Vanda Pharmaceuticals Inc. (VNDA) Earnings Call Transcript & Summary

The afternoon session of the BofA Healthcare Conference. My name is Geoff Meacham. I'm the senior biopharma analyst here at BofA. We're thrilled today to have Vanda Pharmaceuticals, and speaking on behalf of Vanda is CFO, Kevin Moran. Kevin?

Good afternoon, everyone, and thank you very much, Geoff, for the introduction and the invitation. Very excited to share our progress with everyone here. Great. Here are our forward-looking statements that we'd like for folks to review and be aware of. So Vanda has 2 commercialized products, HETLIOZ and Fanapt. HETLIOZ comes in 2 forms, oral capsules and liquid formulation. Oral capsules are approved in the U.S. and Europe for the treatment of non-24-hour sleep wake disorder. HETLIOZ oral capsules and HETLIOZ LQ, the liquid formulation, are also approved for the treatment of nighttime sleep disturbances in adults and children, respectively, with Smith-Magenis syndrome. We'll come back to that later in the presentation. Our second product, Fanapt is an atypical antipsychotic approved in the U.S. for the treatment of adults in schizophrenia. Here, we've had an overview of our clinical development pipeline. Later in the presentation, we'll go into some detail on specific programs. Starting with HETLIOZ. HETLIOZ is being pursued in a number of indications, and today, we'll discuss in detail the delayed sleep phase disorder program, which is now in Phase III. Fanapt lifecycle management is proceeding with trials in bipolar disorder, long-acting injectable formulation and Parkinson's Disease psychosis. Tradipitant is an NK-1 receptor antagonist being pursued for gastroparesis, as well as motion sickness. Briefly, our financial objectives and highlights for the year 2022, include total revenue of $240 million to $280 million, consisting of HETLIOZ net product sales of $150 million to $180 million, Fanapt net product sales of $90 million to $100 million, and we have projected to end the year with cash of greater than $440 million. Our first quarter 2022 financial results were recently announced with $60.2 million in total net revenue for the first quarter, which consisted of HETLIOZ net product sales of $37 million and Fanapt net product sales of $23.2 million. Our top priorities and milestones for 2022 include, the continued launch of HETLIOZ in Smith-Magenis syndrome and looking forward for growth in this estimated patient community of 15,000 individuals in the U.S. Tradipitant for gastroparesis, as we prepare for a new drug application submission for tradipitant, which we'll discuss in more detail on gastroparesis in a moment. HETLIOZ used for delayed sleep phase disorder. A Phase III study has now been initiated, in an indication that affects approximately 1% of the U.S. population. And we believe HETLIOZ is well suited for this indication as a circadian regulator. And finally, Fanapt programs on lifecycle management are proceeding as discussed in the previous slide. HETLIOZ was approved for nighttime sleep disturbances in Smith-Magenis syndrome in December of 2020. 2 formulations, HETLIOZ capsules for adults and HETLIOZ liquid LQ formulation for children. There are about 15,000 people in the U.S. estimated to suffer with Smith-Magenis syndrome. The syndrome typically expresses itself with major physical, developmental and behavioral features, with almost all patients having very significant nighttime sleep disturbances. Our approach to the commercial launch of HETLIOZ for Smith-Magenis syndrome, was started with the approval in December 2020 by the FDA. Immediately thereafter, we began converting patients from the ongoing open-label clinical trial to commercial product, as well as working in collaboration with the primary advocacy group, PRISMS, contacting additional individuals with SMS and their families around the U.S. And we now are beginning the phase of working with diagnostic tertiary care clinics and targeting through a direct-to-consumer advertising campaign, individuals with SMS and making them aware of the opportunity for treatment. Now I'll turn to some highlights of our research and development programs. Again, here you see the full pipeline. Starting with HETLIOZ in a number of indications, we previously discussed jet lag disorder being at the regulatory phase. We'll discuss the late sleep phase disorder later, but we're also pursuing insomnia and autism spectrum disorder in non-24 and pediatric patients. On Fanapt, lifecycle management indications that we discussed previously are progressing. On tradipitant, we're pursuing gastroparesis and motion sickness, and we previously discussed the atopic dermatitis and COVID-19 pneumonia programs. VTR-297 is a compound being pursued in hematologic malignancies; and finally, our CFTR franchise of an activator and an inhibitor, in a diverse set of indications. Now a bit more on our tradipitant development programs. First of all, in gastroparesis, we completed our reported results on a Phase III study earlier this year. Prior to that, a Phase II study was completed with the results reported in December 2018, and published last year in the Journal of Gastroenterology. We'll review some of these results in the slide deck later today. Motion sickness, a Phase III study has restarted after being on hold due to COVID-19 and is already over 15% enrolled, and a Phase II positive study reported results in July of 2019. The atopic dermatitis program is on hold and the ODYSSEY study in COVID-19 pneumonia was stopped for futility after a DSMB analysis. Turning to the gastroparesis program; as we discussed, the Phase III study has now been completed, and a pre-NDA meeting has been scheduled with the FDA. Gastroparesis remains a significant unmet medical need, with the last treatment