
|
|
|
843
|
|
||
Total liabilities
|
72,139
|
|
|
72,803
|
|
||
Commitments and contingencies (Notes 8 and 13)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding at March 31, 2020 and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 150,000,000 shares authorized; 54,132,336 and 53,549,612 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
|
54
|
|
|
54
|
|
||
Additional paid-in capital
|
635,730
|
|
|
631,307
|
|
||
Accumulated other comprehensive income
|
781
|
|
|
249
|
|
||
Accumulated deficit
|
(220,179
|
)
|
|
(220,665
|
)
|
||
Total stockholders’ equity
|
416,386
|
|
|
410,945
|
|
||
Total liabilities and stockholders’ equity
|
$
|
488,525
|
|
|
$
|
483,748
|
|
|
Three Months Ended
|
||||||
(in thousands, except for share and per share amounts)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Revenues:
|
|
|
|
||||
Net product sales
|
$
|
58,000
|
|
|
$
|
47,713
|
|
Total revenues
|
58,000
|
|
|
47,713
|
|
||
Operating expenses:
|
|
|
|
||||
Cost of goods sold excluding amortization
|
5,207
|
|
|
5,113
|
|
||
Research and development
|
15,527
|
|
|
13,278
|
|
||
Selling, general and administrative
|
37,021
|
|
|
31,029
|
|
||
Intangible asset amortization
|
370
|
|
|
380
|
|
||
Total operating expenses
|
58,125
|
|
|
49,800
|
|
||
Loss from operations
|
(125
|
)
|
|
(2,087
|
)
|
||
Other income
|
1,366
|
|
|
1,485
|
|
||
Income (loss) before income taxes
|
1,241
|
|
|
(602
|
)
|
||
Provision for income taxes
|
755
|
|
|
10
|
|
||
Net income (loss)
|
$
|
486
|
|
|
$
|
(612
|
)
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
53,806,317
|
|
|
52,752,774
|
|
||
Diluted
|
54,870,146
|
|
|
52,752,774
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Net income (loss)
|
$
|
486
|
|
|
$
|
(612
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Net foreign currency translation loss
|
(13
|
)
|
|
(4
|
)
|
||
Change in net unrealized gain on marketable securities
|
705
|
|
|
138
|
|
||
Tax provision on other comprehensive income (loss)
|
(160
|
)
|
|
—
|
|
||
Other comprehensive income, net of tax
|
532
|
|
|
134
|
|
||
Comprehensive income (loss)
|
$
|
1,018
|
|
|
$
|
(478
|
)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Other
Comprehensive
Income
|
|
Accumulated
Deficit |
|
Total
|
|||||||||||||
(in thousands, except for share amounts)
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balances at December 31, 2019
|
53,549,612
|
|
|
$
|
54
|
|
|
$
|
631,307
|
|
|
$
|
249
|
|
|
$
|
(220,665
|
)
|
|
$
|
410,945
|
|
Issuance of common stock from the exercise of stock options and settlement of restricted stock units
|
582,724
|
|
|
—
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
479
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
3,944
|
|
|
—
|
|
|
—
|
|
|
3,944
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
486
|
|
|
486
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
532
|
|
|
—
|
|
|
532
|
|
|||||
Balances at March 31, 2020
|
54,132,336
|
|
|
54
|
|
|
635,730
|
|
|
781
|
|
|
(220,179
|
)
|
|
416,386
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Other
Comprehensive Income |
|
Accumulated
Deficit |
|
Total
|
|||||||||||||
(in thousands, except for share amounts)
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balances at December 31, 2018
|
52,477,593
|
|
|
$
|
52
|
|
|
$
|
611,587
|
|
|
$
|
1
|
|
|
$
|
(336,218
|
)
|
|
$
|
275,422
|
|
Issuance of common stock from the exercise of stock options and settlement of restricted stock units
|
485,083
|
|
|
1
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
3,282
|
|
|
—
|
|
|
—
|
|
|
3,282
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(612
|
)
|
|
(612
|
)
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|
—
|
|
|
134
|
|
|||||
Balances at March 31, 2019
|
52,962,676
|
|
|
53
|
|
|
615,047
|
|
|
135
|
|
|
(336,830
|
)
|
|
278,405
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
