Full Press Release Details
Not For Immediate Release
Communications Manager
Vanda Pharmaceuticals Inc.
Vanda Pharmaceuticals Reports First Quarter 2010 Results
ROCKVILLE, MD. May 4, 2010 Vanda Pharmaceuticals Inc. (Vanda) (NASDAQ: VNDA), a
biopharmaceutical company focused on the development and commercialization of clinical-stage
products for central nervous system disorders, today announced financial and operational results
for the first quarter ended March 31, 2010.
| Vanda records Q1 2010 revenue of $12.4 million | |||
| Fanapt launched in the U.S. by our partner Novartis | |||
| Iloperidone long-acting injectable patent allowed | |||
| Tasimelteon received orphan designation by the Food and Drug Administration for the treatment of Non-24 Hour Sleep/Wake Disorder (N24SWD) in blind individuals with no light perception |
Total revenue for the first quarter of 2010 was $12.4 million, compared to $4.5 million for the
fourth quarter of 2009 and $0 for the first quarter of 2009. Total operating expenses for the first
quarter of 2010 were $6.3 million, compared to $13.8 million for the fourth quarter of 2009 and
$6.6 million for the first quarter of 2009. Net income was $0.5 million for the first quarter of
2010 compared to net losses of $9.2 million for the fourth quarter of 2009 and $6.5 million for the
first quarter of 2009.
Vanda s cash, cash equivalents, and marketable securities as of March 31, 2010 totaled
approximately $202.4 million. Approximately 27.9 million shares of Vanda common stock were
outstanding as of March 31, 2010. Basic and diluted net income per common share for the first
quarter of 2010 was $0.02, compared to a net loss per common share of $0.34 for the fourth quarter
of 2009 and $0.24 for the first quarter of 2009.
First Quarter 2010 Key Financial Figures1
| Q1 2010 ($) | Q4 2009 ($) | Change ($) | Change (%) | |||||||||||||
| Total revenues | 12,421,000 | 4,548,000 | 7,873,000 | 173 | % | |||||||||||
| R D expenses | 2,041,000 | 2,253,000 | (212,000 | ) | -9 | % | ||||||||||
| G A expenses | 2,489,000 | 9,245,000 | (6,756,000 | ) | -73 | % | ||||||||||
| Non-cash stock-based compensation | 1,089,000 | 2,446,000 | (1,357,000 | ) | -55 | % | ||||||||||
| Net income (loss) before tax provision | 6,195,000 | (9,237,000 | ) | 15,432,000 | N/A | |||||||||||
| Tax provision | 5,665,000 | 5,665,000 | N/A | |||||||||||||
| Net income (loss) | 529,000 | (9,237,000 | ) | 9,766,000 | N/A | |||||||||||
| Basic and diluted net income (loss) per share attributable to common stockholders | 0.02 | (0.34 | ) | 0.36 | N/A |
OPERATIONAL HIGHLIGHTS
On January 11, 2010, Novartis Pharmaceuticals Corporation (Novartis) launched Fanapt in the U.S.
First quarter sales of Fanapt were reported by Novartis to be approximately $21.0 million. As a
result, Vanda recorded royalty revenue of approximately $2.1 million for the first quarter of 2010.
On February 23, 2010, the U.S. Patent and Trademark Office (USPTO) issued a notice of allowance for
Vanda s patent application of a microsphere, long-acting injectable (depot) formulation of
(iloperidone). The USPTO has informed Vanda that the application is
eligible for patent term adjustment of an additional
300 days, making the patent expiration date August 26, 2023. Novartis is responsible for the further development
of the depot formulation in the U.S and Canada. Vanda has retained the rights for the development
and commercialization of the depot formulation outside the U.S. and Canada. Vanda continues to
explore the regulatory path and commercial opportunity for Fanapt outside of the U.S. and Canada.
During the first quarter of 2010, Vanda also made significant progress in evaluating potential
opportunities for tasimelteon, Vanda s compound for the treatment of circadian rhythm sleep
disorders (CRSD). On January 19, 2010, the FDA granted orphan drug designation status for
tasimelteon in a specific CRSD, Non-24-Hour Sleep/Wake Disorder (N24SWD) in blind individuals with
no light perception. Tasimelteon has already been shown in clinical studies to significantly
improve sleep onset and sleep maintenance parameters and to affect the sleep wake cycle.
