We're gonna get started with our next session. I'm Andrew Tsai, Senior Biotech Analyst here at Jefferies. Thanks for joining us for our last day of the conference, and, lo and behold, we have Vanda Pharmaceuticals', Chairman and CEO, Mihael Polymeropoulos, will be giving a presentation first, and then we'll follow up with a Q&A afterwards. And Kevin, will you be on? And Kevin Moran is here, too, as CFO. Just-
Thank you very much, Andrew, for the invitation. Good afternoon, everyone. I'm Mihael Polymeropoulos, a founder, CEO, and Chairman of the Board of Vanda Pharmaceuticals. We'll spend a few minutes giving an overview of the company, and then we'll open up to questions. Some forward-looking statements. I will not leave it up for 10 minutes for you to read, but it's there. Vanda Pharmaceuticals is a leading global biopharmaceutical company dedicated to innovation. We have three commercialized products: HETLIOZ, HETLIOZ LQ, and Fanapt. A robust pipeline of late and early-stage programs, and a strong financial position of approximately $490 million in cash and no debt. Our commercialized products are HETLIOZ and HETLIOZ LQ.
HETLIOZ comes in oral capsules for the treatment of non-24-hour sleep-wake disorder and the nighttime sleep disturbances of Smith-Magenis syndrome, and so does HETLIOZ liquid LQ formulation for children of ages 3 and above. Approved in the U.S. for both indications, approved in the EU for the non-24-hour sleep-wake disorder in totally blind. Fanapt is approved in the U.S. for the treatment of schizophrenia, and we'll discuss results in bipolar disorder and the recent new drug application. An overview of research and development of late stage clinical assets.
First, HETLIOZ, and you can see that jet lag disorder and insomnia at the regulatory phase, delayed sleep phase disorder in phase 3, and non-24-hour of pediatric at the same stage. For Fanapt, bipolar I disorder is now in the regulatory phase, and we're working on a long-acting injectable formulation of Fanapt as well. P88, VTX-896, or otherwise known as P88, is now in the equivalent of phase 3 for schizophrenia and bipolar I disorder. A new drug, which has been shown to be bioequivalent to Fanapt. Tradipitant for 3 main indications, gastroparesis, motion sickness, and atopic dermatitis.
I'll touch upon here on the details of jet lag disorder program and with the FDA challenging their negative decisions from some years past. Insomnia, the clinical program, we submitted a supplemental NDA, and it now has a PDUFA regulatory action of March of next year. Delayed sleep phase disorder, the phase three program is ongoing, and the same for the non-24 pediatric. On Fanapt, bipolar I disorder, we're pursuing the FDA approval for this second indication now with a PDUFA target date of April 2024. Long-acting injectable has finished the phase one study, and we're considering now a phase three program for approval in the treatment of schizophrenia.
And again, here, the P88, an active metabolite of iloperidone, now ready to be pursued as a new drug application in the next year. On bipolar disorder, the study was completed last year, large phase 3 study, 400 people randomized, and the primary endpoint was the classic Young Mania rating scale, or YMRS. And highly significant results at week 4, depicted also in the graph at the bottom, with separation beginning at day 14. And on the right side, you have the detail of all the YMRS subcomponents, most of them, and each one of them highly significantly improved compared to placebo.
The tradipitant programs, gastroparesis, phase 3 results were announced in February 2022, as a result of a 12-week study. The phase 2 positive study results were discussed in December 2018, and we are pursuing FDA approval for patients in gastroparesis. Motion sickness program, the second phase 3 study was initiated, and we have previously shared positive results on phase 2 and phase 3 studies in actual sea travel. Atopic dermatitis, previously discussed results of the Epione study program. A bit more detail on gastroparesis. Completed two clinical studies pursuing the FDA approval. Gastroparesis is a significant unmet medical need. The last drug approved for a subtype of gastroparesis, the diabetic subtype, was metoclopramide 40 years ago.
A smaller number of patients are diagnosed compared to the number of patients that is estimated to have gastroparesis in the U.S. Again, the clinical program in more detail here, phase II was a four-week study with 150 patients, which shown efficacy of tradipitant as compared to placebo. The phase III study, a twelve-week study in patients with gastroparesis, and the primary endpoint failed to separate from placebo with what we described as a large placebo effect. An open label phase study remains open with several hundred patients already enrolled. Also, and as a result of the subjective feeling well by patients in the study, a number of patients have asked for expanded access, and the FDA has granted individual patient expanded access.
