Vanda Pharmaceuticals Reports Second Quarter 2014 Results

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Aug 07, 2014, 07:00 ET

WASHINGTON, Aug. 7, 2014 /PRNewswire/ -- Vanda Pharmaceuticals Inc. (Vanda) (NASDAQ: VNDA), a biopharmaceutical company focused on the development and commercialization of products for the treatment of central nervous system disorders, today announced financial and operational results for the second quarter ended June 30, 2014.

"We are encouraged by the early positive reception of HETLIOZ by patients, physicians and payors. We look forward to more patients benefiting from HETLIOZ in the coming months and years," said Mihael Polymeropoulos MD, President and CEO of Vanda Pharmaceuticals.

Key Highlights:

As of August 6, 2014, over 420 new patient prescriptions have been written for HETLIOZ^®(tasimelteon) in the U.S.
In June 2014, Vanda announced that the European Medicines Agency (EMA) accepted for evaluation the Marketing Authorization Application for oral HETLIOZ^® capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24).
In July 2014, the U.S. Patent and Trademark Office (USPTO) issued a new method of use patent for HETLIOZ^®in the treatment of Non-24.

SECOND QUARTER 2014 REPORTED RESULTS

Total revenues for the second quarter of 2014 were $10.9 million, compared to $9.1 million for the first quarter of 2014 and $8.3 million for the second quarter of 2013. Net product revenues related to U.S. sales of HETLIOZ^® in the second quarter of 2014 were $1.6 million.

Total operating expenses for the second quarter of 2014 were $32.5 million, compared to $35.7 million for the first quarter of 2014 and $11.7 million for the second quarter of 2013. Vanda recorded a net loss of $21.6 million for the second quarter of 2014, compared to a net loss of $26.5 million for the first quarter of 2014 and $3.4 million for the second quarter of 2013.

Cash, cash equivalents and marketable securities (Cash) were $63.6 million as of June 30, 2014.

Year to Date June 30, 2014 Key Financial Figures^{(1) (2)}

	Six Months Ended
	June 30,	June 30,
($ in thousands, except per share amounts)	2014	2013	Change ($)	Change (%)

Total revenues	$ 20,005	$ 16,387	$ 3,618	22%
Research & development expenses	10,777	14,211	(3,434)	(24%)
Selling, general & administrative expenses	56,032	9,413	46,619	495%
Non-cash stock-based compensation ⁽³⁾	2,836	2,432	404	17%
Net loss	(48,108)	(7,902)	(40,206)	(509%)

Diluted net loss per share	$ (1.42)	$ (0.28)	$ (1.14)	(407%)

Second Quarter 2014 Key Financial Figures^{(1) (2)}

	Three Months Ended
	June 30,	March 31,
($ in thousands, except per share amounts)	2014	2014	Change ($)	Change (%)

Total revenues	$ 10,862	$ 9,143	$ 1,719	19%
Research & development expenses	3,514	7,263	(3,749)	(52%)
Selling, general & administrative expenses	28,139	27,893	246	1%
Non-cash stock-based compensation ⁽³⁾	1,443	1,393	50	4%
Net loss	(21,575)	(26,533)	4,958	19%

Diluted net loss per share	$ (0.64)	$ (0.79)	$ 0.15	19%

Select Cash Flow Data⁽¹⁾⁽²⁾

	Six Months Ended
	June 30,	June 30,
($ in thousands)	2014	2013
Net cash provided by (used in)
Operating activities	$ (60,569)	$ (17,168)
Investing activities	10,756	31,428
Financing activities	2,043	601

Select Balance Sheet Data⁽¹⁾

	June 30,	December 31	June 30,
($ in thousands)	2014	2013	2013

Total Cash⁽⁴⁾	$ 63,585	$ 130,350	$ 103,633

(1) Unaudited.

