Vanda Pharmaceuticals Inc. Aktie

Good afternoon and welcome to the second quarter 2026 Vanda Pharmaceuticals Incorporated Earnings Conference Call. I am Franz, and I'll be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the call over to Vandes Chief Financial Officer, Kevin Moran.

Go ahead. Thank you, France. Good afternoon, and thank you for joining us to discuss Vanna 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.vandafarma.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. Mahalis Polymeropoulos, our President, Chief Executive Officer, and Chairman of the Board, and Daniel McGuire, our General Counsel. Following my introductory remarks, Mahalos 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. 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. Mahalas Palimoropoulos. Thank you.

Good afternoon, everyone. Thank you for joining us today for Vanda Pharmaceutical's second quarter, 2026 earnings conference call. We're pleased with the continuous strong growth of FENAPT and the enthusiastic response to Nereus as it becomes available to patients. With Bisanti approved and on track for launch in the second half of 2026, a December 2026 PDUFA date for Quimilza or MC-Dolima, 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 3 programs launch preparations in 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 project 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 Fanaft and Punvori and prepared for the commercial launches including manufacturing, commercial supplies of Nereus, Bisanti, and Quimilza. As these activities conclude, we expect operating expenses to begin decreasing by 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. FNAF show 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, FNAPT has seen significant growth with TRX up 62% and BRX up 300% versus the second quarter of 2024. The site has received U.S. Food and Drug Administration approval for the treatment of bipolar 1 disorder and schizophrenia in the first quarter of 2026 and is expected to launch in the second half of 2026. Visante is protected by data exclusivity through February 20, 2031, and multiple patents, the latest of which expires on May 31, 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.

VANDER'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 three 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 VQW765 in the treatment of adults with social anxiety disorder with results expected in 2026. phase three study of HETLIOs in the treatment of delayed sleep phase disorder, DSPD, with results expected in 2026. Finally, the Phase III study of Vysanti is a one-stay adjunctive treatment for major depressive disorder with results expected in the first half of 2027. The Biologic License Application, BLA, for Quimilza in generalized postular psoriasis is under review by the FDA with a prescription drug user fee act, target action date of December 12, 2026. study were published earlier in April 28, 2026 in the New England Journal of Medicine Evidence. In May, 2026, we announced that Japan's Ministry of Health, Labor, 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 positive opinion recommending orphan drug designation for Quimilza for the treatment of GTP. In July, 2026, we announced that the FDA had granted rare pediatric disease designation for VCA894A, our investigational antisense oligonucleotide therapy for the treatment of Charcot-Marie-Tooth disease, axonal type 2S, or CMT2S, a rare, serious, and progressive inherited neurological disorder.

We continue to progress the FDA formal hearing regarding head lures for the treatment of jet-lag disorder. The proceeding, a rare administrative hearing process, granted after the district 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-year 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, Mahalis. 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 FNAPT revenue as a result of the continued commercialization efforts for FNAPT and bipolar 1 disorder, increased PONVORI revenue and revenue contribution from the newly launched Nereus, offset by decreased Hetlios 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 Hetlios revenue for orders shipped on June 29, that arrived on July 1st, 2026. Let me break this down now by product. FNAP 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 Hetlios. Hetlios net product sales were 21.5 million for the first six months of 2026, a 42% decrease compared to 37.1 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. Hetlios 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. 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, Hetlios continued to be the leading product from a market share perspective, despite generic competition now for over three years. Turning to PONVORI. PONVORI 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 PONVORI net product sales is subject to dispute of which approximately 3 million was recognized for the the three months ended December 31st, 2024.

And finally, turning to Nereus. Nereus became commercially available in the US in May of 2026. Nereus net product sales were one 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 constrain Nereus net product sales to an amount not probable of significant revenue reversal. The constrained revenue of 12.6 million relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers.

As a reminder, Nereus launched commercially in the U.S. in the second quarter of 2026 with the direct-to-consumer offering via the web portal Nereus.us. Personal promotion using our existing sales force is expected to commence later in 2022. For the first six months of 2026, Vanda recorded a net loss of $111.1 million compared to a net loss of $56.7 million for the same period in 2025. The net loss for the first six months of 2026 included income tax expense of $0.3 million as compared to an income tax benefit of $15.6 million for the same period in 2025. 2025. As a reminder, the company recorded a one-time non-cash income tax charge in the fourth quarter of 2025 to establish a valuation allowance against all of Vanda's deferred tax assets. expense is expected to be nominal going forward until such time that evaluation allowance is no longer required. Operating expenses for the first six months of 2026 were $216.3 million compared to $182.82 million for the same period in 2025. The $34.1 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the continued commercialization efforts for FNAPT and Bipolar I disorder, and Pomvoria multiple sclerosis, the nearest commercial launch, and the upcoming Basanti commercial launch, and higher R&D expenses primarily related to our VQW 765, FNAPT, and Basanti programs, partially offset by lower expenses on our Chemilza or Imsedol-MOB program.

The first six months of 2025 included an upfront payment to Enaptis for the exclusive global license agreement for the development and commercialization of mSdolimov. On the commercial side, starting in 2024, we commenced a host of activities as a result of the commercial launches of Phenaptin Bipolar I Disorder and Pomvoriom Multiple Sclerosis and, more recently, the launch of the Phenaptin Bipolar I Disorder and launch of Nereus and upcoming launch of Basanti. We maintain strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. Vanda's cash, cash equivalents, and marketable securities referred to as cash as of June 30th, 2026, was 170 million, representing a decrease of 93.8 million compared to December 31st, 2025, and a decrease of $32.3 million compared to March 31st, 2026. The change in cash during the second quarter of 2026, as compared to the first quarter of 2026, was driven by the net loss in the second quarter of 2026, excluding the impact of non-cash charges such as stock-based compensation and amortization of our intangible and right-of-use assets, as well as timing of cash received from customers for revenue and related payments of rebates payers, and the timing of cash paid to third parties for services related to operating expenses and inventory production. The decrease compared to the balance as of December 31st, 2025 was also driven by the one-time milestone payment of 10 million made to Eli Lilly in the first quarter of 2026 for the approval of Nereus in the US. As a reminder, payments made in advance of production are capitalized as a prepaid expense.

Commercial products are capitalized as inventory on our balance sheet after production, while pre-commercial products are generally expensed as incurred as research and development costs. The timing of production of pre-commercial products, including the IMSA Dolomite Program, may result in future variation of our R&D expense and cash payments. Turning now to our quarterly results. Total revenues were $50.5 million for the second quarter of 2026, a 4% decrease compared to $52.6 million for the second quarter of 2025, and a 2% decrease compared to $51.7 million in the first quarter of 2026. The decreases as compared to the second quarter of 2025 and the first quarter of 2026 were primarily due to decrease in Hetlios revenue as a result of the generic competition and the timing of shipments to customers at the end of the second quarter of 2026, partially offset by growth in FNAP revenue as a result of the bipolar commercial launch. Total revenues for the second quarter of 2026 do not include approximately $7 million of Hetlios revenue for order shift on June 29th that arrived on July 1st. Let me now break this down by product.

FNAP net product sales were 36 million for the second quarter of 2026, a 23% increase compared to 29.3 million in the second quarter of 2025, and a 22% increase compared to 29.6 million in the first quarter of 2026. FNAP total prescriptions, or TRX, as reported by Equivia exponent in the second quarter of 2026 increased by 31% compared to the second quarter of 2025 and 11% compared to the first quarter of 2026. The increases to net product sales relative to the second quarter of 2025 and first quarter of 2026 were primarily attributable to increases in volume. FNAP new patient starts in the second quarter of 2026. of 2026 as reflected by new-to-brand prescriptions, or MBRX, increased by 32% compared to the second quarter of 2025 and by 10% compared to the first quarter of 2026. Historically, FNAPT inventory at wholesalers has ranged between three and four weeks on hand as calculated based off trailing demand. As of the end of the second quarter of 2026, FNAPT inventory at wholesalers was slightly above four weeks on hand, which was generally consistent with the level of inventory weeks on hand as of the first quarter of 2026 and the fourth quarter of 2025, but slightly above four weeks on hand. the historic range turning to at Leos Helios net product sales were 5.6 million for the second quarter of 2026 a 66 percent decrease compared to 16.2 million in the second quarter of 2025 and a 65 percent decrease compared to 15.9 million in the first quarter of 2026 the decrease in net product sales relative to the second quarter of 2025 was the first quarter in and the first quarter of 2026 was primarily attributable to a decrease in volume due to generic competition and timing of shipments to customers at the end of the second quarter. Hetlios net product sales in the second quarter 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. As mentioned in the discussion of results for the first six months of 2026, Hetlios net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. During the second quarter of 2026, there was destocking of inventory by certain of our specialty pharmacy customers, primarily as the result of time of shipments. Going forward, HELIOS net product sales may reflect lower unit sales as a result of the reduction of the elevated inventory levels of specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Turning to POMVORI. POMVORI net product sales were $7.9 million for the second quarter of 2026, an increase of 12% compared to $7.1 million in the second quarter of 2025, and an increase of 27% compared to $6.2 million in the first quarter of 2026. The specialty distributor and specialty pharmacy inventory on hand levels during these periods were in line with normal ranges. Additionally, as we have previously discussed, 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 31, 2024.

And finally, turning to Nereus. Nereus became commercially available in the U.S. in May 2026. Nereus net product sales were $1 million for the second quarter of 2026. NEARIUS is sold using both traditional wholesaler channel and also by prescription directly through the NEARIUS.us website. Revenue recognized during the second quarter of 2026 primarily related to units sold through the wholesaler channel. During the second quarter of 2026, there was an initial stocking of NEARIUS by wholesalers of 15.2 million. We constrained NEARIUS net product sales to an amount not probable of significant revenue. revenue reversal. The constrained revenue of 12.6 million relates to the uncertainties of patient demand and product returns related to the elevated inventory levels on hand at wholesalers.

As a reminder, Nereus launched commercially in the U.S. in the second quarter of 2026 with a direct-to-consumer offering via the web portal, nereus.us. Personal promotion using our existing sales force is expected later in 2026. For the second quarter of 2026, Vanda recorded a net loss of 62.5 million compared to a net loss of 27.2 million for the second quarter of 2025. The net loss for the second quarter of 2026 included income tax expense of 0.1 million as compared to an income tax benefit of 7.7 million for the second quarter of 2025. Operating expenses in the second quarter of 2026 were 114.3 million, compared to 91.1 million in the second quarter of 2025. The 23.2 million increase was primarily driven by higher R&D expenses related to our VQW and NERIUS programs, and higher SG&A expenses related to spending on Vanna's commercial products as a result of the continued commercialization efforts for Phenaptin Bipolar 1 disorder and Pomphoria Multiple Sclerosis, the nearest commercial launch and upcoming Basanti commercial launch. On the commercial side, starting in 2024, we commenced a host of activities as a result of the commercial launches of Phenaptin Bipolar 1 disorder and Pomvoria multiple sclerosis and, more recently, the launch of Nereus and upcoming launch of Vasanti.

We maintain strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With regards to the launches of Phenaptin Bipolar I Disorder and Pomvoria Multiple Sclerosis, as I mentioned, these launches were initiated in 2024, and we continue to enhance our commercial infrastructure through the second quarter of 2026, with the impact of these commercial efforts contributing to revenue growth for these products in 2026, and expected to continue to contribute to revenue growth for these products in coming periods. We have seen significant growth in our commercial activities, including the following. Several lead indicators suggesting a strong and continued market response to our commercial activities related to FNAP for bipolar one disorder. Total prescriptions or TRXs increasing by approximately 31% in the second quarter of 2026 as compared to the second quarter of 2025. In May of 2026, a weekly TRX number for FNAP reaching an 11-year high of over 2,700 prescriptions. patient starts as reflected by NBRX increased by 32% in the second quarter of 2026 as compared to the second quarter of 2025. Since the commercial expansion following the approval of bipolar 1 disorder, FNAFTA has seen significant growth, with TRX up 62% and MBRX up 300% as compared to the second quarter of 2024.

Of particular note, FNAFTA is one of the fastest-growing atypical antipsychotics in the market throughout 2025 and into the second quarter of 2026, based on several prescription metrics. Our FNAP sales force expanded to approximately 300 representatives in the second half of 2025. This expansion has allowed us to significantly increase our reach and frequency with prescribers. To that end, the number of face-to-face calls in the second quarter of 2026 was more than 30% higher than the number of face-to-face calls in the second quarter of 2025. FNAP performance remains the focus of our commercial initiatives and encourages us to invest in this differentiated medicine and the franchise extending launch of Basanti in the second half of 2026. Before turning to our financial guidance, I would like to remind folks that with FNAP, Hetlios, Pomvori, and now Nerius already commercially available, and with Basanti recently approved for bipolar 1 disorder and schizophrenia, and a biologics license application for Impsidolemab, now under review by the FDA, being it could have six approved products by the end of 2026. Turning now to our financial guidance.

Vanda is reiterating its full year 2026 total revenue guidance and expects to achieve the following financial objectives in 2026. Total revenues from FNAPT, Basanti, Hetlios, Pomvori, and Nereus of between 240 and 290 million. The midpoint of this revenue range of 265 million would imply revenue growth in 2026 of approximately 23% as compared to full-year 2025 revenue. FNAPT and Basanti net product sales of between $150 and $170 million. The midpoint of this revenue range would imply combined FNAPT and Basanti revenue growth in 2026 of approximately 36% as compared to full-year 2025 FNAPT revenue. Note that based on the expected launch timing of Basanti, we have included the Basanti revenue contribution in this guidance range. Other net product sales of between 80 and 90 million.

And finally, nearest net product sales of between 10 and 30 million. Note that Nereus launched commercially in the U.S. in the second quarter of 2026 with the direct-to-consumer offering via the web portal Nereus.us. Personal promotion using our existing sales force is expected to commence later in 2026. As previously communicated, Vanda is not providing 2026 cash guidance at this time. However, it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025. During 2025 and 2026, we advanced multiple phase three programs, continued execution on the commercialization of Phenaptin-Pombori, and prepared for the commercial launches, including manufacturing commercial supplies of Nereus, Basanti, and Imson Oil Mop. These activities resulted in significantly increased operating expenses in 2025 and 2026.

As these activities conclude, Vanda expects operating expenses to begin decreasing by the end of 2026 and more substantially throughout 2027. Based on its current cash position of $170 million, million as of June 30th, 2026 and anticipated future revenues, Vanda expects to have sufficient resources to fund operations through at least the end of 2027. With that, I'll now turn the call back to Miles.

Thank you very much, Kevin. At this point, we would be happy to answer your questions. Thank you. And we will now begin the question and answer session.

If you would like to ask a question during this time, please press star one on your telephone keypad to join the queue. If you would like to redraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from Raghuram Ram Silvaraj from H.G. Wainwright. Please go ahead.

Hi, thank you for taking my question. This is Yonzi sitting in for Ram. I have two questions. The first is with respect to the nearest launch experience. So I'm curious, you know, with about three months of experience here, where are you seeing the biggest drop off in the patient funnel? And what metrics should investors watch to judge whether the 26th sales finished near the low or the high end of the $10 to $30 million range.

Yes, thanks for the question, Jan. So, as we look at the Nearest Launch, we're obviously very early in the launch phase here. We initiated our launch activities in May, first with the Nearest.US platform and DTC campaigns following that. As we head into the back half of the year, we're going to be initiating personal promotion with our sales force, which we expect to support the activities that we're seeing out there in the field. As far as metrics go for what folks should be looking for there, I think that as we continue to report going forward, the sales engagement and the visits that we see with doctors and the receptivity to the product in the market is going to be important to seeing what trends we see as far as revenue goes. And then similarly to what we discussed in the prior quarter call, some of the important levers here as far as the revenue trajectory and modeling it out will be the patient acquisition metrics as well as refill metrics and the pills per fill metrics, which obviously early in the launch year we're starting data but it's fairly minimal so we'll continue to be tracking that closely to determine kind of where in the revenue range we expect to fall in future periods.

Thank you so much. One more about Head Layoffs. So following the July 20th pre-hearing conference and the August 3 evidentiary disclosure deadline, what became clear about the hearing for that overall? And which issue is most likely to drive the outcome? Do you think it would be something like interpretation of sites from 3101 and 3107, endpoint validity, or something else?.

