Hello everyone, and welcome to this latest in a series of fireside chats here at the H.C. Wainwright Fourth Annual BioConnect Investor Conference. For those who don't know me, I'm Ram Selvaraju. I'm a Managing Director and Senior Healthcare Equity Research Analyst in Wainwright's equity research department. I am joined by the next company, Vanda Pharmaceuticals, which is traded on the Nasdaq under the ticker symbol VNDA. We cover Vanda with a buy rating and 12-month price target of $21 a share. I'm joined here on stage by Kevin Moran, Vanda's Chief Financial Officer. Kevin, it's a pleasure to have you with us.
Thanks so much for having us, Ram.
For those folks who don't know, Vanda is obviously a storied company in the biopharmaceutical industry, one of several that has fought bruising battles with the FDA and lived to tell the tale, but also very much a diversified commercial stage entity with significant footprints in neuropsychiatry, various chronic inflammatory and autoimmune diseases, not to mention, of course, areas like sleep disorders. Now, of course, branching out into gastroenterology with the recent approval of NEREUS for motion sickness and a very interesting trial that we're gonna talk about at some length.
Yeah
That is focusing on characterizing tradipitant, neurokinin-1 receptor antagonist, in addressing and modulating the side effects associated with glucagon-like peptide 1 receptor agonist drugs, GLP-1 RAs, which of course, as everyone knows, are mainstays of weight loss therapy in this and many other countries. Kevin, perhaps you could talk through how Vanda is positioned commercially today in terms of the breadth and the depth of the marketed product portfolio, the diversification across therapeutic areas, and the revenue base that this currently represents and what your expectations are for it in the near future.
Yep, great. Thanks, Ram, and again, thanks Ram, and thanks to the entire HCW team for having us here. Very excited to be here and speak with you guys. Just to the table set a bit here, for 2025, we had three products in market. We had Fanapt, which is an atypical antipsychotic, approved for both bipolar and schizophrenia. We had HETLIOZ, which is approved for two orphan indications here in the U.S., Non-24-Hour Sleep-Wake Disorder or Non-24, and nighttime sleep disturbances in Smith-Magenis syndrome, and then PONVORY, which is approved for multiple sclerosis. Those three products generated, you know, a little more than $200 million in revenue last year.
Our guidance initially for those products for this year was $230 million-$260 million, so representing some nice growth on a year-over-year basis, most of it driven by the expected Fanapt revenue growth that we've seen as a result of our expansion into bipolar disorder. As we've turned towards 2026, we've also had two recent drugs approved. NEREUS, which Ram mentioned, was approved at the end of last year for motion sickness, and then BYSANTI, which is also approved for bipolar and schizophrenia, and is actually the active metabolite of Fanapt that we expect to launch later this year.
As a result of the introduction of NEREUS guidance for the year, we've increased our revenue range to be $240 million-$290 million for the year, and that does not include a contribution from BYSANTI that we expect to again launch later this year. Characterizing those a bit further, you know, Fanapt obviously has represented the most significant growth asset for us over the last few years, and with the approval of BYSANTI, we expect that psychiatry franchise to continue to be the largest contributor of our revenue growth for the next few years.
A couple things to point out there is when we launch BYSANTI later this year, there's gonna be at least a two-prong approach to our commercial strategy there, which is launching BYSANTI as both a novel atypical antipsychotic, first-line treatment in the space, but also executing a switch strategy where we look to migrate patients that are currently on Fanapt over to BYSANTI.
One other key element of that is, that I've spoken, you know, at some length on, is our gross to net dynamics on Fanapt, given that it's been in the market for quite some time, are that we see a gross to net percentage in the neighborhood of 50%, and that's primarily driven by Medicaid URAs, Medicaid rebates, that are due just given the length of time the drug has been on the market and the pricing dynamics there. With BYSANTI's launch, we'll get a reset on those Medicaid dynamics, and as a result of that, we expect our gross to net percentage on BYSANTI to be more in the mid-30% range, so a very significant improvement on pricing dynamics.