(2) Prior year amounts have been restated to reflect a change in accounting method for the attribution of stock-based compensation. Refer to footnote 3 in the quarterly report on Form 10Q for the quarter ending June 30, 2014.

(3) Non-cash stock-based compensation is allocated to both Research & development and Selling, general & administrative expenses.

(4) Total Cash reflects cash, cash equivalents and marketable securities

OPERATIONAL HIGHLIGHTS

As of August 6, 2014, over 420 new patient prescriptions have been written for HETLIOZ^® in the U.S. This represents growth of approximately 90% in new prescriptions since the Company's June 4, 2014 commercial update. HETLIOZ^® was launched in the U.S. in April 2014 for the treatment of Non-24, a disorder which affects the majority of totally blind individuals. It is estimated that approximately 80,000 Americans have the disorder.

On July 22, 2014, a new method of use patent was issued by the USPTO for HETLIOZ^® in the treatment of Non-24 (patent number 8,785,492). The '492 patent is expected to expire in 2033, potentially further extending the exclusivity protection of HETLIOZ^®. In the U.S., HETLIOZ^® is also covered by a composition of matter patent (patent number 5,856,529), which including a Hatch-Waxman 5-year extension is currently expected to expire in 2022. Both patents, '529 and '492, are now listed in the FDA's Orange Book.

In June 2014, the EMA accepted for evaluation Vanda's Marketing Authorization Application for oral HETLIOZ^® capsules for the treatment of Non-24. HETLIOZ^® was previously granted orphan drug designation by the European Commission for the treatment of Non-24.

Vanda has initiated development activities for the use of HETLIOZ^® in the pediatric population with Non-24, as well as in patients with Smith-Magenis syndrome.

The VLY-686, NK1 antagonist, Phase 2 study in chronic pruritus is ongoing and results are expected in mid-2015.

2014 FINANCIAL GUIDANCE

Total 2014 operating expenses are expected to be between $110.0 and $120.0 million. This includes intangible asset amortization expense of $2.3 million and $6.0 to $8.0 million of non-cash stock based compensation.

Full HETLIOZ^® Prescribing Information can be found at: www.hetlioz.com.

CONFERENCE CALL

Vanda has scheduled a conference call for today, Thursday, August 7, 2014, at 10:00 AM ET. During the call, Vanda's management will discuss the second quarter 2014 financial results and other corporate activities. Investors can call 1-800-708-4540 (domestic) and 1-847-619-6397 (international) and use passcode 37729521. A replay of the call will be available beginning Thursday, August 7, 2014 at 12:30 PM ET and will be accessible until Thursday, August 14, 2014, at 11:59 PM ET. The replay call-in number is 1-888-843-7419 for domestic callers and 1-630-652-3042 for international callers. The access number is 37729521.

The conference call will be broadcast simultaneously on Vanda's website, 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.

ABOUT VANDA PHARMACEUTICALS INC.:

Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and commercialization of products for the treatment of central nervous system disorders. For more on Vanda, please visit www.vandapharma.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements in this release, including, but not limited to, the guidance provided under "2014 FINANCIAL GUIDANCE" above, are "forward-looking statements" under the securities laws. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "project," "target," "goal," "likely," "will," "would," and "could," or the negative of these terms 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: Vanda's ability to successfully commercialize HETLIOZ^® for the treatment of Non-24 in the U.S., uncertainty as to the market awareness of Non-24 and the market acceptance of HETLIOZ^®, Vanda's dependence on third-party manufacturers to manufacture HETLIOZ^® in sufficient quantities and quality, Vanda's limited sales and marketing infrastructure, the regulatory status of HETLIOZ^® in Europe and other factors that are described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Vanda's annual report on Form 10-K for the fiscal year ended December 31, 2013 which is on file with the SEC and available on the SEC's website at www.sec.gov and Vanda's quarterly report on Form 10-Q for the quarter ended June 30, 2014 to be filed with the SEC. In addition to the risks described above and in Vanda's annual report on Form 10-K and quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, other unknown or unpredictable factors also could affect Vanda's results. There can be no assurance that the actual results or developments anticipated by Vanda will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Vanda. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