Yes, thanks for the question. We have our general counsel here, to explain a little bit about the process. The pre-hearing was more of a process call than actually looking at the facts.

Yes, that's right. And so obviously it's never a good idea to speculate about the outcome of litigation or litigation strategy. But, you know, we are confident in our ability to present our case to the administrative law judge, the process will continue throughout the year and we're hoping obviously for a favorable recommendation from the judge early in 2027.

Your next question comes from Madison from B Riley securities. Please go ahead.

Hi, thanks for taking our question. A couple from us, maybe sticking with the NARES campaign. What exactly does the personal promotion start? How many reps are we talking? Does that spin sit inside the OpEx moderation you guided to relatedly now that you've done that? that you're guiding to the OPEX that come down later in 26 and 2027. Is that more related to R&D or SG&A? And then what drove the 2Q R&D expense? Thanks. Yes, thanks, Madison. So first on the nearest launch site, as we've spoken about before, we have a sales.

to support our FNAP franchise, and soon to be Basanti franchise, in the neighborhood of approximately 300 representatives, as well as a sales force in the neighborhood of 50 supporting our Pombori efforts. And so we'll be using some element of those two sales forces to be detailing nearest in the future. It's yet to be determined exactly kind of what the structure is, but we have sufficient resources between those two teams to reach the prescribers that we're looking to reach. On your second question around kind of what we're seeing from an expense trajectory perspective, you know, so as we've gone through 2025 and 2026, we now have, you know, four phase three programs set to read out either before the end of the year or early, in 2027. We have three potential launches with Nereus, Basanti, and hopefully in the future, Impsidolimab. And so, you know, obviously the cost of running those phase three programs is not insignificant. And the commercial production in order to make sure that we have sufficient supply for the launch of those products is also a significant investment.

So as we, you know, have now are reaching the end of those activities with the readouts of the clinical trials, you know, kind of right in front of us and the launch materials, you know, either made or being made shortly, those will be driving the most, you know, significant reductions in operating expenses as we head towards the end of 2026 and into 2027. And Madison, to the second part to your question there, the significant increase in R&D operating expenses during the period, again, was the ramp up of those programs that have kind of reached their or are reaching their conclusion shortly. And also, for some of the products that are not yet approved, namely ,, any of the production activities that associated with making that inventory, our expense is incurred to R&D, and that's just an accounting treatment of you can capitalize inventory once the product is approved, whereas generally prior to approval, you expense that as R&D and it would hit our R&D line item. So those are the significant drivers in the current period.

Thanks, Kevin. Appreciate it. No further questions at this time. I would now like to turn the call back over to Vanda's management for the closing remarks. Please go ahead.

Thank you very much, all, for . Oh, sorry. We... Oh, do we have another question?.

Sorry, we do actually have a follow-up question coming from Andrew Tsai from Jefferies.

Would you take the question? Yes, please. Please let me enter it. Okay, go ahead. Thanks so much for... Can you hear me okay? Yep, we can hear you. Oh, okay. Yes, so on the 765 program, I was hoping maybe you guys could talk about your prior phase two data and maybe what exactly gives you confidence that you could succeed in phase three and maybe even why efficacy could look even better in phase three. Thanks.

Yes, thank you for the question. The Phase III study that we're running now is similar in design with the Phase II study, with a similar setup and similar primary endpoint. And we have reported prior. results there with two observations. One, a significant effect in reducing anxiety measures in that setting, but also understanding of a dose-response curve. So, this phase three study we believe has been appropriately powered with the right number of patients that was informed by the Phase II study. So again, minimal changes in the design, no change in the dose, but increase in the size of the study to be powered according to the learnings from the phase two study.

Great. Thanks so much. And then maybe one more if I can. I'm wondering, you know, if you could possibly talk about, you know, your filing strategy or potentially timing for the GLP-1 induced vomiting for Nereus. And then just kind of second to that, have you aligned with the FDA on the phase three trial design and then maybe just your latest and greatest on what you hope to see relative to the phase two findings?.

Yes, so just to remind everyone on the call, last November we reported a positive study on the effects of Nereus in preventing vomiting in people that take GLP-1 analogs in the design of administrative Wegovia at one milligram, which is an advanced dose without any titration. And the results pretty much show that while 60% of the people on placebo approximately vomited in that design, only about 30% of the patients with Nereus did so, showing a significant protection. So the current design is a similar design where we aim to confirm the prior findings. We believe that this body of evidence, alongside with all the new use experiences for this approved product, would support the new use of the product. suffice for the filing of a supplemental NDA. We continue to communicate with the FDA on the statistical analysis plan on this study, and we will see how the results go, and we'll continue those conversations.

Great, thanks so much. As of now, there are no further questions at this time. Again, I would now like to turn the call back over to Vandis Management for the closing remarks. Please go ahead.

Yes. I thank you all for your questions and thank you for joining this call. Thank you.

Ladies and gentlemen, thank you all for joining and that concludes today's conference call. All participants may now disconnect. Thank you.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q1 2026 Vanda Pharmaceuticals, Inc. Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Vanda's Chief Financial Officer, Kevin Moran.

Thank you, Jordan. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals First Quarter 2026 performance. Our first 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. Following my introductory remarks, Mihael 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 very much, Kevin. Good afternoon, everyone. Thank you for joining us today for Vanda Pharmaceuticals First Quarter 2026 Earnings Conference Call.

Vanda delivered strong commercial execution in the first quarter, highlighted by 26% year-over-year growth in Fanapt sales, the groundbreaking U.S. launch of NEREUS with its pioneering direct-to-consumer platform at nereus.us and the FDA approval of BYSANTI. We believe that these achievements, combined with meaningful pipeline progress and our raised 2026 revenue guidance position the company for continued growth and value creation.

Financial highlights, the total net product sales reached $51.7 million in the first quarter of 2026, a 3% increase compared to $50 million in Q1 2025. Fanapt net product sales were $29.6 million, up 26% year-over-year. Full year 2026 revenue guidance was raised to $240 million to $290 million, including $10 million to $30 million from newly launched NEREUS.

Key commercial highlights. Fanapt saw continued strong momentum with total prescriptions, TRx, up 32% and new-to-brand prescriptions NBRx, up 76% versus the first quarter of 2025. In April 2026, weekly TRx for Fanapt reached an 11-year high of over 2,600 prescriptions for the week ending April 24, 2026.

NEREUS is now commercially available nationwide through nereus.us, Vanda's innovative direct-to-consumer platform. This pioneering patient-centric model enables convenient ordering online with rapid direct delivery, eliminating traditional pharmacy barriers and providing a seamless modern access experience. As the first new prescription therapy approved for the prevention of vomiting induced by motion in adults in more than 40 years, NEREUS represents a breakthrough in both science and patient access.

Some key regulatory and clinical development highlights. BYSANTI, milsaperidone received FDA approval for the treatment of bipolar I disorder and schizophrenia. BYSANTI is protected by data exclusivity through February 20, 2031, and multiple patents, the latest of which expires on May 31st, 2044.

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 BYSANTI as a once-daily adjunctive treatment for major depressive disorder with results expected in Q1 2027.

The HETLIOZ 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 by the end of 2026.

The FDA accepted the biologic license application for imsidolimab in Generalized Pustular Psoriasis with a Prescription Drug User Fee Act target action date of December 12, 2026. The results of the pivotal clinical study were published in the April 28, 2026, issue of the New England Journal of Medicine Evidence.

In summary, 2026 is developing into a transformational year for Vanda with an extensive and diversified portfolio of commercialized products that include Fanapt, HETLIOZ, HETLIOZ LQ, PONVORY, NEREUS, BYSANTI and potentially imsidolimab by year-end. Our recent innovative launch of NEREUS through the nereus.us platform revolutionizes customer experience through a convenient ordering system at a significantly discounted cash pay price.

Finally, our late-stage pipeline with several late-stage Phase III studies are poised to further diversify our pipeline and strengthen Vanda's commercial presence for years to come.

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

Thank you, Mihael. I will begin by summarizing our first quarter 2026 financial results. Total revenues for the first quarter of 2026 were $51.7 million, a 3% increase compared to $50 million for the first quarter of 2025 and a 10% decrease compared to $57.2 million for the fourth quarter of 2025.

The increase as compared to the first quarter of 2025 was primarily due to growth in Fanapt revenue as a result of the continued commercialization efforts for Fanapt in bipolar disorder, partially offset by decreased HETLIOZ revenue as a result of generic competition. The decrease as compared to the fourth quarter of 2025 was primarily driven by the impact of insurance plan disruptions and deductible resets that are typical in the industry at the beginning of the year.

Let me break this down now by product. Fanapt net product sales were $29.6 million for the first quarter of 2026, a 26% increase compared to $23.5 million in the first quarter of 2025 and an 11% decrease as compared to $33.2 million in the fourth quarter of 2025. The increase in net product sales relative to the first quarter of 2025 was attributable to an increase in volume, partially offset by a decrease in price net of deductions.

Fanapt total prescriptions or TRx, for the first quarter of 2026 as reported by IQVIA Xponent, increased by 32% compared to the first quarter of 2025. Fanapt new patient starts as reflected by new-to-brand prescriptions, or NBRx, for the first quarter of 2026 as reported by IQVIA Xponent, increased by 76% compared to the first quarter of 2025. The decrease to net product sales relative to the fourth quarter of 2025 was attributable to a decrease in volume and price net of deductions.

Fanapt TRx for the first quarter of 2026 decreased by 1% as compared to the fourth quarter of 2025. The decrease in volume was primarily driven by the impact of insurance plan disruptions and deductible resets that are typical in the industry at the beginning of the year and that we have observed with Fanapt and the broader atypical antipsychotic market in prior years.

Historically, Fanapt inventory at wholesalers has ranged between three and four weeks on hand as calculated based off trailing demand. As of the end of the first quarter of 2026, Fanapt inventory at wholesalers was slightly above four weeks on hand, which was generally consistent with the level of inventory weeks on hand as of the fourth quarter of 2025, but slightly above the historic range.

Turning now to HETLIOZ. HETLIOZ net product sales were $15.9 million for the first quarter of 2026, a 24% decrease compared to $20.9 million in the first quarter of 2025 and a 3% decrease compared to $16.4 million in the fourth quarter of 2025.

The decrease in net product sales relative to the first quarter of 2025 and the fourth quarter of 2025 was attributable to a decrease in volume as a result of continued generic competition in the U.S., which has contributed to declines in dispenses for both comparative periods. Of note, for the first quarter of 2026, HETLIOZ continued to be the leading product from a market share perspective despite generic competition now for over three years.

HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. HETLIOZ net product sales have fluctuated and may continue to fluctuate from quarter-to-quarter depending on when specialty pharmacy customers need to purchase again. HETLIOZ net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

And finally, turning to PONVORY. PONVORY net product sales were $6.2 million for the first quarter of 2026, a 10% increase compared to $5.6 million for the first quarter of 2025 and an 18% decrease compared to $7.6 million in the fourth quarter of 2025.

The increase in net product sales relative to the first quarter of 2025 was attributable to an increase in volume and price net of deductions. The decrease in net product sales relative to the fourth quarter of 2025 was primarily attributable to a decrease in price net of deductions, partially offset by an increase in volume.

The specialty distributor and specialty pharmacy inventory on hand levels during these periods were in line with normal ranges. Of note, underlying patient demand was essentially flat between the fourth quarter of 2025 and the first quarter of 2026, even in light of the negative impact of insurance plan disruptions and deductible resets at the beginning of the year.

Additionally, as we have previously discussed, 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 31, 2024.

For the first quarter of 2026, Vanda recorded a net loss of $48.6 million compared to a net loss of $29.5 million for the first quarter of 2025. The net loss for the first quarter of 2026 included income tax expense of $0.1 million as compared to an income tax benefit of $7.9 million for the first quarter of 2025.

As a reminder, the company recorded a onetime tax charge in the fourth quarter of 2025 to establish a valuation allowance against all of Vanda's deferred tax assets. Tax expense is expected to be nominal going forward until such time that a valuation allowance is no longer required.

Operating expenses for the first quarter of 2026 were $101.9 million compared to $91.1 million for the first quarter of 2025. The $10.8 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the continued commercialization efforts for Fanapt in bipolar disorder and PONVORY multiple sclerosis, expenses associated with the preparation for NEREUS and BYSANTI commercial launches and higher legal expenses.

These increases were partially offset by lower R&D expenses on our imsidolimab program, partially offset by an increase in expenses for our BYSANTI major depressive disorder program, VQW-765 social anxiety disorder program and other development programs.

The first quarter of 2025 included an upfront payment to Anaptys for the exclusive global license agreement for the development and commercialization of imsidolimab.

On the commercial side, during 2024 and 2025, we conducted a host of activities as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs.

Additionally, in the first quarter of 2025, we launched our direct-to-consumer campaign, which has driven meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY. Throughout 2025 and the first quarter of 2026, we maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches.

Vanda's cash, cash equivalents and marketable securities referred to as cash as of March 31, 2026, was $202.3 million, representing a decrease of $61.5 million compared to December 31, 2025. The decrease to cash was driven by the net loss in the first quarter of 2026 as well as a onetime milestone payment of $10 million made to Eli Lilly in the first quarter of 2026 for the approval of NEREUS in the U.S.

Seasonal compensation and benefit payments, which generally hit during the first quarter of the year of approximately $7 million and payments to third parties for manufacturing of commercial and clinical product of approximately $11 million, which is significantly higher than recent quarters.

As a reminder, payments made in advance of production are capitalized as a prepaid expense. Commercial products are capitalized as inventory on our balance sheet after production, while pre-commercial products are generally expensed as research and development costs as incurred. The timing of manufacturing of pre-commercial products may result in future variability of our R&D expense depending upon the timing of production. When adjusting the decrease in cash for these items, the change in the first quarter of 2026 would have been closer to $40 million.

With regard to the launches of Fanapt in bipolar disorder and PONVORY multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we continue to enhance our commercial efforts through the first quarter of 2026 with the impact of these commercial efforts contributing to revenue growth in 2025 and expected to continue to contribute to our revenue growth in 2026 and beyond.

We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong market response to our commercial activities related to Fanapt for bipolar disorder, including total prescriptions or TRx increased by approximately 32% in the first quarter of 2026 as compared to the first quarter of 2025.

In April of 2026, weekly TRx for Fanapt reached an 11-year high of over 2,600 prescriptions for the week ending April 24, 2026. New patient starts as reflected by NBRx increased by 76% in the first quarter of 2026 as compared to the first quarter of 2025. Of particular note, Fanapt was one of the fastest-growing atypical antipsychotics in the market throughout 2025 and in the first quarter of 2026 based on several prescription metrics.

Our Fanapt sales force continues to expand. Our Fanapt sales force number approximately 160 representatives at the end of 2024 and increased to approximately 300 representatives at the end of 2025. These expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, the number of face-to-face calls in the first quarter of 2026 was more than 80% higher than the number of face-to-face calls in the first quarter of 2025.

In addition to our Fanapt sales force, we have established a specialty sales force to market PONVORY to neurology prescribers around the country. We have grown this sales force to approximately 50 representatives. Fanapt performance remains the focus of Vanda's commercial initiatives and encourages us to continue to invest in this differentiated medicine and the franchise extending launch of BYSANTI.

Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ, PONVORY and now NEREUS already commercially available and with BYSANTI recently approved for bipolar disorder and schizophrenia and a biologics license application for imsidolimab now under review by the FDA, Vanda has five products currently commercially approved and could have six products commercially approved by the end of 2026.

Turning now to our financial guidance. Vanda is raising its full year 2026 total revenue guidance to reflect the potential contribution of newly launched NEREUS while maintaining prior ranges for Fanapt and other products.

Vanda expects to achieve the following financial objectives in 2026. Total revenues from Fanapt, HETLIOZ, PONVORY and NEREUS of between $240 million and $290 million. The midpoint of this revenue range of $265 million would imply revenue growth in 2026 of approximately 23% as compared to full year 2025 revenue. This compares to the previous guidance of total revenues from Fanapt, HETLIOZ and PONVORY of between $230 million and $260 million.