The last piece that I would highlight there is with our NEREUS approval and now launch, we've introduced revenue on the NEREUS side, a guidance of $10 million-$30 million for the year. The reason for the obviously the broadness of that range is obviously we just launched, you know, don't have a great deal of actual data to, you know, base that on. As we begin to see data come in, we'll be able to refine, you know, those estimates as we move forward.
We think there's a very significant revenue opportunity for NEREUS on the motion sickness side, not even getting to the readout later this year on nausea and vomiting and GLP-1, where there's, you know, 70 million people in the U.S. impacted by motion sickness, more than 10 million seeking treatment, and Dramamine, which is kind of the most commonly used, you know, drug in that class, you know, 3 million doses on a monthly basis. If we're able to make, you know, even a small, you know, dent in the market size there, you know, the NEREUS motion sickness opportunity could be very substantial. Lastly, on the NEREUS side, you know, we've recently announced our pricing.
Our WAC price on that is $255, per dose for the 85 mg dose, but, available cash pay for patients that wanna pay out of pocket at $85 a dose. The approach there is largely gonna be a direct consumer-driven approach where we're running advertising, bringing patients to treatment, and having them pay, cash pay out of pocket to obtain the drug.
Let's hope the cruise ship industry recovers pretty soon for this hunt, I think.
Yeah.
You know, with respect to neuropsych, I think it's important for folks to take account of the fact that this has been one of the most in vogue disease areas, both from an investment perspective as well as an M&A standpoint. I'd be remiss if I didn't point out several recent high-profile transactions, including the acquisition of Cerevel by AbbVie for $8.7 billion, the acquisition of Karuna by Bristol Myers Squibb for $14.1 billion, most recently, only last year, the acquisition of Intra-Cellular Therapies, a commercial stage neuropsych company, by J&J for $14.6 billion. Clearly, you folks are targeting your efforts in the right place, with all of this concentration in neuropsych.
Now, you've covered a great deal of ground already, Kevin, I wanted to see if you wouldn't mind drilling down a little bit further into Fanapt, particularly as this pertains to prescription volumes, numbers of unique and repeat prescribers, and some of the key drivers of demand kinetics for this product.
Yep, absolutely. What we see on that side on the Fanapt business is there's about 10,000 TRx per month on Fanapt, just to give some sense of context. From a year-over-year basis, we've seen prescription growth in the last year in the mid-20s to mid-30s on a quarterly basis. What we've guided to this year would be, again, the midpoint range of our range would be $160 million. What that implies is that we see sequential quarterly growth in the low- to mid-teens, which is generally consistent with what we saw from a sequential quarterly growth in the last year. Basically, if we kinda keep doing what we're doing, we should be able to see that growth in 2026.
As we you know, the other kind of metric that I would highlight there is we've seen a dramatic increase in NBRx over the same period of time. These are new-to-brand prescriptions, so new Fanapt patient starts. That increase has been in the range of, I believe it was 78% Q1 to Q1, in our most recently reported data. For Q4 to Q4, it was over a 100% increase. Very significant increase in the NBRx, you know, business being generated. Again, as we touch on the, you know, the potential transition to BYSANTI, you know, we'd expect to see the continued growth of from an overall business of volume in the psychiatry portfolio.
The other things that are very exciting about the potential growth of BYSANTI beyond 2026 are, again, the net pricing dynamics. When we look at our revenue growth for 2027, if we assumed it was just Fanapt and we saw growth at a similar trajectory to what we're expecting to see in 2026, you know, that would put us in the $200 million or so revenue range. If you were to pick up all of that volume and convert it to BYSANTI volume, just given the net pricing assumptions that we talked about, that number would be in the high $200 millions, you know, closing in on $300 million, just if you're able to execute a switch.
