Vanda Pharmaceuticals Inc. 2026 Q2 Earnings Call

Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' second quarter 2026 performance. Our second quarter 2026 results were released this afternoon and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today's call is Dr. Mihalis Polymeropoulos, our President, Chief Executive Officer, and Chairman of the Board, and Daniel McGuire, our General Counsel. Following my introductory remarks, Mihalis will update you on our ongoing activities. I will then comment on our financial results before we open the lines for your questions. Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws.

Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances, and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, risk factors, and management's discussion and analysis of financial condition and results of operations, sections of our most recent annual report on Form 10-K as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings with the SEC, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events, or otherwise, except as required by law.

With that said, I would now like to turn the call over to our CEO, Dr. Mihalis Polymeropoulos.

Good afternoon, everyone. Thank you for joining us today for Vanda Pharmaceuticals' second quarter 2026 earnings conference call. We're pleased with the continued strong growth of Fanapt and the enthusiastic response to NEREUS as it becomes available to patients. With BYSANTI approved and on track for launch in the second half of 2026, a December 2026 PDUFA date for Quimilza or imsidolimab, and multiple late-stage clinical trial results expected before year-end, we believe Vanda is well-positioned for meaningful commercial expansion and pipeline value creation. As our phase III programs launch preparations and commercial supply manufacturing near completion, we expect operating expenses to begin moderating later this year, and more significantly in 2027. We believe that our current resources, together with anticipated product revenues, provide a solid foundation to advance our objectives through at least the end of 2027.

During 2025 and 2026, we have advanced multiple phase III programs and continued execution on the commercialization of Fanapt and PONVORY, and prepared for the commercial launches, including manufacturing, commercial supplies of NEREUS, BYSANTI, and Quimilza. As these activities conclude, we expect operating expense to begin decreasing by the end of 2026 and more substantially through 2027. Based on our current cash position and anticipated revenues, we expect to have sufficient resources to fund operations through at least the end of 2027. Fanapt showed continued strong momentum in the second quarter of 2026, with total prescriptions, TRx, up 31%, and new to brand prescriptions, NBRx, up 32% versus the second quarter of 2025. Since commercial expansion following the approval of bipolar I disorder, Fanapt has seen significant growth, with TRx up 62%, NBRx up 300% versus the second quarter of 2024.

BYSANTI received U.S. Food and Drug Administration approval for the treatment of bipolar I disorder and schizophrenia in the first quarter of 2026 and is expected to launch in the second half of 2026. BYSANTI is protected by data exclusivity through February 20, 2031, and multiple patents, the latest of which expires on May 31st, 2044. In May 2026, the early commercial launch of NEREUS was initiated with a direct-to-consumer offering via the web portal nereus.us. Personal promotion is expected to commence later in 2026. Vanda's ongoing late-stage clinical studies are progressing rapidly and are expected to generate top-line results in 2026 or early 2027, including The phase III study of NEREUS for the prevention of vomiting in patients receiving GLP-1 receptor agonist therapies, with results expected in 2026. The phase III study of VQW-765 in the treatment of adults with social anxiety disorder, with results expected in 2026.

The phase III study of HETLIOZ in the treatment of delayed sleep phase disorder, DSPD, with results expected in 2026. Finally, the phase III study of BYSANTI as a once-daily adjunctive treatment for major depressive disorder, with results expected in the first half of 2027. The biologic license application, BLA, for Quimilza in Generalized Pustular Psoriasis is under review by the FDA with a Prescription Drug User Fee Act target action date of December 12th, 2026. The results of the pivotal clinical study were published earlier on April 28, 2026, in the NEJM Evidence. In May 2026, we announced that Japan's Ministry of Health, Labour and Welfare granted orphan drug designation to Quimilza for the treatment of GPP.

In July 2026, we announced that the Committee for Orphan Medicinal Products at the European Medicines Agency had adopted a positive opinion recommending orphan drug designation for Quimilza for the treatment of GPP. In July 2026, we announced that the FDA had granted rare pediatric disease designation for VCA-894A, our investigational antisense oligonucleotide therapy for the treatment of Charcot-Marie-Tooth disease, axonal type 2S, or CMT 2S, a rare, serious and progressive inherited neurological disorder. We continue to progress the FDA formal hearing regarding HETLIOZ for the treatment of jet lag disorder. The proceeding, a rare administrative hearing process granted after the D.C. Circuit set aside the FDA's prior refusal to approve the application, is advancing according to schedule and is expected to culminate in a five-day hearing before the administrative law judge in December of 2026. With that, I'll turn now to Kevin to discuss our financial results.

Kevin? Thank you, Milos. I will begin by summarizing our financial results for the first six months of 2026 before turning to discuss the second quarter of 2026.

Total revenues for the first six months of 2026 were $102.2 million, essentially flat as compared to $102.6 million for the same period in 2025. The first six months of 2026 included increased Fanapt revenue as a result of the continued commercialization efforts for Fanapt bipolar I disorder, increased PONVORY revenue, and revenue contribution from the newly launched NEREUS, offset by decreased HETLIOZ revenue as a result of generic competition and timing of shipments to customers at the end of the second quarter of 2026. Total revenues for the first six months do not include approximately $7 million of HETLIOZ revenue for orders shipped on June 29th, 2026 that arrived on July 1st, 2026. Let me break this down now by product.

Fanapt net product sales were $65.5 million for the first six months of 2026, a 24% increase compared to $52.8 million in the same period in 2025. This increase to net product sales relative to the first six months of 2025 was attributable to an increase in volume, partially offset by a decrease in price net of deductions. Turning to HETLIOZ. HETLIOZ net product sales were $21.5 million for the first six months of 2026, a 42% decrease compared to $37.1 million in the same period in 2025. The decrease was attributable to a decrease in volume as a result of the continued generic competition in the U.S. and the timing of shipments to customers at the end of the second quarter of 2026.

HETLIOZ net product sales for the first six months of 2026 do not include orders totaling approximately $7 million in revenue that were shipped on June 29th and arrived on July 1st. These orders will be recognized as revenue in the third quarter of 2026. During the second quarter of 2026, there was destocking of inventory by certain of our specialty pharmacy customers, primarily as a result of the previously mentioned shipment issue. Of note, for the second quarter of 2026, HETLIOZ continued to be the leading product from a market share perspective, despite generic competition now for over three years. Turning to PONVORY. PONVORY net product sales were $14.1 million for the first six months of 2026, an 11% increase compared to $12.7 million for the same period in 2025.

Of note, an amount of variable consideration related to PONVORY net product sales is subject to dispute, of which approximately $3 million was recognized for the three months ended December 31st, 2024. Finally, turning to NEREUS. NEREUS became commercially available in the U.S. in May of 2026. NEREUS net product sales were $1 million for the first six months of 2026. NEREUS is sold using both the traditional wholesaler channel and also by prescription directly through the nereus.us website. Revenue recognized during the first six months of 2026 primarily related to units sold through the wholesaler channel. During the second quarter of 2026, there was an initial stocking of NEREUS by wholesalers of $15.2 million. We constrained NEREUS net product sales to an amount not probable of significant revenue reversal.