Fanapt net product sales of between $150 million and $170 million. The midpoint of this revenue range would imply Fanapt revenue growth in 2026 of approximately 36% as compared to full year 2025 Fanapt revenue. This guidance is consistent with the previously communicated revenue guidance. Assuming consistent gross to net dynamics between 2025 and 2026, the bottom end of the range assumes high single-digit to low double-digit sequential quarterly TRx growth for Fanapt in the remainder of 2026. The top end of the range assumes mid-teens to high-teens sequential quarterly TRx growth for Fanapt in the remainder of 2026.

Other net product sales of between $80 million and $90 million. This range assumes a further decline of the HETLIOZ business due to generic competition and modest growth of the PONVORY business, where we are seeking to significantly improve market access to the product. Depending on our success in these efforts, we could see meaningful improvements in patients on therapy, prescriptions filled, and prescriptions written by prescribers. This guidance is also consistent with the previously communicated revenue guidance.

Finally, NEREUS net product sales of between $10 million and $30 million. This guidance was not previously provided and is being introduced as part of the Q1 earnings update.

Vanda is currently making conditional investments to facilitate future revenue growth, both in the form of R&D investments, commercial manufacturing, and potentially outsized commercial investments, which could vary moving forward depending on the success of these commercial strategies. As previously communicated, Vanda is not providing 2026 cash guidance at this time. However, it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025.

With that, I'll now turn the call back to Mihael.

Thank you very much, Kevin. At this point, we'll be happy to answer your questions.

[Operator Instructions] Your first question comes from the line of Olivia Brayer from Cantor Fitzerald.

Can you run through what the pushes and pulls are that you're using for that $10 million to $30 million guidance range for NEREUS? It seems like somewhat of a big range, just given that it's so early in the launch. So, I'm curious what the higher end of the range assumes versus the lower end.

And then on BYSANTI's launch, what's the progress on getting that to patients at this point? And should we assume that any contribution from BYSANTI this year is essentially embedded in your Fanapt guidance? Or is it just too early to start attributing revenues there?

Maybe, Olivia, I will start off by saying it is very early on the NEREUS launch. And you have seen that we're approaching it as a broadly available commercial product with a direct-to-consumer platform, which is in the early days. And of course, we're working through all the dynamics and logistics of that. We'll have a better idea on progress by our next call.

And in terms of the $10 million to $30 million, we're excited about the opportunity. We know we are tapping a market of potentially 70 million people with motion sickness and a good percentage of them suffering from severe motion sickness that is not properly treated today. The $10 million to $30 million is a relatively wide range, but it is not informed by experience. It is more modeling from the total market opportunity and other treatments for motion sickness.

But I'll turn it to Kevin.

Yes. And that's right, Olivia. That's what's driving the range there. It's obviously not informed by actual data at this point. It's informed by modeling and what we've seen in some of our qualitative and quantitative research. And so, as we gather more information there, obviously, we'll be able to provide additional context as the year progresses.

Maybe on the BYSANTI side, what we previously communicated there is that we were looking to have the product available in the back half of the year, and that's still on track. So, we're working to bring that product to market.

And then as far as the revenue contribution goes, obviously, still pre-launch, so a little bit early on this. But I wouldn't necessarily think about it being as embedded in the Fanapt revenue item because we expect that we'll see demand for BYSANTI independent of Fanapt. And for any demand that we see for BYSANTI that replaces Fanapt demand, we're expecting to see meaningful net price favorability, which obviously would lead to a larger revenue contribution from a BYSANTI unit versus a Fanapt unit.

Okay. Got it. So, for BYSANTI specifically, is it just a matter of waiting until it's officially commercially available before providing any sort of revenue numbers around that? Or is 2026 maybe just a little bit too early to start modeling BYSANTI?

I think it's going to be -- obviously, we haven't -- we're not committing to providing revenue guidance on BYSANTI at any point in time. But obviously, the launch is, I think, going to be critical to us having better visibility into providing revenue guidance. And then we'll be looking to provide additional updates on it. But I don't think it's necessarily too early depending on the timing at which we launch the product.

Your next question comes from the line of Ram Selvaraju from H.C. Wainwright & Co.

Firstly, I was wondering if you could provide us with some additional color regarding the timeline to reporting of top-line data for the tradipitant study assessing its ability to attenuate nausea and vomiting and other GI side effects associated with GLP-1 drugs.

Yes. Thanks, Ram. So, what we've communicated there is that in the press release today, we said results by the end of 2026. And our timing obviously is consistent with that, and that's consistent with what we communicated in our most recent and our initial launch of the program. And obviously, we're actively enrolling patients at this point. So that's informed by actual activity.

And can you talk a little bit about what your expectations are for that data set? What you would consider to be a clinically meaningful result? And if you are also going to have additional information regarding the impact of tradipitant use on adherence and efficacy outcomes on the GLP-1s for patients enrolled in the study?

Thank you, Ram. This is Mihael. First of all, the Phase III study is of a very similar design like the Phase II study for which we reported positive results in November. And that is a week of pre-treatment with tradipitant or placebo and then a single injection of Wegovy at 1 milligram and follow-on for another week. So, what we aim to do with this study is confirm the previous finding of the significant reduction in vomiting episodes that we saw. And certainly, that was highly clinically meaningful.

On your question whether this will improve adherence, of course, with this short study, we will not have this information. But it is widely known that this GI decreased tolerability, especially around dose escalation to higher doses, is a significant contributor to decreased adherence.

And just two other things on that front. Can you comment on the possibility or likelihood of any off-label use of tradipitant given the fact that it is now an approved drug for motion sickness among those folks taking GLP-1 drugs who may potentially have obtained them via some consumer health initiative, potentially to assist them in achieving long-term adherence?

So first of all, the key word here is off label. Of course, we don't have any approved use for that indication. We cannot promote off label, especially in the midst of clinical studies and certainly not before approval in that indication. So, we cannot have any insights for that. We certainly hope that upon approval there will be a significant interest in the use of the drug.

And then last question for me is with respect to the long-acting injectable formulation of iloperidone. Can you provide us with an update on that? And how rapidly you expect to be able to advance the product candidate in this context at this juncture?

Yes. Thank you. For context, this is a long-acting injectable iloperidone being used in the study to measure relapse prevention in schizophrenia. The study is ongoing in the U.S. However, it is going slowly and slowly recruiting.

We think that is a phenomenon of the field of these studies and the required design of a placebo controlled. And I know you're quite familiar with this type of designs, but we're highly concerned that this exact model that has worked extremely well for Fanapt oral and other antipsychotics is becoming less and less amenable to study new drugs.

And what we are thinking and potentially discussing with the FDA soon is that not only recruitment has become slower in the U.S. for this type of placebo-controlled schizophrenia relapse prevention study, but the rate of relapse has historically been significantly reduced. We observed a significant rate of relapse on placebo in the study that was completed in 2015. We've seen since with other drugs that follow this design, a significant reduction on placebo.

It is too early for us to say what the exact placebo rate will be in this study. But certainly, we already believe will be much lower rate of relapse than the oral REPRIEVE study of iloperidone. All these go together to say that we are concerned about the timing of -- and the progress of the study. But we do have several ideas. We plan to engage the FDA in a constructive discussion and perhaps even modify the development plan.

Your next question comes from the line of Madison El-Saadi from B. Riley.

Maybe I'll ask about the recent New England Journal publication on imsidolimab in GPP. So, we're looking at a potential Christmas time approval again. Are you taking steps now to kind of lay the groundwork for a potential year-end commercial launch? Will this likely be something where there's like a one quarter cushion before the launch? And then is the expectation that you would receive approval in both the acute and the maintenance settings out of the gate?

Yes. Thank you very much, Madison. And you're correct. We're very excited with the publication in such a high-caliber journal, the New England Journal of Medicine evidence on this result, a testament of peer reviewed scrutiny around this very impressive data.

I will answer the question on indication first. We believe that the data that we've seen from the GEMINI-I, GEMINI-II studies do support both immediate treatment of acute flares with a single injection and maintenance of that relapse in responders with the once every four-week injections. So that is our proposed indication with the FDA. And we're also making progress with -- towards regulatory filings in Japan and in Europe, but they are much earlier than the FDA submission.

In terms of launch timing, this is, of course, a complex project to manufacture being a monoclonal antibody. We do not expect that we will be commercially launching right after the PDUFA date. There would be some lag time. But hopefully, we can do that within the first half of 2027.

Understood. And then if I may ask, so on the Fanapt prescription data, this kind of reacceleration in April, BYSANTI was approved late February. Just wondering if there was maybe some type of a halo effect that could have fed into that or if that was purely kind of the sales force that you described earlier?

Yes, Madison, thanks for the question on that. So, the reminder there is that historically, including this year, we've seen the first quarter be -- have seasonality with both Fanapt and the broader atypical class. And this first quarter was no exception. And in line with our expectations, we saw a flattish first quarter on prescription demand, which is, again, consistent with what we saw last year and in years prior to that.

What we saw last year was after the first quarter, we saw an acceleration and sequential quarterly growth in the double-digit range in the second, third and fourth quarter of last year. And that's our expectation of what we'll see this year, and that's supported by what we see on the April data, which includes our highest TRx prescription number in over 11 years, right, which was over 2,600. So, the pattern that we've seen in prior years and expected to see this year is what we've seen play out to date as the year has gotten started here.

Yes. I agree with all that. But also, I want to emphasize that the commercial infrastructure is mature. We have approximately 300 representative sales force, which is now well trained, mature, developing their relationships in the field and supported by both a significant awareness speakers' program, but also our brand awareness direct-to-consumer marketing.

Your next question comes from Leszek Sulewski from Truist.

So first on Fanapt, do you have a sense of what portion of the TRxs and NBRxs are coming from bipolar versus schizophrenia? And with inventory running above normal, should we expect any wholesaler destocking in 2Q?

And then on BYSANTI, can you rank the launch priorities, new patient starts versus switches from Fanapt and targeting the Medicaid heavy patients? And then third, I see the MDD readout was moved to the first quarter of '27 from year-end '26. What drove the timing shift? And I have a follow-up.

Thanks, Les. Maybe I'll start with the first two, and then Mihael can take the one on the MDD. So first on the split. So, while we don't analyze the data at an indication level, our expectation on the Fanapt growth is that the primary driver is going to be the bipolar label expansion that we got in 2024.

And that's what we seen, and that's what's informed our targeting strategy and call points and call guidance. So, the expectation would be that the growth that we're seeing in the Fanapt business is driven by increased demand from the bipolar patient population.

As far as the stocking question goes, so just to point you to what I said in my prepared remarks there, historically, we've seen the Fanapt inventory levels at three to four weeks. What we've seen in the -- at the end of the first quarter of 2026, fourth quarter of 2025 and as far back as the fourth quarter of 2024 is that the inventory levels were at or slightly above four weeks on hand.

So actually, the inventory at the end of the first quarter is largely consistent with what we've seen over the recent period. And what we would expect to see for a product that's growing, right? Because as you're measuring this, it's based off a trailing demand figure. But if the demand is growing, then it's actually on a lag. So, I wouldn't expect that. I'd expect the inventory levels to maintain at this as long as Fanapt continues to grow.

The second question you had there was around the prioritization of new patients versus switches from Fanapt to BYSANTI. And what I would tell you there is that we're going to be prioritizing both. And that's because with BYSANTI being launched as a newly approved atypical antipsychotic, we're certainly going to be detailing it in that light. And as part of that, we'll be deploying commercial strategies to have prescriptions moved from Fanapt to BYSANTI as appropriate.

And the last kind of point I would make on that is that with the nearest -- or sorry, with the BYSANTI launch in the back half of this year and the Fanapt potential loss of exclusivity at the end of next year, we've got five quarters or so where both products will be in the market, and we can execute on a switch strategy while executing a launch strategy as well.

With that, Mihael, I think, can address the question on the MDD timing.

Yes. Les, you're correct. we moved the timing of end of study and results for the MDD in the first quarter of 2027 from end of '26. We're still working hard to get the results as soon as possible and could be by year-end, but we have better data now on recruitment speed and especially bringing on new sites and those in Europe as well. So, it is a reflection of projections from the actual recruitment data.

That is helpful. And then on your commercialization and motion sickness, can you provide some color around the patient access to the drug and how that pricing looks like outside of the website via the retail pharmacy channel?

And then lastly, maybe just kind of curious on your pricing strategy given the competing NK-1s out there and how this would translate to the GLP-1 adjunct opportunity.

Yes. Thanks, Les. So, as we look at the insurance reimbursement landscape, obviously, with the product relatively recently approved, that will be a process that plays out over coming quarters and years as the payers conduct their clinical assessments and then their periodic reviews.

So, I expect to have more information to share on NEREUS access and progress on that front as we move further into the launch, but it's certainly something that would like to secure as well in addition to the cash pay model. But the cash pay model is our immediate focus for the actual NEREUS launch with the innovative platform that we've deployed.

And I'm sorry, Les, what was the second question after that?

The pricing strategy around and read-through for the GLP-1 opportunity.

Yes. Sorry. Thanks, Les. Yes. So, as we kind of evaluate the space and we look at the competitive class for the NK-1s, they range anywhere per dose from the 200 range up to about the 600 range. So, with our pricing strategy there, we're kind of deployed in the middle on the lower end. And we think with an eye towards gastroparesis potentially, if we're able to be successful on the regulatory front there and with the GLP-1 that pricing would put that at a competitive market price to service those patients as well.

So certainly, the considerations for us as we launched the pricing were having the appropriate price for the motion sickness market but having an eye towards the potential for a gastroparesis market and a GLP-1 market, hopefully, in the near future.

And what I would add is a couple of things. We chose this commercial model because we believe motion sickness is a prototypical consumer product. And as you can see on our website, we provide the product in increments of two capsules, which may be enough to supply somebody for their business or personal travel, where they may experience motion. So that's important to us, and we're receiving good comments on being very patient-centric.

And while in recent, I would say, years or a year, we've seen a model of cash pay at discounted prices, coming on, especially for drugs like the GLP-1 analogues. This is the first instance we know that you can directly coordinate with manufacturer. And this is an innovative system that we have built at Vanda and works in conjunction with a mail order pharmacy that can get expeditiously the product to patients.

We also are working to continue to add value-added measures, including a telemedicine platform so that patients can conveniently obtain the prescriptions. So, it's all focused on the customer experience, and we want this to be really an example for others to follow.

You mentioned, I think, briefly other NK-1 antagonist. And yes, there are other approved drugs in the class. None of them have ever been studied or approved in motion sickness or as an adjunct to GLP-1. The lead product there has been precedent by Merck in chemotherapy-induced nausea and vomiting and postoperative nausea and vomiting. And there are some key things and key differences on the label that can make potentially NEREUS more attractive for our consumer base.

And what I'm alluding to is the absence of interaction in the study imsidolimab study, which actually differentiates NEREUS from event on Emend contraindication or warning around contraceptive use. So that and other items on the prescribing information, we believe can make the product attractive, especially for this approved indication.

That's very helpful. Just to clarify one thing, does it seem that you would weigh out the option of a dual model approach for GLP-1 adjunct opportunity, meaning you could roll it out with a DTC plan and also a traditional insurance channel as well?

Yes. First of all, our premise here is broad access. So, any way people want to acquire the product, we want to make it available for them. At the same time, we recognize the difficulties people are going through with all the, let's call it, middleman, the pharmacy benefits organizations, their own plans. Pharmacies and all the markups of prices that go along. And we know there's a national discussion around that.

As Kevin said, the WACC price, the list price of $255 a capsule is within the range of other NK-1 antagonist. However, on the cash pay, we are offering it at about a more than 65% discount from $255 to $85 a capsule, making it affordable for folks who travel for business or pleasure engage in these motion sickness activities.

At the same time, we are making the drug available to pharmacies, and we ensure that wholesalers would either stock the drug or will make it available upon demand. So, the premise here is access, but access is not just insurance negotiations is appreciating independence and convenience by individual patients in accessing this drug. And we think this dual model can achieve that.

Your final question comes from the line of Andrew Tsai from Jefferies.

This is Faye on for Andrew. So, we have two questions. Number one is about milsaperidone. We want to gauge your views on its likelihood of success in the Phase III MDD trial. We know that not all antipsychotics work in MDD. So, do you want to talk about your confidence why milsaperidone should succeed? And is there any existing data to support any of its benefits as antidepressant?

Yes. We think actually we're quite confident. That's why we're running this study, and we're running it with the once-a-day BYSANTI. We think the study is properly powered to detect a clinical meaningful improvement in symptoms of depression. And generally, atypical antipsychotics are effective as an adjunctive treatment in major depression.