Vanda plans to conduct additional clinical trials to pursue FDA approval of tasimelteon for the
treatment of N24SWD in blind individuals with no light perception beginning in the second quarter
of 2010. The first trial will be a randomized, double-blind, placebo-controlled study with an
enrollment of approximately 140 patients with N24SWD. The trial will include measures of both
nighttime and daytime sleep, as well as laboratory measures of the synchronization between the
internal body clock and the environment. Vanda expects to report top-line results for this trial in
the fourth quarter of 2011. Vanda anticipates filing a NDA with the FDA for tasimelteon in N24SWD
by the first quarter of 2013.
On April 15, 2010, Vanda and Bristol-Myers Squibb entered in an amendment to their amended and
restated license, development and commercialization agreement, to, among other things, extend
Vanda s deadline for filing a NDA for tasimelteon. A more detailed description and the full text of
the amendment are contained in Vanda s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on April 19, 2010.
| Revenues. First quarter 2010 revenue of $12.4 million consisted of $6.6 million in licensing revenue due to the amortization of the upfront payment received from Novartis in the fourth quarter of 2009 under the amended and restated sublicense agreement, $3.7 million in product revenue for inventory sold to Novartis and $2.1 million for royalty revenue based on first quarter 2010 net sales of Fanapt in the U.S. by Novartis. Revenue increased by $7.9 million from $4.5 million for the fourth quarter of 2009 due to increases in licensing revenue of $4.0 million and $1.8 million in product revenue coupled with the $2.1 million in royalty revenue. | ||
| Operating Expenses. Cost of sales for the first quarter of 2010 of $1.8 million consisted of $0.4 million resulting from the amortization of the capitalized intangible asset related to the milestone payment to Novartis and $1.4 million for the inventory sold to Novartis, compared to cost of sales for the fourth quarter of 2009 of $2.3 million, consisting of $0.4 million resulting from the amortization of the capitalized intangible asset related to the milestone payment to Novartis and $1.9 million for inventory sold to Novartis. | ||
| Research and development (R D) expenses of $2.0 million for the first quarter of 2010 consisted primarily of $0.7 million of salaries and benefits, $0.9 million of non-cash stock based-compensation costs for R D personnel and $0.2 million for overhead allocated to R D. This compares to $2.3 million for the fourth quarter of 2009 and $2.3 million for the first quarter of 2009. The decrease in R D expenses in the first quarter of 2010 relative to the fourth quarter of 2009 is primarily due to the completion of the carcinogenicity study for Fanapt during the fourth quarter of 2009. | ||
| General and administrative (G A) expenses of $2.5 million for the first quarter of 2010 consisted primarily of $0.6 million of salaries and benefits and $0.2 million of non-cash stock based compensation costs for G A personnel, as well as $0.5 million of legal fees, $0.3 million of audit and tax-related costs and $0.2 million of insurance costs. This compares to $9.2 million for the fourth quarter of 2009 and $4.2 million for the first quarter of 2009. The decrease in G A expenses in the first quarter of 2010 relative to the fourth quarter of 2009 is primarily due to lower consulting fees and advisor fees, primarily relating to the transaction with Novartis completed in the fourth quarter of 2009, and lower non-cash stock-based compensation costs in the first quarter 2010. | ||
| Employee stock-based compensation expense recorded in the first quarter of 2010 totaled $1.1 million. Of this non-cash charge, $0.9 million was recorded as R D expense and $0.2 million was recorded as G A expense. This compares to total employee stock-based compensation expense of $2.4 million and $2.3 million for the fourth quarter of 2009 and the first quarter of 2009, respectively. The decrease in employee stock-based compensation expense in the first quarter of 2010 relative to the fourth quarter of 2009 is the result of the cancellation of unvested options, in the first quarter of 2010. | ||
| Tax provision: Vanda recorded a tax provision of $5.7 million in the first quarter of 2010. The tax provision is based on an annualized effective tax rate for 2010 applied to the first quarter s pre-tax book income with the addition or subtraction of discrete items. The quarterly tax provision is not indicative of estimated quarterly cash tax payments. The tax provision rate applied in the first quarter of 2010 was determined primarily based upon a net increase in valuation allowance for excess of the deferred revenue recorded from the $200.0 million upfront milestone payment received from Novartis at the end of 2009 over the existing tax attributes utilized. The provision also includes the impact of tax credits relating to the orphan drug designation for tasimelteon. Vanda will continue to evaluate its qualified expenses for the orphan drug tax credit and, to the extent that actual qualified expenses |