approved more than 40 years ago. There are 600,000 patients diagnosed with gastroparesis, and this seems to be just the tip of the iceberg of about 6 million patients that are estimated in the U.S., with most being undiagnosed. Today, approximately 300,000 prescriptions are written every month for metoclopramide. That is the drug approved for diabetic gastroparesis more than 40 years ago, which comes off a significant warning on a side effect tolerability issue. Gastroparesis symptoms and clinical expression. Gastroparesis is a gastrointestinal disorder, that has a diverse set of populations, including diabetic, which represent about 1/3 of the patients with gastroparesis; idiopathic, which represent about 30% of the patients, and the remainder being traumatic or postsurgical. The symptoms are dominated by chronic nausea, patients suffer from chronic, severe and debilitating nausea and vomiting. Gastroparesis can cause vomiting, which can lead to weight loss and hospitalizations due to nutritional deficiencies. It is a disorder of delayed gastric emptying, and this is diagnosed with a set of technologies, and there appears to be a mechanical defect of delayed gastric emptying, which in turn causes the symptoms. Now an overview of the key components of our gastroparesis program. First, we have our Phase II study, which was a 4-week study of adult patients with diabetic or idiopathic gastroparesis, where tradipitant was shown to be effective in improving nausea and overall symptoms in patients with gastroparesis. Secondly, we have our Phase III study, which was a 12-week study of approximately 200 adult patients with diabetic or idiopathic gastroparesis. While the study did not meet its primary endpoint, when accounting for confounders, strong evidence of drug effect across a number of symptoms was observed. Finally, we initiated an expanded access program for patients requesting access to tradipitant outside of the clinical studies. We continue to receive requests from patients to participate in this program, and the program currently has multiple patients continuing to take tradipitant for more than a year. This next slide provides an overview of the Phase II study reported in December 2018, which has since been published in the Journal of Gastroenterology in January 2021, with the references included in the footnote at the bottom of the slide. The study was a 4-week double-blind treatment period, followed by an optional 8-week treatment period of open label, the dose 85 milligrams twice daily orally, and we had more than 40 sites participating in the U.S. Study had approximately 150 randomized patients, stratified between idiopathic and diabetic gastroparesis, and the assessments included patient-reported daily diary with nausea, vomiting and other symptoms, and a patient assessment of GI disorders under the acronym PAGI-SYM; and also patient global impression scale change and clinical global impression severity. This slide provides a similar overview of the Phase III study we reported results on earlier this year. The study had a similar design to the Phase II study, but with a 12-week treatment period. The design after the screening period included 12-week double-blind treatment, the dose again, was 85 milligrams twice a day orally, and we had over 40 sites that participated in the U.S. The study had approximately 200 randomized patients, again stratified deeply between idiopathic and diabetic gastroparesis, and the assessments again included patient-reported daily diary, with nausea, vomiting and other symptoms and a patient assessment of GI disorders and the patient global impression scale change and clinical global impression severity. We've recently reported the results of the completed pooled analysis of the 2 clinical studies of tradipitant in gastroparesis. Both studies were large, multisite randomized double-blind placebo-controlled studies. This pooled analysis consisted of 342 patients with relevant clinical endpoints. The results of this pooled analysis demonstrate the efficacy of tradipitant in relieving symptoms of gastroparesis. As part of this analysis, tradipitant was shown to be superior to placebo in key clinical parameters, including nausea, percent of nausea-free days, and also patient global impression scale change. This slide provides the visual depiction of the pooled analysis of the 2 clinical studies of tradipitant in gastroparesis. On the left, Figure 1 and Table 1 show the results of such pooled analysis of all patients randomized in the 2 studies, the intent to treat population, ITT. On the right, Figure 2 and Table 2 show the results for the same parameters in the population of patients, who were judged as compliant to treatment based on analysis of drug exposure, the treatment compliant population. Consistently, both pooled analyses show tradipitant to be superior to placebo in key clinical parameters, including improvement in nausea, the primary endpoint parameter, percent nausea-free days, patient global impression scale change, the PGIC, overall benefit score and gastroparesis cardinal symptom index for the GCSI. Briefly on tradipitant for promotion sickness. This is again tradipitant an NK1 receptor antagonist, that has the potential to be effective in improving the symptoms of motion sickness, which is characterized by nausea and vomiting as the core symptoms. The sensory mismatch resulting in motion sickness is due to discordance between the actual and expected movement, as perceived by the visual vestibular. About 2 million to 3 million doses of Dramamine are purchased each month in the U.S., highlighting the need for treatment options. In the Phase II study that we reported in July 2019 and published in Frontiers Neurology in September of 2020, tradipitant was found to be effective