Now there are individual receptor binding properties of BYSANTI that differentiated and may increase the ability of effectiveness. And that is not only the dual dopamine and serotonin receptor antagonism, but also the strong and unique in the class alpha-1 receptor antagonism. And whether this will be necessary to achieve the effects or not in major depression will remain to be seen. But we remain very confident on the ability of BYSANTI to achieve the effect.

Okay. And the second question we have is for NEREUS. So, it launched earlier this month, and you briefly touched on the pricing strategy, but can you talk about the sales cadence for this drug later this year moving into 2027?

Yes. So obviously, with us launching mid-second quarter, we would expect the revenue to grow as the year progresses. And that's both with the passage of time, but also with the increase of our promotional activities associated with the product launch. So, one of the key elements to the commercial strategy here is a direct-to-consumer campaign, which we have worked on implementing over recent quarters, but will be continue to investing in as the year goes on. So certainly, we're optimistic about the prospects for NEREUS, and we expect the revenue cadence to increase and accelerate as the year goes on.

There are no further questions. I'd now like to turn it over to Vanna Pharmaceutical management for closing remarks.

Thank you very much all for joining this call and for your questions. We look forward to talking to you soon.

That concludes today's meeting. You may now disconnect.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At time, I'd like to welcome Vanda Pharmaceuticals, Inc. Earnings Conference Call. [Operator Instructions] Thank you. I'd now like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Thank you, Jordan. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' Fourth Quarter and Full Year 2025 performance. Our fourth quarter and full year 2025 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 Tim Williams, our General Counsel. Following my introductory remarks, Mihael 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 very much, Kevin. Good afternoon, everyone, and thank you for joining Vanda Pharmaceuticals Fourth Quarter and Full Year 2025 Financial Results Conference Call. 2025 was a year of strong commercial execution and significant regulatory and clinical advancements for Vanda. I will briefly address some of the key highlights. .

Our lead product, Fanapt, drove impressive growth. Full year net product sales increased 24% to $117.3 million versus 2024, and supported by a 28% rise in total prescriptions and a remarkable 149% surge in new-to-brand prescriptions. This reflects accelerating momentum broader prescriber adoption and the impact of our target commercial investments, including direct-to-consumer campaigns that boosted brand awareness.

Our full commercial franchise, Fanapt, HETLIOZ, HETLIO LQ and PONVORY generated total revenues of $216 million for the year, up 9% year-over-year, demonstrating solid performance across our marketed products. Clinical and regulatory milestone highlights, we achieved a major regulatory win with the FDA approval of [ Nereus ] tradipitant in late 2025, for the prevention of vomiting induced by motion. The first new oral pharmacologic option in this space in over 40 years. This approval offers a substantial market opportunity in motion signals.

Most of sickness is a common condition with prevalence estimates indicating that approximately 25% to 30% of U.S. adults roughly 65 million to 78 million people experience symptoms during travel or motion in exposure. Tens of millions seek pharmacologic relief annually, yet current users are often limited by adverse events or inconsistent efficacy.

[indiscernible] addresses this unmet need is well-tolerated, targeted neurokinineceptor antegrade and we're actively preparing for its commercial launch to bringing this common issue. Separately, we see strong adjunct potential for [ Nereus ] in the rapidly expanding GLP-1 agonist market. These therapies used for diabetes and obesity management have seen explosive growth with market projections in tens of millions annually and vomiting remains a frequent side effect, impacting up to 50% patients on agents like semaglutide. Nereus demonstrated positive clinical results in preventing vomiting induced by the GLP-1 analog semaglutide in our study.

To capitalize on this, we plan to initiate a dedicated Phase III program in the first half of 2026, pursuing label expansion in this high potential area where better tolerability will significantly improve based on adherence and outcomes. The [indiscernible] NDA for bipolar 1 disorder in schizophrenia is under FDA review with a PDUFA target action date of February 21, 2026, a Approval would further strengthen our growing suite and franchise alongside Fanapt in the global and psychotic category.

This category has a total addressable market estimated at approximately $20 billion in 2025. We submitted the imsidolimab BLA in the fourth quarter of 2025 for generalized pustular psoriasis, advancing us towards potential approval for this serious unmet need. Imsidolimab is a fully humanized ID4 monoclonal antibody that inhibits IL-36 receptor signaling and is being developed for GPP [indiscernible] indication. Regulatory and patent exclusivity for Imsidolimab is expected to extend into the late 2030s.

Vanda hold an exclusive global license for the development and commercialization of imsidolimab from [ AnaptysBio. ] GPP flares involved painful [indiscernible] over large skin areas accompanied by redness, itching and systemic symptoms and can be life-threatening. Late-stage clinical development programs include a Phase III study of [ Visante ] as a once-a-day adjunct treatment for major depression which is ongoing and results expected by end of the year.

Major depressive disorder is the most common psychiatric disorder in the United States, affecting more than 20 million American adults in any given year according to estimates from the usual into mental health and large-scale servers. It is characterized by persistent feelings of sadness, loss of interest or pleasure, fatigue, changes in appetite to sleep feelings of worthless and impaired concentration for decision-making, often leading to significant functional impairment in work, relationships and daily live.

MTD exhibits highly variable clinical expression and natural course, ranging from single episodic events to recurrent or chronic forms with episodes varying the severity, duration and responsive triggers.

Despite the availability of multiple evidence-based treatments, a substantial unmet medical need remains, approximately 30% to 50% of patients achieved only partial response or emission with first-line therapies, many experienced treatment resistant depression relapse rates are high even after initial improvement and side effects were delayed the onset of action, limit tolerability and appearance for a significant percent of individuals.

This persistent gap underscores the need for novel, more effective and better-tolerated adjunctive or alternative treatments to address the full spectrum of MDD.

The Phase III study of the long-acting injectable LAI formulation of [indiscernible] continues to enroll patients for schizophrenia in lapse prevention representing a key enhancement to Fanapt's long-term utility in psychiatric care.

The long-acting injectable LAI and psychotics market represents a significant and growing opportunity within the broader antipsychotic and psychiatric treatment landscape driven by the need for improved adherence in chronic conditions like schizophrenia and bipolar 1 disorder, where nonadherence total meds contributes to high relapse rates, hospitalizations and costs.

Estimates for the global LAI and psychotic specific market vary across reports, but consensus points to a 2025 size in the $6 billion to $7 billion range with strong growth projected.

A Phase III study of VQW765 our alpha-7 nicotinic [indiscernible] parcel agonist in adults with social anxiety disorder has been initiated with results expected by end of 2026.

Social anxiety disorder SAD affects approximately 30 million American adults according to the 2023, National Health and Wellness Survey with onset typically in the mid-teens or earlier and slightly higher diagnosis rates in females and males.

It manifests as excessive fear of embarrassment, humiliation, scrutiny, evaluation or ejection social or performance situations leading to avoidance or intense distress a significantly bears daily routine portation functioning, social life and overall quality of life.

Though individuals are generally asymptomatic, absent such triggers. Standard treatments include cognitive behavioral therapy, but many patients struggle to initiate or tolerate exposure due to the severity of anxiety. Off-label options like benzodiazepines offer rapid calming effects but carry risks of abuse, misuse, addiction and black box warnings for interactions and dependency.

Beta blockers provide situational relief, but limited broader efficacy. This highlights the need for novel on-demand therapies like VQW765 to address acute episode more effectively. Our clinical development programs for PONVORY, ponesimod in psoriasis and ulcerative colitis are ongoing, building on its established profile as a selective S1 P1receptor modulator approved for relapsing multiple sclerosis.

For psoriasis, PONVORY has already demonstrated strong efficacy in earlier studies, including a Phase II randomized double-blind placebo-controlled trial, so a significant [indiscernible] 75 responses, that is greater than 75% reduction in psoriasis area and severity index at week 16 across tested doses of 10, 20 and 40 milligrams with sustained improvements in symptoms of moderate to severe chronic plaque psoriasis in a favorable time course of response.

[indiscernible] in updates indicate advancement toward Phase III evaluation positioning Poor as a potential oral option in this large inflammatory dermatology market.

For ulcerative colitis, the S1P mechanism has been robustly validated by the successful commercialization and approvals of other modulators, symposia [indiscernible] have shown efficacy in Phase III trials for moderate-to-severe ulcerative colitis, achieving clinical remission and mucosal healing superior to placebo.

PONVORY may be particularly well suited for this indication due to its pharmacological advantages of rapid onset of action faster lymphocyte sequestration compared to some [indiscernible] members and rapid lymphocyte recovery upon discontinuation.

This profile offers greater flexibility for managing infections, vaccination, surgery [indiscernible] planning or therapy switches, key considerations in chronic IBD where treatment interruptions or adjustments are coming. This expansions which significantly broadened for PONVORY addressable patient population and leverage its differential-aided pharmacokinetics to address unmet need in autoimmune informatory diseases beyond multiple sclerosis.

We look forward to progressing these programs and sharing updates as they advance. Looking forward, we expect 2026 total revenues of $230 million to $260 million from our current marketing products only that is FANAPT, HETLIOZ, HETLIO LQ and PONVORY establishing a strong baseline. We anticipate continued growth from this portfolio with further contributions from the Nereus launch and potential approvals of [indiscernible] and imsidolimab plus progress across our late sales programs.

We believe that our growing psychiatry franchise is well positioned for expansion anchored by Fanapt on the market for schizophrenia and bipolar 1 disorder with is caped currently under FDA review for bipolar 1 in schizophrenia with a PDUFA February 21, and in 2026.

And in ongoing Phase III clinical development as an adjunctive treatment for major depressive disorder. Long-acting injectable formulation of Alpert advanced in Phase III for schizophrenia relapse prevention and 765 in a Phase III study for social an disorder with results expected by the end of 2026, collectively strengthening our portfolio across key psychiatric indications.

In summary, 2025 showcased our ability to drive revenue while building a diversified, high-potential pipeline. We remain committed to delivering innovative therapies and long-term value for patients and shareholders. With that, I'll turn it over to Kevin. Kevin?

Thank you, Mihael. I'll begin by summarizing our financial results for the full year 2025 before turning to discuss the fourth quarter of 2025. Total revenues for the full year 2025 were $216.1 million, a 9% increase compared to $198.8 million for the full year 2024.

The increase was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch, partially offset by decreased HETLIOZ revenue as a result of generic competition. Let me break this down now by product. Fanapt net product sales were $117.3 million for the 24% increase compared to $94.3 million for the full year 2024. This increase in net product sales relative to the full year 2024 was attributable to an increase in volume.

Fanapt total prescriptions, or TRx, as reported by Equibia Exponent for the full year 2025 increased by 28% compared to the full year 2024. Fanapt new patient starts for the full year 2025, as reflected by new-to-brand prescriptions, or NBRx, increased by 149% compared to the full year 2024.

Turning to HETLIOZ. HETLIOZ net product sales were $71.4 million for the full year 2025, a 7% decrease compared to $76.7 million in the out of continued generic competition in the U.S. The decrease to net product sales relative to the full year 2024 was attributable to a decrease in volume and price net of deductions.

Of note, for the full year 2025, HETLIOZ continued to retain the majority of market share despite generic competition now for over 3 years. And finally, turning to PONVORY. PONVORY product sales were $27.4 million for the full year 2025, a 2% decrease compared to $27.8 million for the full year 2024.

Of note, an amount of variable consideration related upon PONVORY net product sales is subject to dispute of which approximately $3 million was recognized for the 3 months ended December 31, 2024. For the full year 2025, Vanda recorded a net loss of $220.5 million compared to a net loss of $18.9 million for the full year 2024. The net loss for the full year 2025 included income tax expense of $81.8 million as compared to an income tax benefit of $4 million for the full year 2024, primarily driven by a onetime noncash income tax charge. The provision for income taxes for the full year 2025 includes the impact of the recording of a valuation allowance of $113.7 million against all of Vanda's deferred tax assets.

To reiterate, the recording of this valuation allowance is onetime in nature and is a noncash charge. The company has its deferred tax asset each quarter through the review of all available positive and negative evidence.

Deferred tax assets are reduced by a valuation allowance when in the opinion of management, it is more likely than not that some portion or all of those deferred tax assets will not be realized. This analysis is highly dependent upon historical and projected pretax income.

Projected pretax income includes significant assumptions related to revenue, which could be affected by the trajectory of the commercial launches of Fanapt in bipolar disorder PONVORY multiple sclerosis and Nereus in the prevention of vomiting induced by motion, which was approved on December 30 of 2025 and HETLIOZ generic competition as well as commercial and research and development activities, including spend on our commercial launches and late-stage clinical activities and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors.

In the fourth quarter of 2025, after considering all available positive and negative evidence including, but not limited to, historical, current and future projected results, and significant risks and uncertainties related to forecast, the company concluded that it is more likely than not that substantially all of its deferred tax assets are realizable in future periods and recorded a valuation allowance against all net deferred tax assets.

Resulting in a noncash income tax expense of $113.7 million for the year ended December 31, 2025. Operating expenses for the full year 2025 were $367.3 million compared to $239.4 million for the full year 2024.

The $127.8 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis. Expenses associated with the preparation for future commercial launches and higher R&D expenses primarily related to the exclusive global license agreement with an Fanapt for the development and commercialization of imsidolimab, which was entered into during the first quarter of 2025 and our Fanapt long-acting injectable and [indiscernible] major depressive disorder clinical development programs.

During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt by for disorder and PONVORY multiple sclerosis including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs.

Additionally, in the first quarter of 2025, we launched our direct-to-consumer campaign, which has driven meaningful gains in brand awareness for the company and our products in [indiscernible] We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches.

Vanda's cash, cash equivalents and marketable securities referred to as cash as of December 31, 2025, was $263.8 million, representing a decrease of $110.8 million compared to December 31, 2024, and a decrease of $29.9 million compared to September 30, 2025.

The changes in cash during the full year 2025 and the fourth quarter 2025 were driven by the net loss in those periods, excluding the impact of the onetime noncash charge related to the tax valuation allowance as well as timing of cash received from customers for revenue and related payments of rebates to payers and the timing of cash paid to third parties for services related to operating expenses.

Turning now to our quarterly results. Total revenues were $57.2 million for the fourth quarter of 2025, an 8% increase compared to $53.2 million for the fourth quarter of 2024 and a 2% increase compared to $56.3 million in the third quarter of 2025. The increases as compared to the fourth quarter of 2024 and the third quarter of 2025 were primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch.

Let me break this down now by product. Fanapt net product sales were $33.2 million for the fourth quarter of 2025, a 25% increase compared to $26.6 million in the fourth quarter of 2024 and a 6% increase compared to $31.2 million in the third quarter of 2025. Fanapt total prescriptions, or TRx, as reported by Equibia Exponent in the fourth quarter of 2025, increased by 36% compared to the fourth quarter of 2024 and 8% compared to the third quarter of 2025. Fanapt new patient starts in the fourth quarter of 2025 as reflected by new-to-brand prescriptions, or NBRx, increased by 108% compared to the fourth quarter of 2024 and by 7% compared to the third quarter of 2025.

The increase in Fanapt revenue between the fourth quarter of 2024 and the fourth quarter of 2025 was primarily attributable to an increase in volume. The increase in Fanapt revenue between the third quarter of 2025 and the fourth quarter of 2025 was also attributable to an increase in volume. These increases in volume were primarily driven by increased total prescription demand.

Historically, Fanapt inventory at wholesalers has ranged between 3 and 4 weeks on hand as calculated based on trailing demand. As of the end of the fourth quarter of 2025, Fanapt inventory at wholesalers was slightly above 4 weeks on hand which was generally consistent with the level of inventory weeks on hand as of the fourth quarter of 2024 and the third quarter of 2025, but slightly above the historic range.

Turning to HETLIOZ. HETLIOZ net product sales were $16.4 million for the fourth quarter of 2025, an 18% decrease compared to $20 million in the fourth quarter of 2024 and a 9% decrease compared to $18 million in the third quarter of 2025. The decrease in net product sales relative to the fourth quarter of 2024 was primarily attributable to a decrease in price net of deductions as well as a decrease in volumes sold.

The decrease in net product sales relative to the third quarter of 2025 was primarily attributable to a decrease in price net deductions, partially offset by an increase in volume. HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period.