Obviously, the switch we'd expect would not happen instantaneously at the end of the year, you know, more over a, over a period of time. Obviously, that just shows you how large of an impact the net pricing dynamic could have. To further layer on top of that is in the first quarter of next year, we're expecting our phase III readout of BYSANTI and MDD. You know, MDD is the largest kinda TAM in terms of market sizes that we're pursuing. You know, the schizophrenia market is estimated to be in the, you know, 3 million patients in the U.S. The bipolar market, you know, maybe twice to slightly larger than that. The MDD market, you know, in the 20 million or so patient range.
Obviously, the much larger patient population, also much more accessible from a marketing perspective in terms of the receptivity to DTC and other, you know, marketing campaigns. You know, very excited about the prospects for Fanapt this year, continuation of the TRX trends that we've seen, NBRX trends that we've seen, and then kinda segue into, you know, very excited for the longer term horizon with BYSANTI, continuation of those trends, pricing favorability, potential for the label expansion. Also from a runway perspective, whereas Fanapt has an LOE expected at the end of 2027, you know, BYSANTI has its latest expiring Orange Book-listed patent at 2044.
You know, obviously, we're hopeful we'll be working at BYSANTI for a very long time to continue to grow the revenue in the existing indications and potentially in MDD if we're able to have good data there.
In particular, just before we leave the neuropsych aspect, because clearly there are a lot of other points about the company that we wanna discuss today, maybe you can just elaborate for us on the timeline for the development of the iloperidone long-acting injectable, and maybe talk through a little bit why that is likely to be such a value add if you can complete it successfully, simply because the LAI segment is the fastest-growing in neuropsych overall when you look at the atypical antipsychotic class, and also because it's probably the highest value.
Yeah
Clearly has receptivity among prescribers. The second aspect, you mentioned this a few times already, the applicability of BYSANTI in MDD. You know, when do you anticipate having that data and ultimately potentially getting that label expansion?
Yep. Yeah. Starting first with the LAI. As Ram mentioned there, we're in the process of running a phase III study for the Fanapt long-acting injectable in schizophrenia. Recruitment is underway. We haven't provided a timeline for yet when we expect clinical trial results there, it is something that we continue to work through and continue to focus on. We have had, you know, some issues with our recruitment in the European market, which has led to, you know, some of the inability to provide a firm timeline on when we expect clinical trial results there. Assuming we're able to bring that product to positive clinical trial results and successful regulatory outcome, as Ram mentioned, the market opportunity there is very large.
The current treatment options that are available in the LAI space are, you know, all some variation of risperidone. Whereas in the tablet portion of the market, there's a, you know, a number of options available for patients. Currently in the LAI space, there's a much more limited set of options available. Bringing a novel long-acting injectable treatment to the market, we think could present for a very significant revenue opportunity for the company, and to be very differentiated from what else is available for, you know, patients in that space.
The other thing just to touch on the LAI side, that's a bit of a point of interest is there's the possibility that we develop a long-acting injectable formulation of BYSANTI as well at some point in the future, and certain of the properties of BYSANTI could lend itself to a less frequent, a longer duration, treatment option. You know, instead of it being, you know, once a month or once every six weeks, it could be once every two months or once every three months or, you know, something to that effect. That's something that we also remain focused on and hope to continue to develop, you know, as we move forward.
On the MDD side, you know, again, as I mentioned, we've got phase III results that are expected in the first quarter of 2027. When we developed Fanapt for bipolar disorder, we only ran one phase III trial, which at the time we received kind of a lot of questions about whether we thought that was gonna be sufficient to support approval, it ultimately was, obviously there's been some more recent developments on the FDA's receptivity to, you know, single phase III, trial programs.
