Full Press Release Details
Not For Immediate Release
Acting Chief Financial Officer
Vanda Pharmaceuticals Inc.
Vanda Pharmaceuticals Reports Third Quarter 2009 Results
ROCKVILLE, MD. November 2, 2009 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 third quarter ended September 30, 2009.
Vanda reported a net loss of $7.7 million for the third quarter of 2009, compared to $12.4 million
for the second quarter of 2009 and $10.9 million for the third quarter of 2008. Total expenses for
the third quarter of 2009 were $7.7 million, compared to $12.4 million for the second quarter of
2009 and $11.2 million for the third quarter of 2008. Research and development (R D) expenses for
the third quarter of 2009 were $2.1 million, compared to $7.2 million for the second quarter of
2009 and $3.8 million for the third quarter of 2008. The decrease in R D expenses in the third
quarter of 2009 relative to the second quarter of 2009 is primarily due to the regulatory
consulting fees accrued in the second quarter as a result of the approval of Fanapt (iloperidone)
by the U.S. Food and Drug Administration (FDA). The decrease in R D expenses in the third quarter
of 2009 relative to the third quarter of 2008 is primarily due to the completion of the Phase III
clinical trial of tasimelteon in chronic primary insomnia in 2008.
As of September 30, 2009, Vanda s cash, cash equivalents, and marketable securities totaled
approximately $20.7 million. As of September 30, 2009, a total of approximately 27.2 million
shares of Vanda common stock were outstanding. Net loss per common share for the third quarter of
2009 was $0.28, compared to $0.46 for the second quarter of 2009 and $0.41 for the third quarter of
OPERATIONAL HIGHLIGHTS
On October 12, 2009, Vanda entered into an amended and restated sublicense agreement with Novartis
Pharma AG (Novartis). The parties had originally entered into a sublicense agreement on June 4,
2004 pursuant to which Vanda obtained certain worldwide exclusive licenses from Novartis relating
to Fanapt . The agreement is subject to, and will become effective upon, clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), which is expected by the end of
Pursuant to the agreement, Novartis will have exclusive commercialization rights to all
formulations of Fanapt in the U.S. and Canada. Except for two post-approval studies started by
Vanda prior to the execution date of the agreement, which Vanda is obligated to complete, Novartis
will be responsible for the further clinical development activities in the U.S. and Canada,
including the development of a long-acting injectable (or depot) formulation of Fanapt .
Pursuant to the terms of the agreement, Vanda will be entitled to an upfront payment of $200
million, which it expects to receive within 30 days after the effective date of the agreement.
Vanda will be eligible for additional payments totaling up to $265 million upon the achievement of
certain commercial and development milestones for Fanapt in the U.S. and Canada. Vanda will also
receive royalties, which, as a percentage of net sales, are in the low double-digits, on net sales
of Fanapt in the U.S. and Canada. In addition, Vanda will no longer be required to make any future
milestone payments with respect to sales of Fanapt or any future royalty payments with respect to
sales of Fanapt in the U.S. and Canada.
Vanda retains exclusive rights to Fanapt outside the U.S. and Canada and Vanda will have exclusive
rights to use any of Novartis data for Fanapt for developing and commercializing Fanapt outside
the U.S. and Canada. At Novartis option, the parties will enter into good faith discussions
relating to the co-commercialization of Fanapt outside of the U.S. and Canada or, alternatively,
Novartis will receive a royalty on net sales of Fanapt outside of the U.S. and Canada.
Vanda continued the clinical, regulatory and commercial evaluation for tasimelteon, a MT1/MT2
melatonin agonist, currently in Phase III stage of development.