Going forward, HETLIOZ net product sales may reflect lower unit sales as a result of the reduction of the elevated inventory levels at specialty pharmacy customers or maybe variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ net product sales may decline in future periods potentially significantly related to continued generic competition in the U.S.

And finally, turning to PONVORY. PONVORY net product sales were $7.6 million for the fourth quarter of 2025, an increase of 17% compared to $6.5 million in the fourth quarter of 2024 and an increase of 8% compared to $7 million in the third quarter of 2025.

The increase in net product sales as compared to the fourth quarter of 2024 was attributable to an increase in price net of deductions, partially offset by volume. The increase in net product sales as compared to the third quarter of 2025 was attributable to an increase in price net of deductions, partially offset by volume. The specialty distributor and specialty pharmacy inventory on hand levels during these periods were in line with normal ranges.

Of note, underlying patient demand has increased, albeit modestly on a sequential quarter basis for the last 3 quarters. Additionally, as previously noted, an amount of variable consideration related PONVORY net product sales is subject to dispute of which approximately $3 million is recognized for the 3 months ended December 31, 2024.

For the fourth quarter of 2025, Vanda recorded a net loss of $141.2 million compared to a net loss of $4.9 million for the fourth quarter of 2024. From an income tax perspective, the net loss for the fourth quarter of 2025 included an income tax expense of $103.2 million as compared to an income tax benefit of $1.6 million for the fourth quarter of 2024.

Primarily driven again by the onetime noncash income tax charge of $113.7 million for the tax valuation allowance. Operating expenses in the fourth quarter of 2025 were $97.6 million compared to $63.5 million in the fourth quarter of 2024. The $34.1 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and or is associated with the preparation for future commercial launches and higher R&D expenses.

During 2024 and 2025, we commenced the host of activities as a result of the commercial launches of Fanaptum bipolar 1 disorder and PONVORY multiple sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. Additionally, in the first quarter of 2025, we launched our direct-to-consumer campaign, which has driven meaningful gains in brand awareness for the company and our products, Fanaptum PONVORY.

We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With regards to the launches of fenaptin bipolar 1 disorder and PONVORY multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we continue to enhance our commercial infrastructure in 2025, and with the impact of these commercial efforts contributing to revenue growth in 2025 and expected to continue to contribute to revenue growth in 2026 and beyond.

We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong market response to our commercial activities related to Fanapt. Total prescriptions increased by 36% in the fourth quarter of 2025 as compared to the fourth quarter of 2024, New patient starts or NBRx, increased by 108% in the fourth quarter of 2025 as compared to the fourth quarter of 2024.

And of particular note, Fanapt was one of the fastest-growing atypical antipsychotics in the market throughout 2025 and based on numerous prescription metrics. Our Fanapt sales force numbered approximately 160 representatives at the end of 2024 and increased to approximately 300 representatives at the end of 2025.

These sales force expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, the number of face-to-face calls in the fourth quarter of 2025 was more than twice the number of face calls in the fourth quarter of 2024.

We've established a specialty sales force to market upon borates and neurology prescribers around the country. We've grown this sales force to approximately 50 representatives at the end of 2025. Fanapt performance remains the focus of our commercial initiatives and encourages us to content and, if approved, the franchise extending launch of Vasanti.

Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ and PONVORY, already commercially available and with the nearest NDA recently approved for motion sickness, and the [indiscernible] NDA for biplan disorder and schizophrenia under review by the FDA and a biologics license application, BLA, for imsidolimab now submitted to the FDA, Vanda could have 6 products commercially available in 2026.

Turning now to our financial guidance. Due to the recent and upcoming regulatory and commercial milestones, Vanda's 2026 financial guidance is limited to revenue guidance for currently commercialized products, which includes Fanapt, HETLIOZ and PONVORY. Vanda expects to achieve the following financial objectives in 2026. Total revenues from Fanapt HETLIOZ and PONVORY of between $230 million and $260 million.

The midpoint of this revenue range would imply revenue growth in 2026 of approximately 13% as compared to full year 2025 revenue. Fanapt net product sales of between $150 million and $170 million. The midpoint of this revenue range would imply a revenue growth in 2026 of approximately 36% as compared to full year 2025 Fanapt revenue. Assuming consistent gross to net dynamics between 2025 and 2026, the bottom end of this range assumes mid- to high single-digit quarterly TRx growth for Fanapt in 2026.

The top end of this range assumes low double-digit to mid-teen quarterly TRx growth for Fanapt in 2026. Other net product sales of between $80 million and $90 million.

This range assumes a further decline of the HETLIOZ business due to the generic competition and modest growth in the PONVORY business, we are seeking to significantly improve market access to the product.

Depending on our success in these efforts, we could see meaningful improvement in patients on therapy, prescriptions filled and prescriptions written by prescribers. It is worth commenting that the quarterization of revenue in 2026 will be impacted by several items, including insurance plan transitions as patients adjust to new insurance plans at the start of the year, there may be some disruptions in the first quarter.

This is typical industry-wide occurrence and consistent with our own historical trends. As I previously mentioned, as of December 31, 2025, HETLIOZ inventory at specialty pharmacy customers was elevated, which may result in fewer specialty pharmacies customers ordering or specialty pharmacy customers ordering smaller amounts in the first quarter of 2026.

Vanda is currently making conditional investments to facilitate future revenue growth. Both in the form of R&D investments, commercial inventory production and potentially outsized commercial investments, which could vary moving forward depending on the success of these commercial strategies. Vanda is not providing 2026 cash guidance at this time. However, it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025.

It is also worth noting that the quarterization of cash balances will be impacted by several items. The first quarter cash balance will be impacted by [indiscernible] in the first quarter of 2020 and for the approval of Nereus in the U.S., the $10 million was accrued in the fourth quarter of 2025 and capitalized as an intangible asset that was not paid as of year-end 2025.

The impact of revenue quarterization previously noted, and the standard timing of certain items paid in the first quarter of each year. The full year cash balance will also be impacted by the potential of a $5 million milestone payment to [indiscernible] if the imsidolimab BLA is approved by the FDA and the timing of payments associated with commercial inventory production for our upcoming and potential commercial launches.

With that, I'll now turn the call back to Mihael.

Thank you very much, Kevin. At this point, we'll be happy to address your questions. .

[Operator Instructions]

Your first question comes from the line of Madison El-Saadi from B. Riley Securities.

Maybe I'll start with [indiscernible] pathway and the bioequivalent to Fanapt you've shown. I'm just curious if you could characterize any FDA communication on outstanding issues that came up during the review cycle, if there any requests related to CMC or labeling scope questions that you could discuss and then assuming approval, is there a day one commercial strategy you could walk us through? Just recognizing it's really about transition patients from Fanapt to [indiscernible]

Yes, sure. Thanks, Madison. So first of all, this is a NDA, and it is not a bioequivalents like a generic, while bioequivalence data are important. So think of it as a completely new drug application. In terms of the -- how the review is going -- of course, we don't give incrementals.

But I would say, we remain optimistic for an on-time approval. Now your question on commercial plan. First of all, the commercialization, if approved later this month, will have to wait for some time in Q3 when commercial supplies will be ready.

And between the sign and then we'll have more color we can give on the launch strategy of [indiscernible] and also the interplay with Fanapt.

Your next question comes from the line of Raghuram Selvaraju Vera from HCW.

I was wondering if you could comment on what you expect the commercial infrastructure size and scope to be for imsidolimab assuming timely approval?

Thank you very much. So as you know, GPP is quite rare that most likely would be addressed with a small sales force visiting dermatologists and any advocacy organizations around this disorder. And there is a better awareness than it used to be since the 2021 approval of specolimab from Berger Ingelheim. So we believe that a dedicated small specialty sales force will be the key commercial asset that is needed.

Okay. Great. Is there any additional detail you can provide to us regarding promotional activities in support of Fanapt and [indiscernible] particularly as this pertains to any direct-to-consumer campaigns you may have planned over the course of 2026.

Yes. At this time, we don't have a Visante campaign plan, the direct to consumer campaigns that Kevin alluded to, is consisting of a brand awareness of Vanda overall through sponsorships and direct-to-consumer campaign on product that is Fanapt and PONVORY. We expect that to continue in similar cadence like the past year. And with the commercial launch of [indiscernible ] we expect to have a dedicated campaign for that, but no concrete plans at this time. .

And then with respect to Nereus and tradipitant as a whole, can you maybe offer us some additional contextual information on the following 3 aspects.

Firstly, I'm not sure whether I may have missed this earlier. But can you just confirm to us when you expect Nereus to be commercially available the recently approved indication. Secondly, if you have any additional feedback or context to provide at this time regarding the regulatory outlook for tradipitant in [indiscernible] and then lastly, if you can give us a sense of what you expect the time line to be completion of enrollment in the envisaged Phase III trial assessing tradipitant and attenuation or prevention of nausea and vomiting associated with GLP-1 receptor agonist drugs.

Of course. On commercial availability, we're working in preparing now commercial materials. And we expect available commercial materials, either by late Q2 or beginning of Q3. In terms of the regulatory path in gastroparesis, we are now preparing for a hearing at the FDA. That was in the balance for a little while, but now we have resumed and we expect to hear from the FDA in the near future, whether or not they're going to grant a hearing, and we'll take it from there.

In terms of the US study for GLP-1 analog, remind everyone, we had a very strong Phase II study in prevention of vomiting and we are now in the process of initiating a Phase III study, which we believe could produce results by late Q3, Q4 for this new Phase III study.

And then very -- one last quick 1 for me. Regarding the iloperidone LAI. You mentioned, I think, in the prepared remarks and the press release. that the Phase III program for iloperidone LAI is currently enrolling patients. Do you anticipate completing enrollment in that Phase III program before the end of this year?

Yes, it is enrolling. However, we're not satisfied much with the speed. And that is primarily because of the delays in launching this study in Europe. And it's not delays the company can control it is more resistance in conducting placebo-controlled studies in Europe and other considerations. So that is definitely slowed down. the rate of recruitment we have now, it is encouraging that things are picking up and moving in the U.S. alone. But I would say I don't have good visibility where they will be able to reach the recruitment goals by year-end.

Your next question comes from the line of Olivia Brayer from Cantor Fitzgerald.

This is Sam on for Olivia. A quick one from me. I may have missed this during the call, but could you provide some more color on the Fanapt GTN impacts given the increase in volume and the difference between that and the sales increase year-over-year?

Yes. Thanks, Sam. Yes, so what we saw on a year-over-year basis, and I think what you're highlighting is that the script growth outpaced the overall revenue growth and wh1at we've seen on a year-over-year basis is a relatively small reduction in net price, and that's due to a couple of gross-to-net items, some of which we highlighted during last year's earnings call which was primarily related to the introduction of the Medicare benefit redesign as part of the IR -- so that began at the beginning of this year.

So that was a gross to net differential between 2025 and 2024. And then additionally, in the Q3 call, we commented on that we've seen an increased gross to net item and unfavorable gross item related to commercial co-pay support which, to some extent, should be expected as with the bipolar indication, you would expect to see a higher proportion of commercial patients relative to port would then increases in terms of gross to net items.

So that's the bridge kind of between the TRx growth and the revenue growth where there was a relatively small difference between the 2 percentage wise.

And is that expected to stabilize? Or is there a possibility that it could keep increasing moving forward?

Well, so the Medicare piece has a phase in on there was a 1% fee in 2025 that increases to 2% this year. But in general, we would expect the gross to net to be consistent, absent there being some significant change in the underlying business or payer dynamics. The one thing that I would flag for you that we've highlighted previously, especially with the [indiscernible] PDUFA date right in front of us, is that the gross to net dynamics on [indiscernible] are significantly different and favorable relative to Fanapt. And that's because Vasanti will get a new Medicaid URA calculation, a reset there. And so as you might remember, 30% to 40% of our Fanapt business is Medicaid. And currently, that contributes negative revenue, meaning the gross to net adjustment exceeds the gross revenue for us. It's actually a negative revenue contribution. And with Vasanti, you'll get a complete reset on that so that you'll be subject to the statutory 23.1% discount, but none of the other adjustments that come with having a product on the market over time. .

And so whereas our gross to net, we've previously communicated is in the neighborhood of 50% on Fanapt. We'd expect it to be more like in the mid-30s on Vasanti.

Your final question comes from the line of Andrew Tsai from Jefferies.

One more on the guidance [indiscernible] this year, $150 million to $170 million at the midpoint. Seems like that could be 35% to 40% year-over-year growth. And I believe you mentioned in the prepared remarks, maybe volume grows by 10%, give or take, at the midpoint. So is it -- do we imply that net price will be growing by 30%, if so, why? And then secondly, how much of that guidance range for 2026 seems cannibalization from the [indiscernible] launch in Q3 .

Yes. So Andrew, first, on the first point there, so our revenue guidance range, the $150 million to $170 million, right? So midpoint of $160 million. I think what you're referencing is I, in the prepared remarks, commented that the lower end of the range would have mid- to high single-digit TRx growth and then the higher end of the range would have low double digit to mid-teens. Yes. So Andrew, first, on the first point there. engine a I think what you're referencing is in the prepared remarks commented that the lower end of the range would have mid- to high single-digit TRx growth and then the higher end of the range would have low double digit to mid-teens.

That's sequential quarter growth, so quarterly growth of those numbers. So the revenue getting to $160 million would be almost entirely TRx driven, volume driven. With Medicaid and now the Medicare redesign as part of IRA, price increases are somewhat capped if your business is not significantly driven by commercial markets.

And so yes, that revenue growth is almost entirely volume-driven. And then on your second question, on [indiscernible], again, we are very excited about the PDUFA date coming up very quickly here. But as Mihael mentioned, it will be in the back half of the year by the time that a launch would occur and there's $0 of revenue contribution in the revenue guidance that we've provided.

Okay. And secondly, Nereus, how are you thinking about remind us list price, net price how fast can sales grow in the first 4 quarters when you launch also in Q3?

Yes. Thanks, Andrew. So we haven't communicated a price on Nereus yet. But what we have noted is that in terms of some data points drawn in the market, the NK1 class, which you typically see there is that for a dose of one of the other NK1s that's approved in the market, those can range from between $200 to as high as $600 a dose. And what we also have commented on is that for the available treatments in the market for -- that are used for motion sickness, namely Dramamine or scopolamine patches, we expect our price to have a premium relative to those prices. .

So hopefully, those are some data points that can kind of help frame the kind of pricing dynamic there. And then as Mihael mentioned, with the launch likely happening in late Q2 or early Q3, we didn't provide guidance at this time, but the numbers Mihael quoted in his prepared remarks around the prevalence of motion sickness and the proportion of those people seeking treatment. And so we're excited about the possibilities there, although we haven't provided specific guidance. .

Very good. And then last one for me. study Phase III, where I think you said the data could be ready second half of this year. Is there going to be the same trial design in the Phase II? And are you expecting to see the same 50% relative reduction in vomiting?

And then Secondly, my understanding is the trial is using a high upfront dose of WEGOVI. And so are there precedents of drugs that were approved the reference drug also use a relatively high upfront dose sale?

On the first question, Andrew. Yes, the design is going to be very similar to the prior study. And we will use, again, as the challenge a 1 milligram again we gave naive patient. I understood your second question, would you mind clarifying?

Sure. Rather than titrating [indiscernible] over the course of weeks, your trial lines have been using a high 1 mg upfront dose. [indiscernible] is that have FDA buy in? Or is there some kind of precedent around that kind of unique trial design kind of thing.

Well, it is a logical design. If the drug works at a higher challenge than you expect it to work in the lower sales. And the selling patients are facing is usually with rapid titration in higher doses. You are correct if you are implying that we've got the guidance now on the label is to start low and go slow, you start with 0.25 milligrams, and you only reach the 1 milligram dose we're using at week 9. So while it is true that the titration is different. We don't expect that the drug will work.

That concludes the question-and-answer session. I'd now like to turn the call back over to Vanda management for closing remarks.

Thank you very much all for joining us. We will see you at the next call. .

That concludes today's meeting. You may now disconnect.

Good morning, everybody. Thank you so much for joining us on day 4 of the JPMorgan Healthcare Conference. My name is Bhavana Balakrishnan, and I'm an associate in the Healthcare Investment Banking Group. Today, we're joined by Vanda Pharmaceuticals, and we have with us Kevin Moran, Senior Vice President, Chief Financial Officer and Treasurer. Over to you, Kevin.