| vary significantly from Vanda s estimates, Vanda s effective tax rate will increase or decrease accordingly. | ||
| Vanda s cash, cash equivalents and marketable securities as of March 31, 2010 totaled approximately $202.4 million, compared to approximately $205.3 million as of December 31, 2009. Cash, cash equivalents and marketable securities decreased by $2.9 million during the first quarter of 2010. Changes included: $0.5 million of net income, a decrease in non-cash items of $0.4 million, an increase of $2.9 million in amounts due from Novartis for the remaining finished product, a decrease in inventory of $1.0 million, a decrease of $6.6 million in the deferred revenue related to the upfront payment received from Novartis in December 2009, a decrease in accounts payable and accrued expenses of $2.5 million, a decrease in other working capital of $0.4 million and an increase of $1.9 million in financing activities for the excess tax benefits from the exercise of stock options. | ||
| Net income for the first quarter of 2010 was $0.5 million, compared to net losses of $9.2 million for the fourth quarter of 2009 and $6.5 million for the first quarter of 2009. | ||
| Basic and diluted net income per common share for the first quarter of 2010 was $0.02, compared to a basic and diluted net loss per common share of $0.34 for the fourth quarter of 2009 and $0.24 for the first quarter of 2009. |
Vanda is encouraged by the early prescription data for Fanapt as reported by IMS. At this time,
however, Vanda cannot forecast future revenues based on sales milestones or royalties. Vanda
expects that R D expenses related to the initiation of the tasimelteon program in N24SWD will
increase by approximately $7.5 million for the full year 2010. Vanda anticipates that approximately
75 percent of these expenses will qualify for the orphan drug tax credit.
Vanda submitted a private letter ruling request to the Internal Revenue Service (IRS) in March of
2010 to clarify the application of certain code sections regarding the use of prior net operating
losses that may offset some of the tax liability related to the $197.4 million of deferred revenue
for the upfront payment received from Novartis which will be recognized as income for tax purposes
in 2010. Following the determination of the IRS on this matter, Vanda may choose to provide
financial guidance for the full year.
Vanda has scheduled a conference call for today, Tuesday, May 4, 2010, at 9:30 AM ET. During the
call, Mihael H. Polymeropoulos, M.D., President and CEO, and Stephanie Irish, Acting CFO, will
discuss quarterly results and other corporate activities. Investors can call 1-866-700-7173
(domestic) and 1-617-213-8838 (international) prior to the 9:30 AM start time and ask for the Vanda
Pharmaceuticals conference call hosted by Dr. Polymeropoulos (participant passcode 17942676). A
replay of the call will be available Tuesday, May 4, 2010 at 12:30 PM ET and will be accessible
until Tuesday, May 11, 2010, at 5:00 PM ET. The replay call-in number is 1-888-286-8010 for
domestic callers and 1-617-801-6888 for international callers. The access number is 39291542.
The conference call will be broadcast simultaneously on Vanda s website,
http://www.vandapharma.com. Investors should click on the Investor Relations tab and are advised
to go to the website at least 15 minutes early to register, download, and install any necessary
software or presentations. The call will also be archived on Vanda s website for a period of 30
days, through June 3, 2010.
ABOUT VANDA PHARMACEUTICALS INC.:
Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and
commercialization of clinical-stage products for central nervous system disorders. For more on
Vanda Pharmaceuticals Inc., please visit http://www.vandapharma.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various statements in this release are forward-looking statements under the securities laws.
Words such as, but not limited to, believe, expect, anticipate, estimate, intend, plan,
targets, likely, will, would, and could, and similar expressions or words, identify
forward-looking statements. Forward-looking statements are based upon current expectations that
involve risks, changes in circumstances, assumptions and uncertainties. Important factors that
could cause actual results to differ materially from those reflected in the company s
forward-looking statements include, among others: the extent and effectiveness of the development,
sales and marketing and distribution support Fanapt receives; Vanda s inability to
utilize a substantial portion of its prior net operating losses; Vanda s ability to successfully
commercialize Fanapt outside of the U.S. and Canada; delays in the completion of
Vanda s clinical trials; a failure of Vanda s products to be demonstrably safe and effective;
Vanda s failure to obtain regulatory approval for its products or to comply with ongoing regulatory
requirements for its products; a lack of acceptance of Vanda s products in the marketplace, or a
failure to become or remain profitable; Vanda s expectations regarding trends with respect to its
costs and expenses; Vanda s inability to obtain the capital necessary to fund its research and