vnda-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34186

VANDA PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)


Delaware						03-0491827
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2200 Pennsylvania Avenue NW, Suite 300E

Washington, DC 20037

(202) 734-3400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	VNDA	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 28, 2021, there were 55,712,230 shares of the registrant’s common stock issued and outstanding.

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Vanda Pharmaceuticals Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2021

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		Page
PART I – FINANCIAL INFORMATION

ITEM 1	Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	5

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	6

	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020	7

	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020	8

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	10

	Notes to the Condensed Consolidated Financial Statements	11

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	30

ITEM 4	Controls and Procedures	31

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	31

ITEM 1A	Risk Factors	31

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	31

ITEM 3	Defaults Upon Senior Securities	31

ITEM 4	Mine Safety Disclosures	32

ITEM 5	Other Information	32

ITEM 6	Exhibits	33

Signatures		34

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (Quarterly Report) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). 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 and assumptions that involve risks, changes in circumstances and uncertainties. If the risks, changes in circumstances or uncertainties materialize or the assumptions prove incorrect, the results of Vanda Pharmaceuticals Inc. (we, our, the Company or Vanda) may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The forward-looking statements in this Quarterly Report may include, among other things, statements about:

•our ability to continue to commercialize HETLIOZ® (tasimelteon) capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) in the United States (U.S.) and Europe and HETLIOZ® capsules and oral suspension (HETLIOZ LQTM) for the treatment of nighttime sleep disturbances in Smith-Magenis Syndrome (SMS) in the U.S.;

•our ability to increase market awareness of Non-24 and SMS and market acceptance of HETLIOZ®;

•our ability to continue to generate U.S. sales of Fanapt® (iloperidone) oral tablets for the treatment of schizophrenia;

•the impact of the novel coronavirus (COVID-19) on our business and operations, including our revenue, our supply chain, our commercial activities, our ongoing and planned clinical trial and our regulatory activities;

•our dependence on third-party manufacturers to manufacture HETLIOZ®, HETLIOZ LQTM, and Fanapt® in sufficient quantities and quality;

•our level of success in commercializing HETLIOZ® and Fanapt® in new markets;

•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;

•our ability to prepare, file, prosecute, defend and enforce any patent claims and other intellectual property rights;

•our ability to maintain rights to develop and commercialize our products under our license agreements;

•our ability to obtain and maintain regulatory approval of our products, and the labeling for any approved products;

•our ability to obtain approval from the FDA for HETLIOZ® for the treatment of jet lag disorder;

•our expectations regarding the timing and success of preclinical studies and clinical trials;

•the safety and efficacy of our products;

•regulatory developments in the U.S., Europe and other jurisdictions;

•limitations on our ability to utilize some or all of our prior net operating losses and orphan drug and research and development credits;

•the size and growth of the potential markets for our products and our ability to serve those markets;

•our expectations regarding trends with respect to our revenues, costs, expenses, liabilities and cash, cash equivalents and marketable securities;

•our ability to identify or obtain rights to new products;

•our ability to attract and retain key scientific or management personnel;

•the cost and effects of litigation;

•our ability to obtain the capital necessary to fund our research and development or commercial activities;

•potential losses incurred from product liability claims made against us; and

•the use of our existing cash, cash equivalents and marketable securities.

All written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report. We caution you not to rely too heavily on the forward-looking statements we make or that are made on our behalf. Each forward-looking statement speaks only as of the date of this Quarterly Report, and we undertake no obligation, and specifically decline any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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We encourage you to read Management’s Discussion and Analysis of Financial Condition and Results of Operations and our unaudited condensed consolidated financial statements contained in this Quarterly Report. In addition to the risks described in Part I, Item 1A, Risk Factors, of our annual report on Form 10-K for the fiscal year ended December 31, 2020, other unknown or unpredictable factors also could affect our results. Therefore, the information in this report should be read together with other reports and documents that we file with the Securities and Exchange Commission from time to time, including on Form 10-Q and Form 8-K, which may supplement, modify, supersede or update those risk factors. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

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Part I — FINANCIAL INFORMATION


ITEM 1			Financial Statements (Unaudited)

VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(in thousands, except for share and per share amounts)	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	50,522	$	61,031
Marketable securities	355,446		306,709
Accounts receivable, net	41,496		30,036
Inventory	902		1,280
Prepaid expenses and other current assets	13,442		10,089
Total current assets	461,808		409,145
Property and equipment, net	3,318		4,136
Operating lease right-of-use assets	9,580		10,459
Intangible assets, net	20,450		21,559
Deferred tax assets	76,105		81,516
Non-current inventory and other	8,506		6,641
Total assets	$	579,767	$	533,456
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	31,820	$	31,509
Product revenue allowances	40,177		34,427

Total current liabilities	71,997		65,936
Operating lease non-current liabilities	10,457		11,497
Other non-current liabilities	3,992		2,757
Total liabilities	86,446		80,190
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 September 30, 2021 and December 31, 2020	—		—
Common stock, $0.001 par value; 150,000,000 shares authorized; 55,708,730 and 54,865,092 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	56		55
Additional paid-in capital	664,408		650,300
Accumulated other comprehensive income	111		239
Accumulated deficit	(171,254)		(197,328)
Total stockholders’ equity	493,321		453,266
Total liabilities and stockholders’ equity	$	579,767	$	533,456

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended				Nine Months Ended
(in thousands, except for share and per share amounts)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Revenues:
Net product sales	$	70,095	$	60,308	$	200,663	$	180,515
Total revenues	70,095		60,308		200,663		180,515
Operating expenses:
Cost of goods sold excluding amortization	6,797		5,898		19,393		16,952
Research and development	19,653		12,298		56,032		40,728
Selling, general and administrative	32,456		34,001		90,600		104,939
Intangible asset amortization	370		369		1,109		1,108
Total operating expenses	59,276		52,566		167,134		163,727
Income from operations	10,819		7,742		33,529		16,788
Other income (expense)	(97)		659		225		3,943
Income before income taxes	10,722		8,401		33,754		20,731
Provision for income taxes	2,951		2,454		7,680		5,584
Net income	$	7,771	$	5,947	$	26,074	$	15,147
Net income per share:
Basic	$	0.14	$	0.11	$	0.47	$	0.28
Diluted	$	0.14	$	0.11	$	0.46	$	0.28
Weighted average shares outstanding:
Basic	55,668,156		54,666,128		55,467,528		54,325,832
Diluted	57,040,736		55,209,032		56,818,295		55,054,772

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net income	$	7,771	$	5,947	$	26,074	$	15,147
Other comprehensive income (loss):
Net foreign currency translation gain (loss)	(17)		32		(48)		29
Change in net unrealized gain (loss) on marketable securities	33		(323)		(102)

SEC Form 10-Q filed by Vanda Pharmaceuticals Inc.