Wonderful. Thank you. And thank you very much to the entire JPMorgan team for having us here this week. So we'll begin our presentation first with our forward-looking statements that everyone should obviously review. So now turning to a company overview. Vanda Pharmaceuticals is a leading global biopharmaceutical company dedicated to innovating in the service of people's pursuit of happiness. We focus on an innovation-led strategy where we have a decades-long track record of successfully developing and commercializing innovative therapies.

We have a robust commercial portfolio that's anchored by 4 FDA-approved brands. Our 3 brands that are currently on the market, Fanapt, which is an atypical antipsychotic. HETLIOZ, which is approved for 2 orphan sleep disorders. PONVORY, which is approved in the neurology space for multiple sclerosis and our recently approved NEREUS approved in vomiting induced by motion. We have a strong debt free balance sheet, providing us with substantial capital to invest in our upcoming R&D and commercial activities.

We have a late-stage growth pipeline with numerous high-potential programs targeting significant unmet needs in billion-dollar markets, both at the regulatory stage and late-stage clinical development. And we have a number of imminent regulatory catalysts including our recently approved NEREUS in motion sickness, all of which have potential for significant commercial expansion as early as this year.

Turning now to our strategic focus. Our strategic focus is to grow and diversify our revenue, advance our pipeline, with all of which with a focus on consumers. So in our grow and diversify revenue strategy, we're planning on growing our revenue across our existing products and our current indications while diversifying that revenue with the potential to have 6 commercial products on the market by the end of 2026. In our pipeline, we have a number of programs in regulatory review with upcoming PDUFA dates. As well as a number of programs in the Phase III stage of development.

In addition to that, we have multiple early-stage programs, including our emerging ASO platform. And one particular program to highlight is NEREUS, in addition to being approved recently in motion sickness, also had very positive Phase II results as a potential key adjunct treatment in the GLP-1 market. And finally, on our focus on consumers. We focus on large markets with high unmet patient needs, increasing access and affordability for patients and wherever possible, engaging directly with our customers and consumers.

Focusing now specifically on our commercial therapies, beginning with Fanapt. Fanapt again, is an atypical antipsychotic. Our oral tablets are approved in the U.S. for the acute treatment of bipolar disorder in adults as well as schizophrenia. Our Fanapt long-acting injectable formulation currently is in Phase III for schizophrenia and we've initiated a program in hypertension. Finally, Bysanti, which is the active metabolite of Fanapt, our NDA has been accepted by the FDA for review, and we have an upcoming PDUFA date on February 21, 2026, so in a matter of weeks.

In addition to that, we have a clinical program underway for major depressive disorder, MDD, where results are expected in 2026. HETLIOZ, our second product, the oral capsules are approved in the U.S. and in Europe for the treatment of non-24-hour sleep-wake disorder. And additionally, the oral capsules and the HETLIOZ LQ liquid formulation are approved in the U.S. for the treatment of Smith-Magenis -- nighttime sleep disturbances and Smith-Magenis Syndrome in adults and children.

In addition to those indications, HETLIOZ is at the regulatory stage for both insomnia and jet lag disorder. And we have programs underway for pediatric insomnia, delayed sleep phase disorder and Pediatric Non-24-Hour Sleep-Wake Disorder. Our third product, PONVORY, is approved in the U.S. for the treatment of relapsing forms of multiple sclerosis. And there's IND applications, which have been accepted by the FDA in the treatment of psoriasis and ulcerative colitis, where we have Phase III programs ongoing.

And finally, our recently approved product, NEREUS, which again is approved in the U.S. for the prevention of vomiting induced by motion. In addition to that, we have our Phase III program that we expect to start in the first half of 2026 for nausea and vomiting induced by GLP-1 and again, that program is imminently expected to start after we announced our results in November of 2025. And finally, NEREUS is also at the regulatory stage for the indication of gastroparesis.

Now an overview of our recent and upcoming R&D milestones. So as I mentioned, NEREUS approved for motion sickness on December 30. And with that approval now in hand, we expect the commercial launch sometime in the second half of this year. On February 21, again, a matter of weeks, we have our Bysanti PDUFA date for both bipolar disorder and schizophrenia. In the first half of 2026, we expect to initiate our Phase III program for GLP-1 induced vomiting. In the second half of 2026, we expect to have a PDUFA date for our recently filed BLA for imsidolimab in the indication of generalized pustular psoriasis or GPP and then finally, our Bysanti Phase III program for MDD, we expect results in 2026.

Here, we've got a more detailed overview of the portfolio of approved products and where they are in the pipeline phase. Just briefly, I'll touch on this. You can see the number of products that are -- at least all 4 products approved and in the market, Fanapt with the 2 indications of bipolar disorder and schizophrenia. HETLIOZ with the 2 indications of Non-24 and SMS. PONVORY with multiple sclerosis and NEREUS with motion sickness. And again, as you can see, the number of these programs that also are at the regulatory phase for additional indications as well as the Phase III and Phase IV programs that remain in development.

Turning now to our early-stage pipeline. In addition to those assets that are already on the market, we have a number of other products that are at earlier stages of development. So we have VSJ-110 in the dry eye indication that's at Phase II, our VPO-227 product that's also at the Phase I stage for cholera. And then a particular note here is VQW-765, which is moving into Phase III for social performance anxiety.

From a revenue perspective, we have a number of near-term revenue growth drivers as well as longer-term revenue growth drivers. So on the left side of the slide here, we can see our '25 to '27 commercial growth drivers. And then on the right side, the growth drivers that we expect in '28 and beyond. So with our currently approved products in the market on 2025 to 2027, plus the potential upcoming PDUFA dates, that will be driving our near-term growth. On a longer-term horizon, we see Bysanti and the potential indication of MDD as well as NEREUS in the potential indications of GLP-1 adjunct and gastroparesis. As potentially being very significant growth drivers for years to come.

In a bit more detail here now on NEREUS. So as I mentioned, NEREUS approved for the indication of prevention of vomiting induced by motion. This is the first new pharmacologic treatment in motion sickness in over 4 decades. Our expectation is that this will be a premium prescription medication for those who either are unsatisfied with the current treatments for motion sickness and do not take them or those that take them and find them to be insufficient.

In terms of market sizing, there's approximately 30% of adults in the U.S. or roughly 78 million people that experience symptoms during common travel modes such as cars, planes and boats. And of those 30% of adults, approximately 15% of that population experience symptoms significant enough that they seek treatment. That represents a potential patient population of roughly 12 million people in the U.S.

In addition to that motion sickness opportunity, the opportunity for as an adjunct treatment in the rapidly growing $50 billion-plus GLP-1 market represents a very significant growth driver as we move towards our Phase III program. So what you see is nausea and vomiting is a very common symptom in the GLP treatment paradigm with discontinuation rates in the 30% to 50% range, many of which are due to these GI side effect profiles.

Our randomized controlled study, the Phase II that had results in November of last year, met both the primary and secondary endpoints and demonstrated tradipitant NEREUS ability to significantly mitigate the GLP-1 induced nausea and vomiting. Our data, which we'll step through in a bit more detail on subsequent slide, showed approximately a 50% relative reduction in symptoms. It has a very favorable safety profile. By mitigating these side effects, tradipitant NEREUS could unlock much higher adherence rates for the rapidly growing market. And these results position tradipitant to potentially be a complementary and first-in-class adjunctive therapy for GLP-1 prescriptions.

In a bit more detail on our study results. So the VP-VLY-686-2601 study had a primary endpoint of vomiting with a key secondary endpoint of vomiting and worst nausea greater than 3 on a 0 to 5-point scale. And as you can see in the primary endpoint in the placebo group, nearly 60% of our participants in the trial experienced vomiting compared to the tradipitant arm, which was less than 30%, and that represented a p-value of 0.0016. On the key secondary endpoint, again, of vomiting and worst nausea greater than 3 similar results in terms of the relative reduction. The placebo arm saw approximately 50% of folks that had a score worse than that or the tradipitant arm was closer to 20% that represented a p-value of 0.0039.

Turning now to Bysanti, the latest on our program status there. In the bipolar 1 disorder and schizophrenia indications. Again, our NDA is under review. We've got a PDUFA target action date of February 21, 2026. A major depressive disorder. Our Phase III clinical study, again, expects results in 2026. And one keynote there is Fanapt and potentially Bysanti labels are BID. This Phase III program is being run as a once-daily adjunctive treatment for MDD.

Now a bit more color on the overall psychiatry market. So with our currently approved Fanapt, which is approved in schizophrenia and bipolar disorder, the schizophrenia patient population in the U.S. is estimated to be approximately 3 million individuals with the bipolar patient population being much larger in the 10 million-plus range. The Bysanti PDUFA date on February 21 potentially would have us being approved in both of those indications as well. Whereas the Bysanti phase III program, if ultimately successful and able to be added to the label would open up the potential treatment option for Bysanti to an additional 20 million-plus patients that experience MDD.

And what's commonly seen in this landscape is the ability to commercialize products only increases as you tap these markets, not both just because of the size of the relative markets, but also the relative receptivity to patients to commercialization efforts. Turning now to HETLIOZ. A brief update on our jet lag program status. So as a reminder, we received a CRL from the FDA back in August of 2019 related to our sNDA for HETLIOZ in the treatment of jet lag disorder.

In 2025, we agreed on a collaborative framework with the FDA under which the FDA agreed to rereview our sNDA for jet lag by January 7. On January 7, the FDA concluded that the sNDA could not be approved in its current form. And we remain committed to working constructively with the FDA while pursuing all available paths to us to seek HETLIOZ for jet lag reaching the market as a critical treatment for these potential patients.

Turning next to imsidolimab. So on imsidolimab, which we licensed from Anaptys early in 2025, the BLA for imsidolimab in the indication of generalized pustular psoriasis or GPP was submitted to the FDA in the fourth quarter of 2025. We requested a priority review and if granted, that could have us having a PDUFA date sometime in the summer of 2026. The supporting data underlying this BLA are 2 Phase III programs, the GEMINI-1 trial and the GEMINI-2 trial. In the GEMINI-1 trial, there was a rapid and clinically meaningful improvement of GPP obtained with single IV doses at the 300 mg and 750 mg dose level. In the GEMINI-2 trial, the maintenance dosing with every 4-week 200 mg dosages maintain clearance of GPP and prevented flares for at a minimum 24 weeks of follow-up.

And in terms of the market size for GPP. GPP represents a significant unmet medical need. Prevalence estimates vary widely and vary by geographic region as well, ranging anywhere from 2 to 124 cases per million worldwide. The estimated patient population in the U.S. is somewhere less than 50,000 individuals. So obviously, an orphan indication where there still remains a significant unmet need.

And imsidolimab, if approved, would be a single-dose IV, providing a predictable and seamless transition for patients to move directly from treatment in the acute rescue setting into long-term maintenance therapy. Turning now to our commercial highlights. So on Fanapt, as I mentioned, this product is approved in both the indications of bipolar disorder and schizophrenia. The bipolar approval was received in 2024. Following that approval, we expanded our commercial sales force in the third quarter of 2024 further expanding that in the middle of 2025. And beyond the commercialization efforts that we've taken in the bipolar indication, we continue to serve the needs of schizophrenia patients and providers.

And what we've seen as a result of these significant commercialization efforts is very improved increased prescription demand during this period of time. So between the third quarter of 2024 and the most recently reported third quarter of 2025, we've seen 35% prescription growth in total prescriptions, 57% growth in new prescriptions or NRx and 147% growth in NBRx are new to brand prescriptions during that period of time.

Turning now to HETLIOZ and PONVORY. On the HETLIOZ side, the reminder here is that generic competition entered the market at the end of 2022. Albeit that happening, HETLIOZ continues to be the market share leader despite this generic competition. We continue to see growth of HETLIOZ and HETLIOZ LQ in the SMS market in the U.S. And as I mentioned previously, we continue to pursue FDA approvals for HETLIOZ and other indications with jet lag disorder insomnia being the latest stage in terms of development. On the PONVORY side, PONVORY again indicated in the treatment of relapsing forms of multiple sclerosis now promoted in the U.S. in all 50 states. And what we've seen there is increased underlying patient demand between the first quarter of 2025 and the second quarter of 2025 as well as between second quarter and the third quarter of 2025.

Turning now to our late-stage pipeline update. Again, as I mentioned on the Fanapt side, on our long-acting injectable, we have a Phase III program underway in schizophrenia. And in addition to that, we've initiated a Phase III program as well in hypertension. On the HETLIOZ life cycle management side, again, our jet lag disorder and insomnia disorder programs are completed, and we are continuing to pursue FDA approval and on our other programs, we have programs underway for delayed sleep phase disorder, Non-24 pediatric and pediatric insomnia. On our nearest life cycle management plans, as I mentioned, we have our vomiting induced by a GLP-1 analog program, where we had results reported in November, and we're initiating our Phase III program in the first half of this year. And on gastroparesis, we continue to pursue FDA approval for tradipitant in patients with gastroparesis.

Finally, turning to our financial results. For the most recently reported period of the third quarter of 2025, we had revenue of $56.3 million, which consisted of Fanapt revenue of just over $31 million. HETLIOZ revenue of approximately $18 million and PONVORY revenue of approximately $7 million. And this consists with our guidance of total revenue guidance in 2025 of $210 million to $230 million and year-end 2025 cash guidance of $260 million to $290 million.

With that, I think we can now turn to some questions.

All right. Thank you so much, Kevin. Thank you for the very comprehensive presentation. Maybe we start with some of your recent developments. And you did talk about your upcoming catalysts, which ones do you think are key and ones that you're most excited about?

Yes. So as we look at our upcoming catalysts and how we kind of view them on the Bysanti side, which again is the one with a PDUFA date in about a month, we view that as essentially foundational to the continuation of our base business. So Fanapt has an expected loss of exclusivity around the end of 2027. And so with the introduction of Bysanti potentially in the middle of this year, that will extend our broader psychiatry portfolio for many years to come, potentially out into the 2040s with patents that are pending. So the Bysanti opportunity, I would say, first and foremost, is kind of a foundational continuation. Then the potential to layer on an MDD label, in the Bysanti product obviously represents significant potential upside just given the relative size of the MDD market to both schizophrenia and bipolar.

And then if that's kind of how you view the foundational with upside, then as you turn to NEREUS, we view the approval in the syndication of vomiting induced by motion. That actually being very potentially large just given the number of people that experience that condition and the limitations of current treatment options that are available. Many of the existing treatment options have varying side effect profiles, including drowsiness and sleepiness. And generally, if you're taking a medication to prevent motion sickness. It's not because you want to go to sleep, it's because you're trying to do something, right?

And tradipitant's profile looks very advantageous from that angle. So we certainly think there's both a tremendous demand in the space and clearly an unmet need if patients have limitations on functioning while taking existing medications. And then potentially a transformative opportunity could be the adjunct therapy of NEREUS in the GLP-1 setting, just given the overall relative size of that market. The significant GI side effect profile that's seen in nearly all, if not all of the existing therapies and the effect that a treatment option like NEREUS could have on discontinuation rates, which are very high in the space in the range of 30% to 50% discontinuation rates, right? It's seen as a very common issue within the space for folks that are seeking this treatment.

So that's kind of how we view them all -- and then there's others beyond that, but I would say those are kind of the most important from a kind of foundation perspective and then provide the most potential upside with both motion sickness being potentially very exciting as well as the potential in the GLP-1 space.

And maybe just quickly talking about Bysanti. How are you thinking about the commercial launch and sort of how would it work with your existing efforts with Fanapt?

Yes. So to remind folks, we have a very large sales force out detailing Fanapt right now in the neighborhood of about 300 reps. And prior to the approval for bipolar disorder, our sales force was primarily calling on psychs, right? But with the label expansion to include bipolar, we certainly have expanded our target universe to call on both psychs, but also potentially primary care docs as well. So we have a very well-built commercial infrastructure that's currently supporting Fanapt that could very easily be repurposed and repositioned to support Bysanti.

So we feel very well situated from a commercial resource perspective to be able to support both brands. And as we potentially have Bysanti into the market, and have 6 quarters or so of overlap between when it is introduced to the market and when there could be a potential LOE on Fanapt, we certainly think we would, at the right kind of time and level, pivot our commercial activities towards Bysanti such that we can see that business kind of transition and continue beyond 2027.