486
|
|
|
$
|
(612
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation of property and equipment
|
351
|
|
|
332
|
|
||
Stock-based compensation
|
3,944
|
|
|
3,282
|
|
||
Amortization of discounts and premiums on marketable securities
|
(287
|
)
|
|
(906
|
)
|
||
Intangible asset amortization
|
370
|
|
|
380
|
|
||
Deferred income taxes
|
879
|
|
|
—
|
|
||
Other non-cash adjustments, net
|
314
|
|
|
317
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(2,905
|
)
|
|
2,434
|
|
||
Prepaid expenses and other assets
|
(3,524
|
)
|
|
247
|
|
||
Inventory
|
76
|
|
|
(44
|
)
|
||
Accounts payable and other liabilities
|
(1,795
|
)
|
|
3,507
|
|
||
Product revenue allowances
|
1,184
|
|
|
706
|
|
||
Net cash provided by (used in) operating activities
|
(907
|
)
|
|
9,643
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(373
|
)
|
|
(393
|
)
|
||
Purchases of marketable securities
|
(41,400
|
)
|
|
(100,803
|
)
|
||
Maturities of marketable securities
|
62,073
|
|
|
64,745
|
|
||
Net cash provided by (used in) investing activities
|
20,300
|
|
|
(36,451
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from the exercise of stock options
|
479
|
|
|
179
|
|
||
Net cash provided by financing activities
|
479
|
|
|
179
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
5
|
|
|
2
|
|
||
Net change in cash, cash equivalents and restricted cash
|
19,877
|
|
|
(26,627
|
)
|
||
Cash, cash equivalents and restricted cash
|
|
|
|
||||
Beginning of period
|
45,650
|
|
|
61,749
|
|
||
End of period
|
$
|
65,527
|
|
|
$
|
35,122
|
|
•
|
HETLIOZ® (tasimelteon) for the treatment of jet lag disorder (JLD), Smith-Magenis Syndrome (SMS), pediatric Non-24 and delayed sleep phase disorder (DSPD);
|
•
|
Fanapt® (iloperidone) for the treatment of bipolar disorder and a long acting injectable (LAI) formulation program for the treatment of schizophrenia;
|
•
|
Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, for the treatment of atopic dermatitis, gastroparesis, motion sickness and COVID-19 Acute Respiratory Distress Syndrome (ARDS);
|
•
|
VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and with potential use as a treatment for several oncology indications;
|
•
|
VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, with potential use for the treatment of psychiatric disorders; and
|
•
|
Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors for the treatment of dry eye and ocular inflammation and for the treatment of secretory diarrhea disorders, including cholera.
|
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Cash and cash equivalents
|
$
|
64,950
|
|
|
$
|
34,379
|
|
Restricted cash included in:
|
|
|
|
||||
Prepaid expenses and other current assets
|
—
|
|
|
157
|
|
||
Non-current inventory and other
|
577
|
|
|
586
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
65,527
|
|
|
$
|
35,122
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
HETLIOZ® product sales, net
|
$
|
35,336
|
|
|
$
|
28,957
|
|
Fanapt® product sales, net
|
22,664
|
|
|
18,756
|
|
||
Total net product sales
|
$
|
58,000
|
|
|
$
|
47,713
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Market
Value
|
||||||||
(in thousands)
|
|
|
|
||||||||||||
U.S. Treasury and government agencies
|
$
|
87,014
|
|
|
$
|
558
|
|
|
$
|
—
|
|
|
$
|
87,572
|
|
Corporate debt
|
122,964
|
|
|
572
|
|
|
(110
|
)
|
|
123,426
|
|
||||
Asset-backed securities
|
36,386
|
|
|
56
|
|
|
(64
|
)
|
|
36,378
|
|
||||
Total marketable securities
|
$
|
246,364
|
|
|
$
|
1,186
|
|
|
$
|
(174
|
)
|
|
$
|
247,376
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Market
Value
|
||||||||
(in thousands)
|
|
|
|
||||||||||||
U.S. Treasury and government agencies
|
$
|
88,535
|
|
|
$
|
68
|
|
|
$
|
(2
|
)
|
|
$
|
88,601
|
|
Corporate debt
|
129,860
|
|
|
196
|
|
|
(1
|
)
|
|
130,055
|
|
||||
Asset-backed securities
|
48,355
|
|
|
49
|
|
|
(3
|
)
|