We're hopeful that, with positive results in our MDD phase III study reading out next year, that could be something where we're looking to submit an sNDA, you know, sometime later in the year next year and potentially have that label expansion on the market, you know, as early as 2028. Given that we're, you know, hopeful that the BYSANTI runway here is gonna extend far into the, you know, into the 2044 timeframe, potentially as late as, we'll have a long time to be working on the commercialization, not just in the currently approved schizophrenia and bipolar indications, but again, you know, qualifying this with successful phase III results and regulatory approval, you know, a long time to fully maximize the value of the MDD market for BYSANTI as well.
You know, this is something that was obviously successfully done at least in part with CAPLYTA, lumateperone, being focused on both schizophrenia and depression. Clearly there's some precedent there. I wanted to touch upon very briefly tasimelteon 'cause obviously this is a legacy product. There are multiple generics of it on the market, but I think this is perhaps an underrated potential contributor to the revenue base still. Maybe just talk us through what your expectations are for branded tasimelteon sales, the degree of contribution to the overall revenue base that you anticipate in 2026, and how that could ultimately evolve over the course of the next two-three years.
Yep. And the reminder here is that HETLIOZ, we had an unfavorable ruling in the Delaware District Court at the end of 2022 that allowed three generics to enter the market, you know, as early as the beginning of 2023. We're now, you know, three years on to generic competition in the market. Our revenue prior to that court decision was in the neighborhood of $170 million annualized. Last year we came in just over $70 million for revenue for 2025.
Although obviously that's a, you know, significant decrease from the $170, it's actually incredibly durable revenue for three years post loss of exclusivity product, and that's attributable to, you know, patient loyalty and that we'd established, you know, in the 10 years of commercialization efforts that we'd done, you know, prior to the LOE. What we've seen over the last few years is really, you know, generally pretty consistent patient volume, aside from you tend to see a little bit of a drop in the first quarter consistent with insurance disruptions that you expect to see across industry, a small recovery, and then kind of a flattening that leads to a, you know, again, a small amount of erosion from a year-over-year basis. That's what I'd continue to expect in 2026 and potentially beyond.
Obviously, the market conditions could change in the future, that's what we've been able to, you know, execute on these last few years. It's such that HETLIOZ still remains the largest product in the market from, you know, HETLIOZ/tasimelteon perspective. When we look at our revenue guidance for the year, there's a revenue contribution from what we've characterized as other products, which in this case means HETLIOZ and PONVORY of $80 million-$90 million. The PONVORY trajectory last year was just below $30 million. What kind of underlies that $80 million-$90 million is, you know, modest growth on the PONVORY side and kind of continued durability, you know, on the HETLIOZ side, again, that we expect to see, you know, absent a change in market conditions hopefully for several more years to come.
Then the last piece that I would say to that is, as Ram, as you know, we have by no means kind of surrendered on the HETLIOZ front, and this is both in the oral formulation, where we have active litigation on the patent side, that we are, you know, hopeful for could lead to a successful outcome and potentially, resumption of certain commercial activities on the oral capsule front. We also have the HETLIOZ liquid formulation, which is not subject to these generic challengers.
It is the only, the only product in the market, and we're currently running a program for HETLIOZ LQ in pediatric insomnia where there's currently no approved products available, and that's this very significant challenge facing, you know, obviously the children that suffer from it and their parents. We continue to pursue making HETLIOZ available to all patients who could benefit from it, you know, and are active in that on many fronts.
Now turning to tradipitant. Clearly you talked already about NEREUS, which is the brand name for tradipitant. That's the marketed indication in motion sickness, you know, which you're in the process of launching. Clearly tradipitant has multiple other applications within gastroenterology. Perhaps you could talk first about the potential opportunity in gastroparesis and where that stands right now, because clearly you've locked horns with the FDA a few times on that one.
Also, turn attention to the THETIS trial, which is, as I said at the beginning, the study that is assessing tradipitant in combination with GLP-1 RA with the aim of attenuating the nausea and vomiting GI side effects of those medications, which could have very significant implications because that's a $100 billion a year-plus market, and also those medications are well known to have these kinds of side effects which adversely impact patient compliance, patient adherence, and perhaps most importantly, efficacy.
