Vanda Pharmaceuticals Inc. 2026 Q3 Earnings Call

Thanks, Colby. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third quarter 2026 performance. Our third 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. Mihael 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. Mihael Polymeropoulos.

Thank you, Kevin. Good afternoon, everyone. Thank you for joining us today for Vanda Pharmaceuticals' third quarter 2026 earnings conference call. We are pleased with the strong revenue growth in the third quarter, increasing 24% year-over-year, driven by continued Fanapt momentum and the early contribution from our newest commercial launch, while operating expenses decreased 18% compared to the second quarter as key phase III and launch preparation activities conclude. Looking ahead, with the commercial launch of BYSANTI expected in fourth quarter, the Quimilza BLA under FDA review with a December PDUFA date, and positive phase III results supporting potential expansions for NEREUS in GLP-1 induced vomiting and HETLIOZ in delayed sleep-wake phase disorder, we are focused on further moderating costs and driving revenue growth from our current portfolio and planned launches to support sustainable long-term value. Some of our financial highlights on operating expenses.

During 2025 and 2026, we have advanced multiple phase III programs, continued our commercial activities for FANAPT, HETLIOZ, and PONVORY, and prepared for the commercial launches, including manufacturing commercial supplies of NEREUS, BYSANTI, and Quimilza. These activities resulted in significantly increased operating expenses in 2025 and 2026. As certain of these activities began concluding in the third quarter of 2026, operating expenses have decreased, and we expect operating expenses to decrease further in future quarters as the remainder of these activities conclude. Some key commercial highlights. FANAPT saw continued strong momentum in Q3 2026, with total prescriptions, TRx, up 25% and new-to-brand prescriptions, NBRx, up 18% versus Q3 2025. Since commercial expansion following the approval of bipolar disorder, FANAPT has seen significant growth, with TRx up 72% and NBRx up 306% versus the second quarter of 2024.

BYSANTI received FDA approval for the treatment of bipolar I disorder and schizophrenia in the first quarter of this year, 2026, and is expected to launch in the fourth quarter of 2026. BYSANTI is protected by data exclusivity through February 20, 2031, and multiple patents, the latest of which expires on May 31, 2044. NEREUS was launched commercially in the U.S. in the second quarter of 2026 with a direct-to-consumer offering via the web portal nereus.us. Sales force promotion began in the third quarter of 2026. During the third quarter of 2026, the NEREUS launch showed strong growth in both total prescriptions and unique prescribers as compared to the second quarter of 2026. Key regulatory and clinical developments. Recent and upcoming milestones. In October 2026, we announced positive results from the phase III clinical study VP-VLY-686-3601 of NEREUS for the prevention of vomiting associated with GLP-1 receptor agonist therapy.

We intend to discuss the results with the FDA and plan to submit a supplemental new drug application, sNDA, seeking approval of NEREUS for the prevention of vomiting associated with GLP-1 receptor agonist therapy. In September of 2026, we announced positive top-line results from the pivotal phase III study of HETLIOZ in adults with delayed sleep-wake phase disorder. We intend to discuss this data with the FDA and to submit a supplemental NDA seeking approval of HETLIOZ for DSWPD. If approved, HETLIOZ would be the first FDA-approved medicine indicated for this condition. The biologics license application, BLA, for Quimilza in generalized pustular psoriasis, or GPP, is under review by the FDA with a Prescription Drug User Fee Act, PDUFA, target action date of December 12, 2026.

The results of the pivotal clinical study were published in the April 28, 2026, issue of the NEJM Evidence. The phase III study of BYSANTI as a once-daily adjunctive treatment for major depressive disorder, MDD, is ongoing, with results expected in the first half of 2027. The study is enrolling patients in 54 sites in the U.S. and Europe and has enrolled 55% of the 500-patient enrollment target. The primary endpoint of the study is the change from baseline to week 6 of the Montgomery-Åsberg Depression Rating Scale, MADRS, comparing milsaperidone and placebo. Secondary endpoints include Clinical Global Impression Severity, CGIS, and Clinical Global Impression Change, CGIC. Finally, on ongoing regulatory proceedings. 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 5-day hearing before the administrative law judge from December 14, 2026, to December 18, 2026. We continue to pursue our legal challenge to the FDA's final order refusing to hold a hearing or to approve our sNDA for HETLIOZ in the treatment of insomnia. Following oral argument before the U.S. Court of Appeals for the D.C. Circuit in September 2026, the matter is awaiting decision. We continue to pursue our challenge to the FDA's final order refusing to hold a hearing or to approve the company's NDA for NEREUS in gastroparesis. Briefing is currently underway before the D.C. Circuit and is due to be completed in mid-November.

With that, I'll turn now to Kevin to discuss our financial results.

Kevin? Thank you, Mihalis. I'll begin by summarizing our financial results for the first 9 months of 2026 before turning to discuss the third quarter of 2026.

Total revenues for the first 9 months of 2026 were $172.1 million, an 8% increase compared to $158.9 million for the same period in 2025. The first 9 months of 2026 include increased FANAPT revenue as a result of the continued commercialization efforts for FANAPT in bipolar I disorder, increased PONVORY revenue, and revenue contribution from the newly launched NEREUS, partially offset by decreased HETLIOZ revenue as a result of generic competition. Let me break this down by product. FANAPT net product sales were $104.3 million for the first 9 months of 2026, a 24% increase compared to $84.1 million in the same period in 2025.

The increase to net product sales relative to the first nine months of 2025 was attributable to an increase in volume. Turning to HETLIOZ. HETLIOZ net product sales were $43.2 million for the first nine months of 2026, a 21% decrease compared to $55 million for the same period in 2025. The decrease was attributable to a decrease in volume as a result of continued generic competition in the U.S. Of note, for the third quarter of 2026, HETLIOZ continued to be the leading product from a market share perspective, despite generic competition now for nearly four years. Turning next to PONVORY. PONVORY net product sales were $21.9 million for the first nine months of 2026, an 11% increase compared to $19.8 million for the same period in 2025.