|
48,401
|
|
||||
Total marketable securities
|
$
|
266,750
|
|
|
$
|
313
|
|
|
$
|
(6
|
)
|
|
$
|
267,057
|
|
•
|
Level 1 — defined as observable inputs such as quoted prices in active markets
|
•
|
Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable
|
•
|
Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions
|
|
|
|
Fair Value Measurement as of March 31, 2020 Using
|
||||||||||||
|
Total Fair Value
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
Significant Other
Observable Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
(in thousands)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||||
U.S. Treasury and government agencies
|
$
|
87,572
|
|
|
$
|
87,572
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt
|
123,426
|
|
|
—
|
|
|
123,426
|
|
|
—
|
|
||||
Asset-backed securities
|
36,378
|
|
|
—
|
|
|
36,378
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
247,376
|
|
|
$
|
87,572
|
|
|
$
|
159,804
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurement as of December 31, 2019 Using
|
||||||||||||
|
Total Fair Value
|
|
Quoted Prices in
Active Markets for Identical Assets |
|
Significant Other
Observable Inputs |
|
Significant
Unobservable Inputs |
||||||||
(in thousands)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||||
U.S. Treasury and government agencies
|
$
|
88,601
|
|
|
$
|
88,601
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt
|
137,025
|
|
|
—
|
|
|
137,025
|
|
|
—
|
|
||||
Asset-backed securities
|
48,401
|
|
|
—
|
|
|
48,401
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
274,027
|
|
|
$
|
88,601
|
|
|
$
|
185,426
|
|
|
$
|
—
|
|
(in thousands)
|
March 31,
2020 |
|
December 31,
2019 |
||||
Current assets
|
|
|
|
||||
Finished goods
|
$
|
1,320
|
|
|
$
|
1,140
|
|
Total inventory, current
|
$
|
1,320
|
|
|
$
|
1,140
|
|
Non-Current assets
|
|
|
|
||||
Raw materials
|
$
|
659
|
|
|
$
|
659
|
|
Work-in-process
|
949
|
|
|
1,109
|
|
||
Finished goods
|
934
|
|
|
1,056
|
|
||
Total inventory, non-current
|
2,542
|
|
|
2,824
|
|
||
Total inventory
|
$
|
3,862
|
|
|
$
|
3,964
|
|
|
|
|
March 31, 2020
|
||||||||||
(in thousands)
|
Estimated
Useful Life
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
HETLIOZ®
|
July 2035
|
|
$
|
33,000
|
|
|
$
|
10,333
|
|
|
$
|
22,667
|
|
|
|
|
December 31, 2019
|
||||||||||
(in thousands)
|
Estimated
Useful Life
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
HETLIOZ®
|
July 2035
|
|
$
|
33,000
|
|
|
$
|
9,963
|
|
|
$
|
23,037
|
|
(in thousands)
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
HETLIOZ®
|
$
|
22,667
|
|
|
$
|
1,108
|
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
$
|
15,647
|
|
(in thousands)
|
March 31,
2020 |
|
December 31,
2019 |
||||
Consulting and other professional fees
|
$
|
7,636
|
|
|
$
|
5,376
|
|
Research and development expenses
|
5,839
|
|
|
5,893
|
|
||
Royalties payable
|
4,912
|
|
|
5,904
|
|
||
Compensation and employee benefits
|
3,762
|
|
|
6,597
|
|
||
Operating lease liabilities
|
2,101
|
|
|
2,147
|
|
||
Other
|
1,795
|
|
|
1,673
|
|
||
Total accounts payable and accrued liabilities
|
$
|
26,045
|
|
|
$
|
27,590
|
|
(in thousands)
|
March 31,
2020 |
|
December 31,
2019 |
||||
Foreign currency translation
|
$
|
—
|
|
|
$
|
13
|
|
Unrealized gain on marketable securities
|
781
|
|
|
236
|
|
||
Accumulated other comprehensive income
|
$
|
781
|
|
|
$
|
249
|
|
2006 and 2016 Plans
(in thousands, except for share and per share amounts)
|
Number of
Shares
|
|
Weighted Average
Exercise Price at
Grant Date
|
|
Weighted Average
Remaining Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 31, 2019
|
4,495,145
|
|
|
$
|
12.21
|
|
|
5.58
|
|
$
|
21,148
|
|
Granted
|
487,500
|
|
|
11.42
|
|
|
|
|
|
|||
Forfeited
|
(225,000
|
)
|
|
18.83
|
|
|
|
|
|
|||
Expired
|
(10,104
|
)
|
|
11.78
|
|
|
|
|
|
|||
Exercised
|
(172,500
|
)
|
|
4.96
|
|
|
|
|
890
|
|
||