And one thing that's potentially important to highlight as part of that is from a net gross to net perspective, a net pricing perspective, Fanapt has been on the market for many years. And as a result of that, the gross to net that we see on Fanapt really includes no revenue contribution from Medicaid, and that's just due to time on the market and the way that those formulas are calculated. Bysanti as a new product under an NDA would get a pricing reset such that we would see a very meaningful improvement on gross to net and net pricing, meaning that if you have the same number of units in Bysanti that you currently have in Fanapt and WACC was the same, your net revenue would be much higher on Bysanti.

So that's how we see kind of -- we're very well positioned commercially. There's going to be a transition strategy from one product to the other, but largely using the same resources that we currently have in place. And there's tremendous benefits both in the potential indication expansion to MDD, if we have positive results there, the potential for Bysanti moving to a once-a-day dose versus Fanapt in BID and these potential pricing benefits that we see by getting a reset with Bysanti.

Yes. And sticking to talking about Bysanti, how are you thinking about expansion in MDD and updates coming this year?

Yes. So we have our Phase III program underway. In our program, this is a fairly well-trodden space. So our clinical trial design is one that we think is consistent with what others have done, and therefore, we expect to be well positioned for discussion with the FDA from that end. So moving towards results this year. And then actually, if we have positive results, would look to move towards a regulatory filing soon thereafter and then potentially have it on the market in a few years in that indication. As you look across the space, the competitive landscape, the folks that have an MDD indication on their label are doing at a minimum, the same level of commercialization efforts, we are, if not even more.

And so a label expansion there in a few years would represent both an opportunity for us to look to make sure we're rightsized from an investment perspective, but also represent potentially very significant revenue growth, just again, given that, that tends to be the largest market in the atypical antipsychotic space is the MDD market. So potentially a very significant opportunity for us a few years out if we're able to execute on positive data in the Phase III program.

Yes. And maybe switching gears to talk about in areas a little bit, and you did talk about it when you were talking about upcoming catalysts. What do you think the commercial opportunity in motion sickness looks like? And you also alluded about the excitement in the GLP-1 space. So if you could sort of like talk about both the commercial opportunities.

Yes. So maybe starting with the motion sickness opportunity, again, based on kind of the populations that we outlined there. It looks like there's in the neighbor of 10 million plus people that are seeking treatment in the U.S. for motion sickness. So obviously, again, a very large patient population. We'd expect from a pricing perspective, that our pricing would be at a premium relative to the existing treatment options, again, just given the product profile and the need. And then in terms of the commercialization and distribution strategy, we're going to look at making it available through as many avenues as possible, right? We want people to be able to access the medication in a way that's appropriate for them.

But with the emergence of the DTP market and cash pay dynamics that have become much, much more prevalent in recent years. We think that NEREUS and motion sickness is a good candidate for that as well. Where patients can buy the product directly out of pocket rather than necessarily having to navigate insurance. We certainly will look to seek to have it be available via insurance for those appropriate patients, but also then have it be available and accessible for those patients that would like to just pay out of pocket to get it directly.

So we think it's a very substantial market opportunity in the $100 million-plus range certainly and potentially even larger. As we look at the potential in the GLP-1 market, that could be significantly larger than that motion sickness opportunity just given the tremendous growth and continuing growth that we see in the GLP-1 space. And where motion sickness, you'd see NEREUS used on essentially an as-needed basis. There'd be some potential treatment paradigm with NEREUS and GLP-1 where it might be something that you take at initiation of treatment or at dose escalation where the incidence of nausea and vomiting are likely to be the highest.

So I don't think it would be a companion product on an ongoing basis, but it will be used at intervals where it could be useful. So -- but again, just given the size of the market there and the incidents that you see of these type of side effect issues, again, we think that could be a potentially larger, maybe much larger market than even the motion sickness market.

And maybe to talk about imsidolimab a little bit. What are commercial efforts looking there?

Yes. So the reminder there is that we submitted the BLA at the end of last year and requested a priority review. So that could put us at an approval again sometime this summer, right? And if approved, likely a launch a couple of quarters after that, just given time to finish commercial packaging. From a commercialization effort perspective, this is an orphan patient population, who often present with a very acute flare in a hospital-type setting and so from a commercialization effort, as we're looking at it, we think of that more as an efficient orphan-type commercial model, unlikely to have a sales force or at least a large sales force, but very direct, dedicated, efficient commercial model.

And we see the revenue opportunity there as being a very, I would say, strong contributor with a substantial market, albeit limited to an orphan patient population, where there's already another product Spevigo in the space that we think our product is going to have some differentiators to it that would make it potentially preferable, but the pricing is already pretty well established there at orphan pricing, and you see good access and reimbursement. So we think that's an efficient market that's more easily commercializable by us.

Well, thank you so much, Kevin, do you have any closing as we end up here? .

Yes. I would just say, incredibly excited for the progress that we've seen over the last 3 months. We had 3 products on the market and talking about having the potential to have 6 products on the market in a matter of months. As well as a number of very exciting clinical programs that have readouts over the next 6 to 18 months. So just a very exciting time for the company, lots of progress that we've seen over the last few months and a lot of exciting milestones and catalysts on a relatively near-term horizon. So very excited.

Well, thank you so much, Kevin.

Thank you so much. Thanks.

Hello, and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Vanda Pharmaceuticals Inc. earnings conference call. [Operator Instructions]

Now I would like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Thank you, Mark. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third quarter 2025 performance. Our third quarter 2025 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 Tim Williams, our General Counsel. Following my introductory remarks, Mihael 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 very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's Third Quarter 2025 Results. This quarter reflects strong commercial execution with total net product sales reaching $56.3 million, up 18% year-over-year, led by a 31% increase in Fanapt sales and 35% growth in prescriptions. HETLIOZ continues to deliver stable performance with $18 million in Q3 sales.

We are particularly encouraged by our advancing pipeline, with multiple near-term regulatory milestones. The tradipitant NDA for motion sickness under FDA review with a PDUFA target action date of December 30, 2025; the Bysanti NDA for bipolar I disorder and schizophrenia, also under FDA review with a PDUFA target action date of February 21, 2026; and the anticipated Q4 submission of the imsidolimab BLA for generalized pustular psoriasis.

We're also investing strategically in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. We believe that these milestones, combined with our collaborative framework with the FDA will position Vanda for sustained growth and expanded therapeutic impact in 2026 and beyond.

On commercial updates. During the third quarter, our Fanapt sales force further expanded their efforts, and we continued our broad awareness campaign. Fanapt revenue increased by 31% compared to the same period in the prior year, driven by the launch of the bipolar I indication. Fanapt is now promoted in the U.S. across all 50 states with a dedicated sales force of approximately 300 representatives. With the expansion of the sales force that was largely completed during the second quarter, we observed a significant increase in activity with the total number of calls growing by more than 20% as compared to the second quarter of 2025 and growing by over 100% compared to Q3 of 2024.

Since the bipolar launch, demand is measured by total prescriptions, TRx, new prescriptions, NRx and new-to-brand prescriptions NBRx reached new highs in the third quarter. The commercialization of Fanapt is also supported by a broad speakers program operating across the country that educates prescribers on the profile of Fanapt and how to use it. We're excited by the progress our commercial organization has made as we continue to support the commercialization of Fanapt, aiming for further growth in the coming periods.

Total revenue from our 3 commercial branded products Fanapt, HETLIOZ, and PONVORY reached $158.9 million in the first 9 months of 2025. HETLIOZ continues to be the market share leader despite the availability of 3 generic products, a testament to the brand loyalty of our patient customers over the last 11 years. We're continuing to build out and training of our dedicated PONVORY sales force team addressing prescribers for multiple sclerosis. In the last 2 quarters, we saw an increase in underlying patient demand as we intensified our consumer and prescriber awareness programs.

During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY. We maintain strategic investments in our commercial infrastructure, including increased brand visibility through target sponsorships with the goal of supporting long-term market leadership and future commercial launches.

Key regulatory clinical updates, collaborative framework for resolution of disputes with the FDA. On October 1, 2025, we announced a collaborative framework with the U.S. Food and Drug Administration for the resolution of certain disputes regarding HETLIOZ and tradipitant. Pursuant to the agreement, the FDA will conduct an expedited rereview of the partial clinical hold preventing long-term clinical status of tradipitant for the treatment of motion sickness by November 26, 2025.

The FDA will continue its review of Vanda's new drug application for this indication with the existing Prescription Drug User Fee Act target action date of December 30, 2025. The FDA will conduct an expedited rereview of Vanda's supplemental new drug application, sNDA, for HETLIOZ for the treatment of jet lag disorder by January 7, 2026, including consideration of alternative or narrowed indications focusing on the sleep-related aspects of jet lag disorder.

Bysanti, the NDA for Bysanti for the acute treatment of bipolar I disorder and the treatment of schizophrenia is under review by the FDA with a PDUFA target action date of February 21, 2026. If approved, exclusivity for Bysanti, including pending patent applications could extend in the 2040s. Bysanti is a new chemical entity, which was initially identified as an active metabolite of iloperidone. Vanta discovered that milsaperidone when administered orally, quickly interconverts to iloperidone. In clinical studies, milsaperidone and iloperidone have been shown to be bioequivalent at both low and high doses administered both in single and multiple dose studies.

The results of these clinical studies were presented in late May at the 2025 American Society of Clinical Psychopharmacology Annual Meeting in Scottsdale, Arizona. The Bysanti Phase III clinical study for use as once-daily adjunctive treatment for major depressive disorder is ongoing and enrolling patients. Results are expected in 2026. We plan to randomize approximately 500 patients into the clinical study across approximately 50 sites. And as the number of patients randomized increases, we'll be in a better place to estimate the time to completion.

Tradipitant, the NDA for tradipitant for motion sickness is under review by the FDA with a PDUFA target action date of December 30, 2025. In the fourth quarter of 2024, Vanda initiated clinical trial study tradipitant in the prevention of vomiting induced by GLP-1 analog, Wegovy, semaglutide. The trial is now complete, and results are expected in the fourth quarter of 2025.

Iloperidone long-acting injectable. The Phase III study of the long-acting injectable formulation of iloperidone in the treatment of schizophrenia and relapse prevention is ongoing and enrolling patients. We plan to randomize approximately 400 patients into the clinical study across approximately 60 sites. In general, we have seen similar clinical studies run by other organizations, and they take around 2 years to complete. As the number of patients randomized increases, we'll be in a better place to estimate completion of that study. A clinical study of the long-acting injectable formulation of iloperidone in people with treatment-resistant hypertension is now ongoing and Vanda plans to begin enrolling patients soon.

Imsidolimab, a BLA for imsidolimab in the treatment of the rare or orphan disorder, generalized pustular psoriasis is expected to be submitted to the FDA in the fourth quarter of 2025.

PONVORY, investigational new drug applications for PONVORY in the treatment of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024. Vanda has initiated the psoriasis study and plans to initiate the study in ulcerative colitis in early 2026. Early-stage program highlights. VQW-765, an alpha-7 nicotinic acetylcholine receptor partial agonist is currently in clinical development for the treatment of acute performance anxiety in social situations.

Vanda has initiated the Phase III program and is enrolling patients. We plan to randomize approximately 500 patients into the clinical study across approximately 30 sites. And as the number of patients of randomization increases, again, we'll be able to estimate time to completion. The IND for VCA-894A in the treatment of Charcot-Marie-Tooth disease, axonal type 2S or CMT2S, an inherited peripheral neuropathy for which there is no available treatment, was accepted by the FDA in 2024. Previously, in 2023, VCA-894A was granted orphan drug designation for the same indication. The Phase I clinical study for VCA-894A enrolled the patient who has already received several doses of VCA-894A.

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

Thank you, Mihael. I'll begin by summarizing our financial results for the first 9 months of 2025 before turning to discuss the third quarter of 2025. Total revenues for the first 9 months of 2025 were $158.9 million, a 9% increase compared to $145.6 million for the same period in 2024. The increase was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch.

Fanapt net product sales were $84.1 million for the first 9 months of 2025, a 24% increase compared to $67.6 million in the same period in 2024. This increase to net product sales relative to the first 9 months of 2024 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 $55 million for the first 9 months of 2025, a 3% decrease compared to $56.6 million in the same period in 2024. The decrease in net product sales relative to the first 9 months of 2024 was attributable to a decrease in volume. Of note, through the third quarter of 2025, HETLIOZ continues to retain the majority of market share despite generic competition for now over 2.5 years.

And finally, turning to PONVORY. PONVORY net product sales were $19.8 million for the first 9 months of 2025, a 7% decrease compared to $21.3 million in the same period in 2024. The decrease in net product sales relative to the first 9 months of 2024 was attributable to a decrease in price net of deductions.

For the first 9 months of 2025, Vanda recorded a net loss of $79.3 million compared to a net loss of $14 million for the same period in 2024. The net loss for the first 9 months of 2025 included an income tax benefit of $21.4 million as compared to an income tax benefit of $2.4 million for the same period in 2024.

Operating expenses for the first 9 months of 2025 were $269.7 million compared to $176 million for the same period in 2024. The $93.7 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY and multiple sclerosis and higher R&D expenses primarily related to the exclusive global license agreement with Anaptys for the development and commercialization of imsidolimab, which was entered into during the first quarter of 2025.

During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs.

During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and or products, Fanapt and PONVORY. We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches.

Vanda's cash, cash equivalents, and marketable securities, referred to as cash, as of September 30, 2025, was $293.8 million, representing a decrease of $80.9 million compared to December 31, 2024, and a decrease of $31.8 million compared to June 30, 2025. The change in cash during the third quarter of 2025 as compared to the second quarter of 2025 was driven by the net loss in the third quarter of 2025 as well as timing of cash received from customers for revenue and related payments of rebates to the payers as well as the timing of cash paid to third parties for services related to operating expenses.

Turning now to our quarterly results. Total revenues were $56.3 million for the third quarter of 2025, an 18% increase compared to $47.7 million for the third quarter of 2024 and a 7% increase compared to $52.6 million in the second quarter of 2025. The increase as compared to the third quarter of 2024 was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. The increase as compared to the second quarter of 2025 was due to both growth in Fanapt revenue as a result of the bipolar launch and higher HETLIOZ revenue.

Let me now break this down by product. Fanapt net product sales were $31.2 million for the third quarter of 2025, a 31% increase compared to $23.9 million in the third quarter of 2024 and a 7% increase compared to $29.3 million in the second quarter of 2025. Fanapt total prescriptions, or TRx, as reported by IQVIA Xponent in the third quarter of 2025 increased by 35% compared to the third quarter of 2024 and 11% compared to the second quarter of 2025.

Fanapt new patient starts in the third quarter of 2025 as reflected by new-to-brand prescriptions, or NBRx, increased by 147% compared to the third quarter of 2024 and by 14% compared to the second quarter of 2025. The increase in Fanapt revenue between the third quarter of 2025 and the third quarter of 2024 was primarily attributable to an increase in volume, partially offset by a decrease in price net of deductions. The increase in Fanapt revenue between the third quarter of 2025 and the second quarter of 2025 was attributable to an increase in volume, partially offset by a decrease in price net of deductions. These increases in volume were primarily driven by increased total prescription demand as well as increased wholesaler inventory levels.

Historically, Fanapt's inventory at wholesalers has ranged between 3 and 4 weeks on hand as calculated based off trailing demand. As of the end of the third quarter of 2025, Fanapt inventory at wholesalers was just above 4 weeks on hand, which was consistent with the level of inventory weeks on hand as of the fourth quarter of 2024, but slightly above the historic range.

Turning to HETLIOZ. HETLIOZ net product sales were $18 million for the third quarter of 2025, a 1% increase compared to $17.9 million in the third quarter of 2024 and an 11% increase compared to $16.2 million in the second quarter of 2025. The increase in net product sales relative to the third quarter of 2024 was primarily attributable to an increase in volumes sold, almost entirely offset by a decrease in price net of deductions. The increase in net product sales relative to the second quarter of 2025 was primarily attributable to an increase in price net of deductions, partially offset by a decrease in volume.

HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. Going forward, HETLIOZ net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.