Yep, absolutely. First beginning with the gastroparesis side. As kind of a, you know, a reminder here, there's one drug approved for gastroparesis in the U.S. that's brand name Reglan or metoclopramide, approved over 40 years ago, comes with a black box warning for tardive dyskinesia. It does in the neighborhood of $250,000-$300,000 prescriptions on a monthly basis in the U.S. Very significant demand for that product. In the U.S., it's estimated that there's about 6 million people who suffer from gastroparesis, about 600,000 of whom have been diagnosed with gastroparesis. Again, about $250,000-$300,000 people being treated with metoclopramide, presumably many or most of them for gastroparesis, right?
Very significant market opportunity and very underserved patient population, given that's the only product available for those patients. As far as our development program goes, we had a positive phase II study that was followed up by a phase III study where we did not meet on the primary endpoint. When looking at a number of confounders, you know, accounting for those, the study was, you know, positive once you accounted for those. When we did a pooled analysis of our phase II and phase III study results, that also showed statistical significance. We submitted our application to the FDA and it was rejected in September of 2024.
Separately from that, we've been in litigation with the FDA around the requirement for the agency to hold a hearing for non-approved products where there's a dispute of fact. The courts have found in our favor, recently, on that issue and have, you know, rendered a decision such that the FDA is required to hold a hearing on the approvability of HETLIOZ for jet lag. Why that's relevant to this conversation is that tradipitant for gastroparesis is likely on a similar path where we'll be looking to bring, you know, tradipitant to a hearing with the agency on the approvability, given the very substantial data set that we've prepared, for an indication where there's, you know, very few treatment options available for patients.
NEREUS has been shown to be effective and safe and approvable for the indication of motion sickness. Very excited to continue to bring that forward. Again, think it's a great product that, you know, would love to have be available for those patients for gastroparesis if we're able to navigate kind of the regulatory legal, you know, framework that we're currently working through. On the GLP-1 side, in November of last year, we had positive study results on a Phase II program for vomiting in GLP-1 Wegovy specifically. The study design was a two -week study design where patients took either placebo or tradipitant for a week prior to being treated with 1 mg of Wegovy, and then for another week after receiving the treatment, and we measured a number of data points, including vomiting.
The data set showed that patients that were on placebo had vomiting rates in the neighborhood of 60%, where patients on NEREUS had vomiting rates in the neighborhood of 30%. Obviously a very significant effect size in reducing vomiting for those patients. We measured a number of other effects that also showed, you know, benefit for those patients. With those results in hand, we've very quickly moved forward with our phase III program, which we initiated earlier this year. We're actively recruiting, and we've communicated that we expect results on that program by the end of this year. You know, once we have those results in hand, you know, we'll certainly evaluate next steps on how to continue to bring this program forward.
As Ram mentioned, you know, we think this obviously represents a very significant market opportunity, just kind of any way you cut it, given the number of patients that are taking GLP-1s in the U.S. and around the world, the very significant incidence of vomit and nausea in those patients, the discontinuation rates that are seen because of those vomiting and nausea side effect incidents, and the potential that this product could both, you know, provide for better compliance for patients by reducing those symptoms. Also potentially expedite the time to therapeutic treatment, given that we had patients in the trial on 1 mg of Wegovy at, you know, week zero instead of, you know, titrating up to that dose over potentially nine weeks.
Just to note for those in the audience who are interested, our price target, our valuation assessment does not include any value for tradipitant outside the motion sickness indication.
Yep
Which as you said, is already approved, you're already marketing it. In addition, I would venture to say, it probably would be remiss of me not to note this fact, the origin of tradipitant is pretty interesting. It was originally designed by Eli Lilly. Make of that what you will. I would like to turn to another aspect of the portfolio, which is coming up on PDUFA date, which is imsidolimab for generalized pustular psoriasis. Maybe walk us through why you folks felt that was such a compelling and interesting rare disease opportunity within INI, and also tell us where you got the drug from and how it's differentiated from whatever else is currently out there, which isn't much for GPP.