Outstanding at March 31, 2020
|
4,575,041
|
|
|
12.07
|
|
|
5.81
|
|
4,818
|
|
||
Exercisable at March 31, 2020
|
3,379,139
|
|
|
11.02
|
|
|
4.63
|
|
4,818
|
|
||
Vested and expected to vest at March 31, 2020
|
4,340,916
|
|
|
11.99
|
|
|
5.60
|
|
4,818
|
|
2006 and 2016 Plans
|
Number of
Shares
Underlying RSUs
|
|
Weighted
Average
Grant Date Fair Value
|
|||
Unvested at December 31, 2019
|
1,649,285
|
|
|
$
|
18.04
|
|
Granted
|
745,818
|
|
|
11.32
|
|
|
Forfeited
|
(136,091
|
)
|
|
18.65
|
|
|
Vested
|
(498,505
|
)
|
|
16.73
|
|
|
Unvested at March 31, 2020
|
1,760,507
|
|
|
15.52
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Research and development
|
$
|
1,111
|
|
|
$
|
728
|
|
Selling, general and administrative
|
2,833
|
|
|
2,554
|
|
||
Total stock-based compensation expense
|
$
|
3,944
|
|
|
$
|
3,282
|
|
|
Three Months Ended
|
||||
|
March 31,
2020 |
|
March 31,
2019 |
||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
Weighted average expected volatility
|
52
|
%
|
|
58
|
%
|
Weighted average expected term (years)
|
6.09
|
|
|
5.92
|
|
Weighted average risk-free rate
|
1.37
|
%
|
|
2.51
|
%
|
|
Three Months Ended
|
||||||
(in thousands, except for share and per share amounts)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
486
|
|
|
$
|
(612
|
)
|
Denominator:
|
|
|
|
||||
Weighted average shares outstanding, basic
|
53,806,317
|
|
|
52,752,774
|
|
||
Effect of dilutive securities
|
1,063,829
|
|
|
—
|
|
||
Weighted average shares outstanding, diluted
|
54,870,146
|
|
|
52,752,774
|
|
||
Net income (loss) per share, basic and diluted:
|
|
|
|
||||
Basic
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Antidilutive securities excluded from calculations of diluted net income (loss) per share
|
3,095,224
|
|
|
3,068,806
|
|
ITEM 2
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
HETLIOZ® (tasimelteon) for the treatment of jet lag disorder (JLD), Smith-Magenis Syndrome (SMS), pediatric Non-24 and delayed sleep phase disorder (DSPD);
|
•
|
Fanapt® (iloperidone) for the treatment of bipolar disorder and a long acting injectable (LAI) formulation program for the treatment of schizophrenia;
|
•
|
Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, for the treatment of atopic dermatitis, gastroparesis, motion sickness and COVID-19 Acute Respiratory Distress Syndrome (ARDS);
|
•
|
VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and with potential use as a treatment for several oncology indications;
|
•
|
VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, with potential use for the treatment of psychiatric disorders; and
|
•
|
Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors for the treatment of dry eye and ocular inflammation and for the treatment of secretory diarrhea disorders, including cholera.
|
•
|
The ongoing atopic dermatitis and gastroparesis studies, have been adapted in accordance with FDA guidance to protect the health and safety of currently enrolled patients and healthcare providers.
|
•
|
The results of the recent atopic dermatitis (EPIONE), gastroparesis (VLY686-2301) and motion sickness (Motion Sifnos) studies have all been submitted to peer-review publications.
|
•
|
See below for details on our clinical study, ODYSSEY VLY-686-3501, for the treatment of patients with COVID-19 ARDS.
|
•
|
Discussions with the FDA are ongoing regarding the supplemental New Drug Applications for HETLIOZ® in the treatments of JLD and SMS.
|
•
|
We announced the initiation of ODYSSEY VLY-686-3501, a Phase III double-blind placebo-controlled trial investigating the efficacy and safety of tradipitant for the treatment of patients with COVID-19 ARDS. Results of this study are expected in the third quarter of 2020.
|
•
|
We also announced the initiation of the CALYPSO genetics study to evaluate the role of human and viral genetic variations in COVID-19 infection and disease severity.