Additionally, the company constrained HETLIOZ net product sales for the first 9 months of 2025 and for the years ended December 31, 2024, and 2023 to an amount not probable of significant revenue reversal. As a result, HETLIOZ net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

And finally, turning to PONVORY. PONVORY net product sales were $7 million for the third quarter of 2025, an increase of 20% compared to $5.9 million in the third quarter of 2024 and a decrease of 1% compared to $7.1 million in the second quarter of 2025. The increase in net product sales as compared to the third quarter of 2024 was attributable to an increase in volume. The decrease in net product sales as compared to the second quarter of 2025 was attributable to a decrease in volume sold, almost entirely offset by an increase in price net of deductions.

During the second quarter of 2025, there was an increase in net product sales as compared to the first quarter of 2025, which was attributable to an increase in volume sold, a portion of which was driven by increased underlying patient demand, albeit modest, but was also impacted by increased specialty pharmacy and specialty distributor inventory on hand levels above the historic range. The inventory on hand levels remained elevated as of the end of the third quarter of 2025, but had decreased closer to the historic range.

As a reminder, we completed the acquisition of the U.S. and Canadian rights to PONVORY in December 2023 and initiated the commercial launch of PONVORY in the third quarter of 2024. As such, this represents the fourth full quarter of PONVORY revenue recognition since the initiation of commercial launch activities and significant progress in diversifying our product mix with innovative and value-generating products. 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 3 months ended December 31, 2024.

For the third quarter of 2025, Vanda reported a net loss of $22.6 million compared to a net loss of $5.3 million for the third quarter of 2024. From an income tax perspective, the net loss for the third quarter of 2025 included an income tax benefit of $5.8 million as compared to an income tax benefit of $0.9 million for the third quarter of 2024.

Of note, on the tax side, the company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence. The company generated a pretax loss for the quarter ended September 30, 2025. If the company continues to generate pretax losses and/or if the company's projections indicate pretax losses in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in the future. An increase in the valuation allowance would result in a noncash income tax expense during the period of change.

The current deferred tax assets reflected in the balance sheet as of September 30, 2025, amount to $103.1 million. If it is determined that the company needs a valuation allowance against its deferred tax assets in a future period, the noncash income tax expense recorded during the period of change could be equal to the significant majority of the $103.1 million balance.

Operating expenses in the third quarter of 2025 were $87.5 million compared to $58.7 million in the third quarter of 2024. The $28.9 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis and higher R&D expenses.

During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY.

We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With regards to the launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we expect to continue the build-out of our commercial infrastructure with the impact of these commercial efforts expected to contribute to revenue growth in 2025 and beyond.

We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong initial and continued market response to our commercial launch of Fanapt for bipolar disorder, including new patient starts as reflected by NBRx, increasing by 147% in the third quarter of 2025 as compared to the third quarter of 2024. In the third quarter of 2025 as compared to the third quarter of 2024, total prescriptions or TRx increased by approximately 35%.

Of particular note, Fanapt was one of the fastest-growing atypical antipsychotics in the market through the first 9 months of 2025 based on several prescription metrics. Our Fanapt sales force size continues to expand. As of the end of the third quarter of 2024, our sales force numbered approximately 150 representatives. And currently, we have approximately 300 representatives following our additional expansion during the second quarter of 2025. These expansions have allowed us to significantly increase our reach and frequency with prescribers.

To that end, face-to-face calls in the third quarter of 2025 were more than 20% higher than face-to-face calls in the second quarter of 2025. And face-to-face calls in the third quarter of 2025 were more than twice the face-to-face calls in the third quarter of 2024. In addition to our Fanapt sales force, we have established a specialty sales force to market PONVORY to neurology prescribers around the country. We have grown this sales force to approximately 50 representatives in the third quarter of 2025.

Of particular note, PONVORY underlying patient demand increased, albeit modestly, for the second consecutive quarter. Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ, and PONVORY already commercially available, and with HETLIOZ for jet lag currently being rereviewed by the FDA and the tradipitant NDA for motion sickness under review by the FDA, the milsaperidone or hopefully to be known under the brand name Bysanti NDA for bipolar I disorder and schizophrenia under review by the FDA and a biologics license application or BLA for imsidolimab expected to be submitted later this year, Vanda could have 6 products commercially available in 2026.

Turning now to our financial guidance. Vanda is providing an update to its prior 2025 guidance. Vanda expects to achieve the following financial objectives in 2025. Total revenues from Fanapt, HETLIOZ, and PONVORY of between $210 million and $230 million. This compares to prior guidance of between $210 million and $250 million, year-end 2025 cash of between $260 million and $290 million. This compares to prior guidance of between $280 million and $320 million. This revised revenue range narrowed to the lower end of the original revenue range reflects strong Fanapt revenue growth in 2025 that is expected to grow on a quarterly basis and potentially accelerate with the full impact of the expanded sales force.

The revised and lowered year-end 2025 cash guidance reflects the impact of the significant investments that Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and strategic investments in commercial infrastructure, including Vanda's direct-to-consumer campaign launched in the first quarter, which continued to drive meaningful gains in brand awareness for the company and its products as well as increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches.

With that, I'll now turn the call back to Mihael.

Thank you very much, Kevin. At this point, we will be happy to answer your questions.

[Operator Instructions] And your first question comes from the line of Raghuram Selvaraju with H.C. Wainwright.

I was wondering if you could first and foremost comment on some hypothetical scenarios with respect to the interactions with the FDA. And if these ultimately result in approval decisions, particularly as this pertains to tradipitant, when those approvals might occur? Should we expect potential -- the possibility of tradipitant approval sometime in the first half of 2026, if ultimately the interactions with the FDA proceed positively?

Yes. Thank you very much, Ram. First of all, I would say and I reiterate that we're very pleased with the new collaborative framework that has been established with the FDA. And just as a background, that comes after the significant development of a win in the appellate court by Vanda in August of this year, where we challenged the decision of rejection of HETLIOZ for jet lag without a hearing. And the court canceled the rejection by the FDA and sent it back to the FDA for further proceedings.

This was one of the precipitating factors alongside with the new management at the FDA, where we sat down with them to develop a path forward. And we're very quickly able to agree on several initial steps. And the first one, as we mentioned, is the rereview of the HETLIOZ sNDA for jet lag and a promise to be completed by early January of 2026.

On your question on tradipitant, tradipitant review is ongoing. And we expect the decision by December 30, 2026. The reason we are optimistic is that so far there have been no issues raised with the efficacy of the drug. And therefore, we are encouraged that this could lead to approval. One area that's very relevant with the collaborative framework to tradipitant is the reconsideration of the partial clinical hold. And to give context, this is a clinical hold on a longer-term motion sickness study. The initial study lasted 12 months and people could take up to 90 doses. We asked for an extension of that study with an amendment to further study tradipitant for an additional 12 months and an additional 90 dose within that period. And that is when, about a year ago or so, the FDA objected to that additional extension, suggesting that an additional long-term 6-month dog toxicity study is needed. And of course, we have contested that.

But now the FDA was willing to reconsider that decision, and that is now with CDER with a promise to issue a decision by end of November. So with that, if cleared, alongside what is almost agreed upon, I would say, efficacy demonstrated for tradipitant motion sickness, we'll be optimistic for an approval by end of this year.

Secondly, I wanted to ask about PONVORY performance and what you look for in terms of future quarterly growth rate pickup in revenue from this product, particularly given the current investment that you are making in sales and marketing behind the product at this point. Maybe you can give us a sense of what kind of quarterly growth you would expect in terms of net sales for PONVORI over the course of the next 2, 3 quarters? That would be helpful.

Yes. I will let Kevin comment on the future growth. But I would say, we're still in the early phase. The sales force that was built to about 50 people is actually a very recent event, in the last quarter or so, fully staffed. The speaker programs are just starting. And PONVORY has been a smaller piece of our direct-to-consumer campaign so far. That being said, these are significant investments, and we're investing towards future growth. But I will pass it on to Kevin for his comment.

Thanks, Mihael. Thanks, Ram, for the question. Just as a bit of reminder on the background here. So we acquired the product from J&J at the end of 2023. And at that point, J&J had ceased support for the product a little over a year prior to that. We completed the transition of the PONVORY product from J&J right at the end of the third quarter of last year, so about a year ago. And what we saw during that period from when J&J ceased commercial support through the first quarter of this year was a decline in the underlying patient demand. And that would be expected given that there wasn't any active support in the market from essentially the end of 2022 through roughly the end of the third quarter of last year.

What we've seen in the last 2 quarters that's very encouraging to us is we've seen increases in the underlying patient demand, both from the first quarter to the second quarter and then again from the second quarter to the third quarter. There's been some buying patterns from the SPs and SDs that have made the quarterly revenue a little bit up or a little bit down depending on the timing of their purchases, but the underlying demand during those 2 periods is up. And so for us, that's an encouraging sign that our commercial strategy and support for the product is beginning to take hold.

And as Mihael had mentioned, with the recent investment in the commercial sales force that, as I mentioned in my script, was completed during the third quarter of this year, we're hopeful that we'll begin to see that trend continue and potentially increase as we exit this year and head into next year, where we not yet have provided guidance beyond 2025.

And then just very quickly, 2 other time line aspects. I was wondering if you could, A, comment on the perspectives for the imsidolimab BLA to receive priority review once it has been submitted to the FDA? And secondly, if you could give us any sense of whether you have revised or more specific timing guidance to provide on the MDD study?

So Ram, I think your 2 questions were on the imsidolimab priority review.

Yes. I will address that. But go ahead, Kevin.

And then on the timing for the MDD study, Ram, so maybe I'll take that one second, is what we communicated at this point is that we expect results by the end of next year. But given that we've enrolled patients over the last few quarters, we'd like to see a bit more of kind of a run rate before we provide an exact timing on what period we expect to see the results in. But at this point, we've communicated results by the end of next year and hope to be able to share more as we get a few more quarters under our belt.

Yes, that's right. And sites are coming up in the U.S., but also very recently, we got approval for initiation for a number of sites in Europe. So hopefully, that will accelerate recruitment. Regarding imsidolimab, of course, this is a rare or orphan disorder, and we expect a 6-month priority review.

And your next question comes from the line of Olivia Brayer with Cantor.

Can you talk a little bit about the guidance change this quarter? I mean at the midpoint, it still implies growth for 4Q, but at the lower end of the range, it wouldn't necessarily. So maybe just thoughts around the pushes and pulls of that guidance change and what you're seeing so far into October that helped inform today's update? And then I've got a couple of questions on Bysanti.

Yes, absolutely. Thanks, Olivia, for the question. So a couple of pieces there. And one thing that I commented on in my script was that underlying the guidance for this year is strong Fanapt revenue growth for the year, right, which is, I think, an underpinning of our guidance. But the other thing that's a variable in that consideration is the HETLIOZ revenue, which we've commented on, can be very variable from quarter-to-quarter depending on the timing of our customers' purchases. So what we see there is that the actual underlying demand for HETLIOZ is pretty consistent.

As we've mentioned, we maintain the majority of the market share still at this point, even 2.5 years post generic launch. But the actual buying patterns, which translate to the revenue patterns for HETLIOZ can vary from quarter-to-quarter. And if we saw customers not need to buy as much in the fourth quarter, that could put us on the lower end of the revenue range. So that's kind of the dynamic there. But for Fanapt, what we've seen in the last 2 quarters is both revenue meaningful growth in both quarters and the underlying demand, which we're highly focused on, right, from a quarter-to-quarter perspective, growing sequentially very strong.

So we saw 14% growth Q1 to Q2 and 11% growth Q2 to Q3 from a script perspective. And so we expect to see that continue to grow in Q4 to increase relative to Q3 would be our expectation underlying that guidance.

Super helpful, Kevin. And then is there anything you guys can tell us at this point around just the engagement that you're having with the FDA for your ongoing Bysanti review? Have they indicated wanting to see any additional information as part of your submission package? And anything you can tell us on when you might enter into label discussions for that asset?

And then just kind of as a -- I know there's a couple of questions in there, but as a follow-up on the commercial side, as you look out to your PDUFA next year, what's the commercial strategy for actually convincing patients to switch from Fanapt over to this newer product? Is there a commercial hook or an incentive that would actually incentivize patients to make the switch before a generic version of Fanapt becomes available?

Maybe I'll start off with the regulatory update, and I'll let Kevin comment on the commercial strategy. The -- I think we have given an update that so far, the interactions with the division have been quite positive in that there have been no issues raised on the efficacy and the safety of the drug. So that is progressing well.

Now in terms of label negotiations, we don't comment if they have started or about to start. But typically, those will precede the PDUFA date by a couple of months or so.

Yes. And then, Olivia, on the commercial strategy, we haven't shared, I would say, some key elements of our commercial strategy for Bysanti and the potential transition for Fanapt to Bysanti. But what I would tell you is, as we've talked about in the past, the atypical antipsychotic class is both a highly promotionally sensitive class and also a high switch class. So products that are actively promoted out there, as you know, will do significantly better than products that are not actively promoted.

And as part of that, with it being a high switch class, if there are certain commercial tools that are available to prescribers, namely starter packs or titration packs in our case, or commercial co-pay programs, if those programs are available to patients that are starting, they'd be more likely to start on a product that offers those programs versus a product that doesn't. So I think both the nature of the class being highly promotionally sensitive and the potential support that could be available for patients, I think will lead to meaningful success on Bysanti when we decide to pull that trigger.

And I will add, Olivia, that the longer commercial plan is the addition of indications starting with the adjunct treatment of major depression with actually a key differentiator of how Fanapt has been used so far with a once-a-day dosing, increasing the convenience and hopefully compliance.

And your next question comes from the line of Andrew Tsai with Jefferies.

On the quarter. This is [ Matt Marcus ] on for Andrew Tsai. First off, for tradipitant in motion sickness, it could be approved on December 30, and then HETLIOZ jet lag could be approved January 7. What would your marketing strategy be for these? And what would the shape of the launch curve look like for these drugs?

Yes. Thank you. We're actually very excited for both of these potential approvals because they share in common the consumer-centric focus, both in HETLIOZ in jet lag and tradipitant for motion sickness. We're developing a quite elaborate strategy that will become very consumer-centric, focusing on concierge service for supplying the drug to both of them. And our recent experiences with direct-to-consumer campaigns, but also the elevation of brand awareness of the company are going to be very important and have been strategically designed to be in place in advance of those launches.

We expect if both of them approved in that time frame you mentioned, that we should be able to be in the market by the first half of 2026. And in subsequent interactions, we can discuss a little more about the latest on the total addressable market for both indications. But I will highlight, it is significant and expanded, both of increased travel, but also the unmet need in motion sickness that has not seen a treatment -- a new treatment in the last 45 years.

And then for your GLP vomiting study, can you describe that study? Like what does the positive efficacy data look like? And what would be the next steps for the program? And then similarly, for Bysanti, should have like Phase III data in 2026. What kind of measures to efficacy separation do you hope to achieve in that study?

Yes. So I will start with the last question. On MDD, like any other study, there is not a threshold of response. We are looking for a positive primary endpoint on the typical clinical scales that will be used. And of course, subsequently, people are doing a responder analysis, trying to identify a portion of patients responding to a certain effect. But there is no threshold that is required. But of course, the study is powered to detect a significant minimal threshold of efficacy.

Your other question was on the use of tradipitant in preventing the GI, specifically vomiting side effects of Wegovy, semaglutide. And we know that GLP-1 analogs have to be titrated slowly because of the very frequent nausea and vomiting side effects, which actually limits the efficacy at least for a certain period of time. And for a number of patients, around 15% or so, may actually drop out of treatment and obviously the benefit of GLP-1 analogs.

So this is a well understood and very significant therapeutic issue. The study we have designed, administers tradipitant for a few days prior to initiating a Wegovy injection, which is administered at a much higher dose than the recommended titration dose. Titration dose begins at 0.25 milligrams and escalates in 4-week increments. The dose we're using in the study is 1 milligram. And patients are randomized to receive either Wegovy or placebo. And what we do is we follow these people and measure the efficacy with the number of vomiting episodes and other secondary endpoints like nausea, duration of nausea, et cetera. And as I said, this study has completed now. The sites and data are being monitored and data clean, and we hope soon to be able to analyze the top line results.

That concludes our question-and-answer session. I will now turn the call back over to the management for closing remarks.

Thank you very much for joining this call. We'll see you at a later time.

This concludes today's call. You may now disconnect.