in preventing motion sickness. Additionally, an exploratory analysis was performed to evaluate the effects of tradipitant under calm and rough seas. Under rough sea conditions, defined as seawaves above 1 meter, 72.2% of the placebo-treated patients vomited as compared to 15.8% of those treated with tradipitant. A significant effect was also seen under rough conditions in the Motion Sickness Severity Scale Worst score. In the table below, you see the results of the study. This was a single day sea travel on the Pacific Ocean, with patients with a history of motion sickness. They received 170 milligrams of tradipitant versus placebo, prior to initiating their travel, and the primary endpoints included were vomiting and the Motion Sickness Severity Scale Worst score. In the table, you see the effects of tradipitant under calm seas and the rough seas. Under calm seas as expected, not as many placebo patients vomited. 26.7%, which compares to a smaller number of 18.2% in tradipitant. However, in rough seas, placebo patients vomited 72.2% versus 15.8% on tradipitant, a highly statistically significant result. And in this slide, we see the effects overall. In blue is tradipitant. We see fewer people vomiting versus the overall placebo. In calm seas, there's not much difference between treatments, and this is due to placebo, patients not getting sick. And to the right, on the rough seas, you see the highly significant results that we discussed on the previous slide. Briefly on to HETLIOZ lifecycle management. Delayed sleep phase disorder has a Phase III program ongoing insomnia in autism spectrum disorder has a Phase II open label study underway, and programs for non-24 pediatric and jet lag disorder are under consideration. On delayed sleep phase disorder, it's estimated that approximately 3 million adults in the U.S. suffer from the disorder, which is highest in adolescents and young adults, with rates estimated between 3.3% and 4.6%. The prevalence in adults is lower, with estimates between 0.2% and 1.7%. In a study of patients with circadian rhythm sleep disorders, 83% were diagnosed with DSPD, making DSPD the most common circadian rhythm disorder. 90% of those DSPD patients reported an onset of the symptoms during childhood or adolescence. DSPD is likely the most prevalent circadian rhythm disorder, affecting approximately 1% of the population and 7% to 10% of patients with disorders of initiating or maintaining sleep. The symptoms include delayed sleep onset; individuals with DSPD habitually go to bed and wake up significantly later than typical or desired times. DSPD patients have an inability to fall asleep at a conventional time. The clinical history typically emerges during adolescence, age-related circadian rhythm changes may lessen the propensity for delayed sleep in adulthood. A delayed bedtime combined with conventional school work start times, cause significant reductions in total sleep time for DSPD patients. Individuals may have low energy in the daytime, because they're attempting to be awake, while sleep propensity is high. Comorbidities in DSPD include depression and a delayed circadian preference, has been described in adults with bipolar disorder, and in some cases, correlating with higher illness recurrence rates. Now on the Fanapt lifecycle management. Again, Fanapt is an atypical antipsychotic approved for schizophrenia, now being pursued for Bipolar I disorder, with the Phase III program currently enrolling patients in the U.S. and Europe. The study is now over 75% enrolled, and we expect to complete enrollment by the end of 2022. On Parkinson's Disease psychosis, we are planning 2 studies, a Phase II open-label study of 2 cohorts, followed by a larger randomized placebo-controlled study, that will be a Phase III study. Our long-acting injectable Fanapt is currently in a PK study, as we work towards finalizing and optimizing the dosing and administration that would lead to a Phase III efficacy study in acute schizophrenia. And finally, VHX-896 or formerly P88, the active metabolite of Fanapt iloperidone has the potential to improve the clinical profile and create a sustained long-term value in the treatment of psychiatric disorders, a clinical pharmacology bioequivalent study is currently underway. Now briefly on Parkinson's Disease psychosis. There are approximately 1 million adults who suffer with Parkinson's Disease in the U.S., more than 10 million people worldwide have Parkinson's Disease, and it's estimated that 20% to 40% of people with Parkinson's Disease, will report the experience of hallucinations or delusions at some time. Parkinson's Disease psychosis is a combination of hallucinations and delusions, in patients with Parkinson's Disease, and it's associated with significant patient and caregiver burden. It's one of the major reasons for nursing home placement among Parkinson's Disease patients, and limited treatment options are currently available. And now finally, our financial results. Earlier, we reviewed our 2022 financial guidance and the financial results for the first quarter of 2022. This slide shows the net product sales of HETLIOZ since launch in 2014, with steady growth as we have made our way into the Non-24 market, and more recently in our newly launched indication of nighttime sleep disturbances in Smith-Magenis syndrome. This shows the net product sales of our more mature product Fanapt, with guidance of $90 million to $100 million in net product sales for 2022. And finally, a recap of our Q1 2022 financial results, the total revenues for the first quarter again were $60.2 million, and we ended with a cash position of $435.2 million. Finally, for more information on our commercial products, HETLIOZ and Fanapt, please visit hetlioz.com and fanapt.com. Thanks very much for your time.