| Operating Expenses. Third quarter 2009 R D expenses of $2.1 million consisted primarily of $0.5 million of salaries and benefits, $0.7 million of non-cash stock based compensation costs for R D personnel,$0.2 million for the carcinogenicity study and $0.2 million in consulting fees. This compares to $7.2 million for the second quarter of 2009 and $3.8 million for the third quarter of 2008. The decrease in R D expenses in the third quarter of 2009 relative to the second quarter of 2009 is primarily due to the regulatory consulting fees accrued in the second quarter as a result of the approval of Fanapt by the FDA. The decrease in R D expenses in the third quarter of 2009 relative to the third quarter of 2008 is primarily due to the completion of the Phase III clinical trial of tasimelteon in chronic primary insomnia in 2008. | ||
| General and administrative (G A) expenses of $5.3 million for the third quarter of 2009 consisted primarily of $0.4 million of salaries and benefits and $2.6 million of non-cash stock based compensation costs for G A personnel, as well as $0.5 million of legal fees, $0.7 million of commercial costs and $0.2 million of insurance costs. This compares to $5.0 million for the second quarter of 2009 and $7.4 million for the third quarter of 2008. The decrease in G A expenses in the third quarter of 2009 relative to the third quarter of 2008 is primarily due to lower stock-based compensation and commercial expenses. | ||
| Employee stock-based compensation expense recorded in the third quarter of 2009 totaled $3.3 million. Of these non-cash charges, $0.7 million was recorded as R D expense and $2.6 million was recorded as G A expense. For the second quarter of 2009 and the third quarter of 2008, total stock-based compensation expense was $2.8 million and $3.6 million, respectively. The increase in stock-based compensation expense in the third quarter of 2009 relative to the second quarter of 2009 is the result of the issuance of additional non- |
| qualified stock options in 2009. The decrease in stock-based compensation expense in the third quarter of 2009 relative to the third quarter of 2008 is primarily due to a lower stock-based compensation expense resulting from the workforce reduction in the fourth quarter of 2008. | ||
| Cash and marketable securities decreased by $8.3 million during the third quarter of 2009. Changes included $7.7 million of net losses, increases of $0.5 million in inventory, decreases in accrued expenses and accounts payable of $2.9 million, increases in prepaid expenses of $1.5 million, offset by $3.9 million in non-cash depreciation, amortization, and stock-based compensation expense and $0.4 million in proceeds from the exercise of stock options. | ||
| Vanda s cash, cash equivalents and marketable securities as of September 30, 2009 totaled approximately $20.7 million, compared to approximately $46.5 million as of December 31, 2008. | ||
| Net loss for the third quarter of 2009 was $7.7 million, compared to a net loss of $12.4 million for the second quarter of 2009 and a net loss of $10.9 million for the third quarter of 2008. | ||
| Net loss per common share for the third quarter of 2009 was $0.28, compared to $0.46 for the second quarter of 2009 and $0.41 for the third quarter of 2008. |
Vanda is currently concentrating its efforts on the transition of the commercialization and
development rights to Fanapt in the U.S. and Canada to Novartis and expects to work closely on the
joint steering committee to assist in the anticipated commercial launch of Fanapt in the first
quarter of 2010. The transition includes all regulatory, manufacturing and post-marketing
commitments requested by the FDA. Under the terms of the agreement with Novartis, except for two
small post-approval studies started by Vanda prior to the execution date of the agreement, which
Vanda is obligated to complete, Novartis will be responsible for the further clinical development
activities in the U.S. and Canada, including the development and commercialization of a depot
formulation of Fanapt . In addition, the Company will also evaluate the regulatory path and
commercial opportunity for Fanapt outside the U.S. and Canada. Vanda will also continue the
clinical, regulatory and commercial evaluation for tasimelteon. The Company intends to operate on a
reduced spending plan with its fixed overhead costs expected to be approximately $2.5 million to $3
million per quarter.
Vanda has scheduled a conference call for today, Monday, November 2, 2009, at 10:00 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 1-800-901-5247
(domestic) and 1-617-786-4501 (international) prior to the 10:00 AM start time and ask for the
Vanda Pharmaceuticals conference call hosted by Dr. Polymeropoulos (participant passcode 46702701).
A replay of the call will be available Monday, November 2, 2009, at 1:00 PM ET and will be
accessible until Monday, November 9, 2009, 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
The conference call will be broadcast simultaneously on the company s Web site,
http://www.vandapharma.com. Investors should click on the Investor Relations tab and are advised
to go to the Web site at least 15 minutes early to register, download, and install any
necessary software. The call will also be archived on the Vanda Web site for a period of 30 days,
through December 2, 2009.
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. Vanda Pharmaceuticals Inc.
is at an early stage of development and may not ever have any products that generate significant
revenue. 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 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 commercial and research and development activities; Vanda s failure to identify or obtain
rights to new products; Vanda s failure to develop or obtain sales, marketing and distribution