vnda-20220930

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, 2022


☐			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(s)	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 27, 2022, there were 56,590,048 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, 2022

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		Page
PART I – FINANCIAL INFORMATION

ITEM 1	Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	5

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	6

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021	7

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021	8

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	10

	Notes to Condensed Consolidated Financial Statements	11

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	31

ITEM 4	Controls and Procedures	32

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	32

ITEM 1A	Risk Factors	32

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	32

ITEM 3	Defaults Upon Senior Securities	32

ITEM 4	Mine Safety Disclosures	32

ITEM 5	Other Information	33

ITEM 6	Exhibits	34

Signatures		35

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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, but are not limited to, 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 LQ®) 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 overcome the increased reimbursement and patient access challenges we face as a result of declining third-party payor coverage;

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

•our ability to obtain regulatory approval for tradipitant from the U.S. Food and Drug Administration (FDA);

•the impact of public health crises, epidemics, pandemics or similar events 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 LQ®, and Fanapt® in sufficient quantities and quality;

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

•our ability to obtain approval from the FDA for HETLIOZ® beyond the currently approved indications;

•our ability to obtain approval from the FDA for Fanapt® beyond the currently approved indications;

•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

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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.

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, 2021, 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, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	49,397	$	52,071
Marketable securities	405,394		380,742
Accounts receivable, net	29,352		32,467
Inventory	1,590		1,025
Prepaid expenses and other current assets	21,373		11,996
Total current assets	507,106		478,301
Property and equipment, net	2,594		3,113
Operating lease right-of-use assets	8,262		9,272
Intangible assets, net	18,944		20,081
Deferred tax assets	74,529		74,878
Non-current inventory and other	10,353		8,147
Total assets	$	621,788	$	593,792
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	50,125	$	34,438
Product revenue allowances	42,498		39,981

Total current liabilities	92,623		74,419
Operating lease non-current liabilities	8,903		10,055
Other non-current liabilities	4,605		4,390
Total liabilities	106,131		88,864
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, 2022 and December 31, 2021	—		—
Common stock, $0.001 par value; 150,000,000 shares authorized; 56,588,548 and 55,900,855 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	57		56
Additional paid-in capital	681,847		669,223
Accumulated other comprehensive loss	(1,485)		(175)
Accumulated deficit	(164,762)		(164,176)
Total stockholders’ equity	515,657		504,928
Total liabilities and stockholders’ equity	$	621,788	$	593,792

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, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Revenues:
Net product sales	$	65,318	$	70,095	$	189,900	$	200,663
Total revenues	65,318		70,095		189,900		200,663
Operating expenses:
Cost of goods sold excluding amortization	6,320		6,797		18,044		19,393
Research and development	24,857		19,653		67,316		56,032
Selling, general and administrative	29,854		32,456		103,703		90,600
Intangible asset amortization	379		370		1,137		1,109
Total operating expenses	61,410		59,276		190,200		167,134
Income (loss) from operations	3,908		10,819		(300)		33,529
Other income (expense)	1,553		(97)		1,987		225
Income before income taxes	5,461		10,722		1,687		33,754
Provision for income taxes	2,191		2,951		2,273		7,680
Net income (loss)	$	3,270	$	7,771	$	(586)	$	26,074
Net income (loss) per share:
Basic	$	0.06	$	0.14	$	(0.01)	$	0.47
Diluted	$	0.06	$	0.14	$	(0.01)	$	0.46
Weighted average shares outstanding:
Basic	56,574,503		55,668,156		56,397,805		55,467,528
Diluted	56,969,033		57,040,736		56,397,805		56,818,295

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 (LOSS) (Unaudited)


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net income (loss)	$	3,270	$	7,771	$	(586)	$	26,074
Other comprehensive income (loss):
Net foreign currency translation loss	(37)		(17)		(83)		(48)
Change in net unrealized gain (loss) on marketable securities	(24)		33		(1,594)		(102)
Tax benefit on other comprehensive income (loss)	7		(8)		367		22
Other comprehensive income (loss), net of tax	(54)		8		(1,310)		(128)
Comprehensive income (loss)	$	3,216	$	7,779	$	(1,896)	$	25,946

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

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SEC Form 10-Q filed by Vanda Pharmaceuticals Inc.