Now a few dozen patients are on the program, some of them for a period over 2 years. This is a detail of the pooled study results of the 4-week study and the 12-week study, looking at a 4-week endpoint. And on the left side, you see the performance in the ITT population. This is a forest plot, and you see the items of nausea, % nausea-free days, the PGIC, overall benefit score, and the GCSI, which is a scale for gastroparesis symptoms. And you can see all of them favor tradipitant and many of them significantly so, and that is at 4 weeks.
On the right side, you see what is labeled here as compliant population, and actually what it is is people in the study on tradipitant that had exposures above a certain low cutoff. So you can call it adequate exposure. Also, although some of it was explained by poor compliance. Again, you see the same picture with the ITT population, just a larger effect size and more significant values. On motion sickness, we all know what motion sickness is, but it is believed that the neurokinin 1 receptor, if blocked, it may actually block the effect of substance P in the nociceptive areas emetic pathway.
Nausea and vomiting are the core symptoms, and it is believed to come from a sensory mismatch between the evaluation of the environment moving around you and perception. About 2-3 million dose of Dramamine, a very popular antiemetic in motion sickness, are purchased every month in the U.S. The phase III program we had announced before opposed to phase II sea travel study. The same was repeated in the phase III program, randomized 365 people in three arms, 85 milligrams, 170 milligrams, and placebo. A second phase III study has been initiated with a similar design. We expect to pursue an FDA approval upon completion of this program.
The motion sickness phase III study you see here in 34 boat trips of the coastal waters of the U.S., both East and West Coast. And you can see that tradipitant at 170 and 185 milligrams protected people from vomiting. You can see placebo, 44% of the people had a vomiting episode during the trip, compared to 18%, 19% for the tradipitant treated individuals. Vanda also has some early-stage programs summarized here. A program with cystic fibrosis transmembrane conductance regulators, CFTR, both activators and inhibitors. The activator is being pursued in inflammatory disease of the eye, such as dry eye. And the inhibitor has been granted now an orphan drug designation by the FDA for the treatment of cholera.
Hematologic malignancies, VTR-297, an HDAC inhibitor in phase II for hematologic malignancies, in sites in U.S. and Europe. Social performance anxiety, VQW-765, is an alpha-7 nicotinic partial agonist, and we reported positive results in a phase II single-dose study looking at the Trier social performance test. And finally, an early platform of antisense oligonucleotides, VCA-894A, was granted orphan drug designation for the treatment of a patient with Charcot-Marie-Tooth axonal type 2S, with a specific cryptic slice variant in IGHMBP2. In September 2022, we announced a collaboration with OliPass of Korea, for joint development with specifically modified antisense oligonucleotides. Finally, our financial results.
We just reported the third quarter $38.8 million in combined sales. A decline in sales of HETLIOZ given the challenges with the at-risk launch of generic products and Fanapt at $21.3 million. This is our balance sheet. The bottom line is a growing cash balance to $489 million, and the company carries no debt. For more prescribing information, you can go to hetlioz.com and fanapt.com. Thank you very much.
Great. Thanks. Maybe to start, Mihael, you do have $500 million in cash, so what, what is your vision with that cash? Do you continue pursuing the pipeline, or do you engage in BD? What is-
Yeah, both. Of course, pursue the pipeline. The history of Vanda is that we have been fiscally conservative. That we have been running an organization that it is a bit profitable for the last few years. But we do want to invest in programs with significant short-term ROI, positive ROI. And what we think is coming up is the potential approval and launch of Fanapt in bipolar disorder. Having said that, we're very keen to diversify source of revenue, and with that, we mean external late states or commercial states, revenue-producing deals.
In terms of BD, what indication areas would you be interested in pursuing, in your view?
We're agnostic. Yeah, but of course it makes a lot of sense that there were certain synergies with the commercial infrastructure we have. We have a threefold infrastructure, a sales force that likely we plan to expand. We have a marketing organization, and we have also a case management organization that supports HETLIOZ now and can be adapted to support any other specialty program.
Great. And speaking of HETLIOZ, you know, unfortunately, it went generic or generics are launching at risk as of right now. And what are the latest steps around the litigation front? When do we hear about next steps, and when do we get an outcome in your view?
Yeah. There are three ongoing challenges. The first challenge is the Federal Circuit decision on the patents that were invalidated by the lower court. Vanda has expressed its disagreement with the criteria the Federal Circuit is using. A big challenge, but very important, the entire industry around the definition of obviousness. And the simple question we want to pose to the Supreme Court is, is the obviousness standard a reasonable expectation of success, like the Federal Circuit says, or predictable results? The Supreme Court has spoken to that, it's predictable results. The Federal Circuit is using reasonable expectation of success, and that can be misconstrued in the case of Vanda did, that if somebody says, "I'm gonna do this experiment," the results fall under reasonable expectation of success. That cannot be right.