|
•
|
We and the University of Illinois at Chicago announced a research partnership to identify small molecule inhibitors of cathepsin-L, a host enzyme required for viral processing.
|
(in thousands)
|
Rebates & Chargebacks
|
|
Discounts,
Returns and Other
|
|
Total
|
||||||
Balances at December 31, 2019
|
$
|
22,392
|
|
|
$
|
10,151
|
|
|
$
|
32,543
|
|
Provision related to current period sales
|
17,245
|
|
|
6,872
|
|
|
24,117
|
|
|||
Adjustments for prior period sales
|
(531
|
)
|
|
(231
|
)
|
|
(762
|
)
|
|||
Credits/payments made
|
(14,701
|
)
|
|
(7,286
|
)
|
|
(21,987
|
)
|
|||
Balances at March 31, 2020
|
$
|
24,405
|
|
|
$
|
9,506
|
|
|
$
|
33,911
|
|
|
Three Months Ended
|
|||||||||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
|
Net
Change
|
|
Percent
|
|||||||
HETLIOZ® product sales, net
|
$
|
35,336
|
|
|
$
|
28,957
|
|
|
$
|
6,379
|
|
|
22
|
%
|
Fanapt® product sales, net
|
22,664
|
|
|
18,756
|
|
|
3,908
|
|
|
21
|
%
|
|||
Total net product sales
|
$
|
58,000
|
|
|
$
|
47,713
|
|
|
$
|
10,287
|
|
|
22
|
%
|
|
Three Months Ended
|
||||||
(in thousands)
|
March 31,
2020 |
|
March 31,
2019 |
||||
Direct project costs (1)
|
|
|
|
||||
HETLIOZ®
|
$
|
1,898
|
|
|
$
|
2,097
|
|
Fanapt®
|
2,685
|
|
|
1,081
|
|
||
Tradipitant
|
7,193
|
|
|
6,652
|
|
||
VTR-297
|
368
|
|
|
390
|
|
||
CFTR
|
780
|
|
|
1,367
|
|
||
Other
|
471
|
|
|
105
|
|
||
|
13,395
|
|
|
11,692
|
|
||
Indirect project costs (1)
|
|
|
|
||||
Stock-based compensation
|
1,111
|
|
|
728
|
|
||
Other indirect overhead
|
1,021
|
|
|
858
|
|
||
|
2,132
|
|
|
1,586
|
|
||
Total research and development expense
|
$
|
15,527
|
|
|
$
|
13,278
|
|
(1)
|
We record direct costs, including personnel costs and related benefits, on a project-by-project basis. Many of our research and development costs are not attributable to any individual project because we share resources across several development projects. We record indirect costs that support a number of our research and development activities in the aggregate, including stock-based compensation.
|
(in thousands)
|
March 31,
2020 |
|
December 31,
2019 |
||||
Cash and cash equivalents
|
$
|
64,950
|
|
|
$
|
45,072
|
|
Marketable securities:
|
|
|
|
||||
U.S. Treasury and government agencies
|
87,572
|
|
|
88,601
|
|
||
Corporate debt
|
123,426
|
|
|
130,055
|
|
||
Asset-backed securities
|
36,378
|
|
|
48,401
|
|
||
Total marketable securities
|
247,376
|
|
|
267,057
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
312,326
|
|
|
$
|
312,129
|
|
|
Three Months Ended
|
||||||||||
(in thousands)
|
March 31, 2020
|
|
March 31, 2019
|
|
Net
Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
486
|
|
|
$
|
(612
|
)
|
|
$
|
1,098
|
|
Non-cash charges
|
5,571
|
|
|
3,405
|
|
|
2,166
|
|
|||
Net change in operating assets and liabilities
|
(6,964
|
)
|
|
6,850
|
|
|
(13,814
|
)
|
|||
Operating activities
|
(907
|
)
|
|
9,643
|
|
|
(10,550
|
)
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(373
|
)
|
|
(393
|
)
|
|
20
|
|
|||
Net maturities (purchases) of marketable securities
|
20,673
|
|
|
(36,058
|
)
|
|
56,731
|
|
|||
Investing activities
|
20,300
|
|
|
(36,451
|
)
|
|
56,751
|
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from the exercise of stock options
|
479
|
|
|
179
|
|
|
300
|
|
|||
Financing activities
|
479
|
|
|
179
|
|
|
300
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
5
|
|
|
2
|
|
|
3
|
|
|||
Net change in cash, cash equivalents and restricted cash
|
$
|
19,877
|
|
|
$
|
(26,627
|
)
|
|
$
|
46,504
|
|
|
Cash Payments Due by Year (3)(4)
|
||||||||||||||||||||||||||
(in thousands)
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
Operating leases(1)
|
$
|
19,445
|
|
|
$
|
1,671
|
|
|
$
|
2,329
|
|
|
$
|
2,355
|
|
|
$
|
2,420
|
|
|
$
|
2,488
|
|
|
$
|
8,182
|
|
Purchase commitments(2)
|
4,665
|
|
|
3,218
|
|
|
966
|
|
|
481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total noncancellable long-term contractual cash obligations
|
$
|
24,110
|
|
|
$
|
4,889
|
|
|
$
|
3,295
|
|
|
$
|
2,836
|
|
|
$
|
2,420
|
|
|
$
|
2,488
|
|
|
$
|
8,182
|
|
(1)
|
Operating leases include the minimum lease payments for our operating lease liabilities. This table does not include obligations under short-term lease agreements, variable payments for building maintenance and other services and executory costs associated with our operating lease agreements.