Yep. Yep, absolutely. The background on that is that at the beginning of 2025, we in-licensed imsidolimab from Anaptys, who had brought the program through two phase III trials in generalized pustular psoriasis and had positive data in those trials. We have moved forward with submitting our BLA, which was accepted for the FDA, by the FDA earlier this year, and we were given a PDUFA date of December 12th. If we're able to receive an approval on that in December, you know, the hope would be that we'd be launching this product sometime in the early part, first half, of 2027.
Currently, there is one product approved in this indication, which is SPEVIGO, which is a great product, but we do think that imsidolimab has some differentiators that could potentially make it a preferred treatment option in the space. Namely that in about a third of the cases of SPEVIGO, patients require a second dose in the acute setting, whereas we wouldn't expect that in the imsidolimab, you know, treatment option. Obviously, if presenting and given the option of taking, you know, a drug, you know, one time versus potentially having to come back and take it, you know, twice, obviously prefer to just take it one time. And the number of patients that are impacted by this, there's varying estimates in the, you know, low thousands, up to as many as maybe 25,000 or 30,000 in the U.S.
Clearly an orphan indication and one space that we've been very successful in the past. The reminder on HETLIOZ there, you know, is that it's an orphan indication for Non-24-Hour Sleep-Wake Disorder, also approved in an orphan indication nighttime sleep disturbances and Smith-Magenis Syndrome. We were incredibly successful in commercializing HETLIOZ in that space. Obviously imsidolimab would be a very, you know, different product, different setting, but we think that our expertise, you know, in developing and commercializing orphan assets lends itself very well to a successful, you know, hopefully regulatory decision later this year and then commercial strategy for the years to come.
Just before we close, wanted to see if you could offer our audience some perspectives on future strategic directions for Vanda, also the timeline to potential return to sustainable profitability, and any other closing comments you might have.
Yeah. I would say as we look towards, you know, the guidance we've provided this year has been limited to revenue guidance. We haven't guided to cash or OpEx for this year other than that I did mention in our prepared remarks that last year we burned about $110 million of cash and that the expectation is that we will likely burn more than that in the current year. And that's given, you know, the two commercial launches, potentially three, that are underway with NEREUS in motion sickness, BYSANTI in bipolar and schizophrenia, and potentially imsidolimab in GPP, as well as phase III readouts in BYSANTI and MDD, NEREUS in GLP-1, another program that we didn't get a chance to talk about, VQW-765 in social performance anxiety.
We've got, you know, tremendous success, which has led to tremendous investments that we want to make sure we properly fund. We're in the near term certainly very focused on making sure that we don't underfund any of these commercial assets and that we don't underfund any of the potential R&D opportunities. You know, again, these successes have led to us making sure that we're properly investing the future success of, you know, these programs. The last thing I would just add kind of in closing is, you know, it's been a tremendous last six months.
You know, again, we've gone from three products approved to now five, which for a company of our size I think is, you know, relatively unheard of and with the possibility of a sixth on the horizon. Just incredibly excited for what, you know, I would say BYSANTI potentially brings in the future as kind of a foundational, core revenue growth asset moving forward. NEREUS, you know, again, in motion sickness where we think that there's a very significant revenue possibility but also some potentially outsized upside with the, you know, potential progress on gastroparesis as well as the nausea and vomiting in GLP-1.
I think we're gonna have to leave it there. Kevin, I don't know how you managed to take a breath between sentences. It's been a lot to cover, but, hopefully this has left our audience with the distinct impression that this is a company with a lot of untapped horsepower under the hood, a lot of upcoming interesting value inflection points, and clearly the key aspect, diversification and strength in commercial. Kevin, thank you so much for being with us today, and thank you to our audience for their attention.
Thanks again, Ram.