There will be no patents. So, we plan to challenge that. We have an extension to file our writ of certiorari with the Supreme Court in January. It's part one. Part two is a patent we have challenged now in Delaware, Patent 129, and that is in the limbo of the local court system. And number 3 is challenges we have brought forward for the improper approval of the generics, and that these are challenges towards the FDA, that, after evaluation of information obtained through the Freedom of Information Act, we have come to recognize that certain generic approved formulations did not meet the statutory standard of bioequivalence.
Let's just say, HETLIOZ, you know, the question is, at what point do you kind of call it quits? Pardon my choice of words in term, because it sounds like you do want to manage profitability for your business. So when do you say, "Yeah, no more litigation, we're gonna cut costs in the business, HETLIOZ is indeed going generic"? When would that timeframe be?
Yeah. So that is more of a it has two sides: a philosophy and practical behavior. Of course, we have significantly already curtailed cost around commercialization of HETLIOZ, right? That's the practical side. The philosophy is that, HETLIOZ is the only circadian regulator approved, and, the need for drugs that change and adapt circadian rhythms have far-reaching applications. And we believe companies in general should not quit the development of useful compounds. It is wasteful, and in fact, it contributes negatively to the concerns of healthcare costs. So while we're practical and reasonable people, at the same time, we will be pursuing reasonable indications like the insomnia, which is now under review by the FDA.
And speaking of insomnia, PDUFA, March 4, 2024. So let's just say it did get approved next year. However, generics continue to launch. How do we reconcile this? Because what isn't HETLIOZ facing price deterioration right now, so how do you extract sales in insomnia?
Yes. So, of course, you know, it is premature to talk about strategy, but let's acknowledge one thing. An insomnia drug is not gonna be priced at $24,000 a month, right? Of course, it's gonna be much less, and this is exactly consistent with our vision of access to drugs. Access does mean price, right? And for insomnia, that price point is much, much lower. But also, I would like to point out that contrary to what, you know, it is the common belief that introduction of generics changes the price dynamics, this is not exactly the case. The price that generics are priced at is less than $24,000; it is $20,000 plus, right? So we don't think that this actually helps access with patients.
It helps the generics make some money. And we believe that the true pricing leverage of the community is expanding the number of people that can use a drug, which will drive prices down. Certainly, there is a market for safe insomnia drugs with no next-day effects and no addictive potential. We believe HETLIOZ can be that as well, and we have previously discussed that our vision with this drug would eventually be a branded OTC release over the counter.
My last one on HETLIOZ, you mentioned how, you've wound down a little bit on expenses, and within the current franchise. So let's just say insomnia did get approved, do you need a marketing sales force? Do you need to ramp up expenses again?
I'm not gonna discuss today our commercialization strategy, but we're mindful of the successes and failures of others in this space. What I point out is that Vanda has a strong belief of talking to the consumers, and which means clever and efficient direct-to-consumer campaigns will be an important anchor of a future commercial strategy.
Makes sense. Okay, and moving on to Fanapt, another PDUFA, based on my notes, April 2, 2024, so just a month later. So remind us the exclusivity for Fanapt, and what ways can you extend the exclusivity such that you can launch in bipolar?
Yeah. So the exclusivity of Fanapt for schizophrenia extends to the late 2027 with the pediatric, sometime beginning of 2028. Two things there. Of course, there can be exclusivity specific for bipolar. We understand these things can overlap, and therefore, the relative utility may not be there. But we're very keen, as I discussed, to bring along P88, the active metabolite, and think of that the same relationship that risperidone of J&J has with paliperidone, a metabolite of risperidone. This is a similar situation between Fanapt and the P88 metabolite.
We believe that P88 will be in place and marketed before expiration of Fanapt, and P88, because of its bioequivalence properties, will carry the full label of Fanapt, and we'll come to exclusivity when we get there.
Mm.
around P-88.
Okay.
But maybe, I add on the Fanapt franchise, right? I caught the tail end of the previous speakers talking about long-acting injectables. We're in the fortunate position that Fanapt has been formulated to a long-acting injectable, and we believe there is a place for that, as we understand from the LAI market now, both for schizophrenia and follow-up on your question on bipolar as well, right? There are compliance issues. We start understanding now that while it is true, what the prior speaker said, that people with bipolar mania treated can be functional, but also can be not compliant, right? And we are working also on the long-acting injectable of P88.
Very good. Okay, I think that's all the time we had, but thank you for the updates, and thanks everyone in the audience for listening. Have a good day.
Thank you very much.