|
(2)
|
Purchase commitments include noncancellable purchase commitments for agreements longer than one year and primarily relate to commitments for media and data services. This table does not include various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, due to the cancelable nature of the services or variable terms within the agreement. Additionally, this table does not include rebates, chargebacks or discounts recorded as liabilities at the time that product sales are recognized as revenue.
|
(3)
|
This table does not include potential future milestone obligations under our license agreements for which we have not deemed it probable that the milestone event will occur as of March 31, 2020. See Commitments and Contingencies footnote to the condensed consolidated financial statements included in Part I of this quarterly report on Form 10-Q for a description of our licensing arrangements and remaining milestone obligations.
|
(4)
|
This table does not include liabilities related to uncertain tax positions taken as of March 31, 2020. Due to the uncertainties in the timing of potential tax audits, the timing associated with the resolution of these positions is also uncertain.
|
ITEM 3
|
Quantitative and Qualitative Disclosures about Market Risk
|
ITEM 4
|
Controls and Procedures
|
ITEM 1
|
Legal Proceedings
|
ITEM 1A
|
Risk Factors
|
•
|
interruption of, or delays in receiving, supplies of the active pharmaceutical ingredients that our contract manufacturing organizations use to manufacture our products and any related interruption of, or delays in receiving, supplies of our products from these organizations, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;
|
•
|
delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
|
•
|
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
|
•
|
delays or difficulties in enrolling patients in our clinical trials;
|
•
|
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints;
|
•
|
limitations on our employee resources or those of third-party clinical research organizations towards the development of our products, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and
|
•
|
interruption or delays in the operations of regulatory agencies, which may impact review and approval timelines.
|
ITEM 2
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
ITEM 3
|
Defaults Upon Senior Securities
|
ITEM 4
|
Mine Safety Disclosures
|
ITEM 5
|
Other Information
|
ITEM 6
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.42
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101
|
|
The following financial information from this quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2020 formatted in Inline Extensible Business Reporting Language (iXBRL) and filed electronically herewith: (i) Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019; (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019; (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2020 and 2019; (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019; and (vi) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document).
|
|
|
|
|
|
Vanda Pharmaceuticals Inc.
|
|
|
|
May 7, 2020
|
|
/s/ Mihael H. Polymeropoulos, M.D.
|
|
|
Mihael H. Polymeropoulos, M.D.
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
May 7, 2020
|
|
/s/ Kevin Moran
|
|
|
Kevin Moran
|
|
|
Acting Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Vanda Pharmaceuticals Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 7, 2020
|
|
/s/ Mihael H. Polymeropoulos, M.D.
|
|
|
Mihael H. Polymeropoulos, M.D.
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Vanda Pharmaceuticals Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 7, 2020
|
|
/s/ Kevin Moran
|
|
|
Kevin Moran
|
|
|
Vice President, Acting Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
May 7, 2020
|
|
/s/ Mihael H. Polymeropoulos, M.D.
|
|
|
Mihael H. Polymeropoulos, M.D.
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
May 7, 2020
|
|
/s/ Kevin Moran
|
|
|
Kevin Moran
|
|
|
Vice President, Acting Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
|