All written and verbal forward-looking statements attributable to Vanda or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Vanda cautions investors not to rely too heavily on the forward-looking statements Vanda makes or that are made on its behalf. The information in this release is provided only as of the date of this release, and Vanda undertakes no obligation, and specifically declines any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

	VANDA PHARMACEUTICALS INC.
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

			Three Months Ended				Six Months Ended
			June 30,		June 30,		June 30,		June 30,
($ in thousands, except per share amounts)			2014		2013 ⁽¹⁾		2014		2013 ⁽¹⁾

Revenues:
	HETLIOZ^®product revenue⁽²⁾		$	1,559	$	-	$	1,559	$	-
	Fanapt^®royalty revenue			1,539		1,641		3,230		3,103
	Fanapt^®licensing agreement ⁽³⁾			7,764		6,678		15,216		13,284
		Total revenues		10,862		8,319		20,005		16,387

Operating expenses:
	Cost of sales			198		-		198		-
	Research and development			3,514		6,100		10,777		14,211
	Selling, general and administrative			28,139		5,260		56,032		9,413
	Intangible asset amortization			617		372		1,182		741
		Total operating expenses		32,468		11,732		68,189		24,365

Loss from operations				(21,606)		(3,413)		(48,184)		(7,978)
	Other income			31		30		76		76
Loss before tax benefit				(21,575)		(3,383)		(48,108)		(7,902)
	Tax benefit			-		-		-		-
Net loss			$	(21,575)	$	(3,383)	$	(48,108)	$	(7,902)

Net loss per share:
	Basic and diluted		$	(0.64)	$	(0.12)	$	(1.42)	$	(0.28)

Shares used in calculations of net loss
	per share:
	Basic and diluted			33,874,625		28,377,254		33,777,207		28,361,340

(1) Prior year amounts have been restated to reflect a change in accounting method for the attribution of stock-based compensation. Refer to footnote 3 in the quarterly report on Form 10Q for the quarter ending June 30, 2014.
(2) HETLIOZ® product revenue is recognized upon delivery of product shipments to the specialty pharmacies.
(3) Fanapt® licensing agreement revenue reflects the amortization of the $200 million upfront payment received from Novartis for the right to commercialize and develop Fanapt® in the U.S. and Canada.

VANDA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


($ in thousands)				June 30, 2014		December 31, 2013 ⁽¹⁾

ASSETS
	Current assets:
		Cash and cash equivalents		$	16,994	$	64,764
		Marketable securities			46,591		65,586
		Accounts receivable			2,376		2,031
		Inventory			1,093		-
		Prepaid expenses and other current assets			4,166		2,703
		Restricted cash			-		530
			Total current assets		71,220		135,614

	Property and equipment, net				2,312		2,198
	Intangible asset, net				11,855		5,037
	Restricted cash, non-current				785		500
			Total assets	$	86,172	$	143,349


LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable		$	248	$	661
		Accrued liabilities			6,753		5,180
		Deferred rent			234		221
		Deferred revenues			31,059		26,789
			Total current liabilities		38,294		32,851

		Deferred rent, non-current			2,853		2,888
		Deferred revenues, non-current			44,000		63,486
		Other liabilities			140		-
			Total liabilities		85,287		99,225

	Stockholders' equity:
		Common stock			34		33
		Additional paid-in capital			357,119		352,240
		Accumulated other comprehensive income			10		21
		Accumulated deficit			(356,278)		(308,170)
			Total stockholders' equity		885		44,124
			Total liabilities and stockholders' equity	$	86,172	$	143,349

(1) Prior year amounts have been restated to reflect a change in accounting method for the attribution of stock-based compensation. Refer to footnote 3 in the quarterly report on Form 10Q for the quarter ending June 30, 2014.