Vanda Pharmaceuticals Inc. Q3 FY2026 earnings call

• Commercial Momentum: FNAP continues strong growth in bipolar disorder, with TRX up 25% YoY in Q3. New-to-brand prescriptions (NBRX) increased 18% YoY. Weekly TRX reached an 11-year high in late September 2026.
• Product Launches: Nereus launched commercially in May 2026; sales force promotion began in Q3. Bisanti received FDA approval for bipolar I disorder and schizophrenia in Q1 2026, with a commercial launch expected in Q4 2026. Quimilza BLA is under review with a PDUFA date of December 12, 2026.
• Pipeline Updates: Positive Phase III results announced for Nereus in GLP-1 induced vomiting and Hetlius in Delayed Sleep-Wake Phase Disorder (DSWPD). DSANTE Phase III study for Major Depressive Disorder (MDD) is 55% enrolled, with results expected in H1 2027.
• Cost Management: Operating expenses decreased 18% QoQ to $93.3 million in Q3 as key Phase III and launch preparation activities conclude. Further decreases are expected as remaining activities wind down.
• Legal/Regulatory: Progressing toward an FDA administrative hearing for Iloperidone LAI (jet lag disorder) scheduled for December 2026. Ongoing legal challenges against FDA refusals for Hetlius insomnia and Nereus gastroparesis indications.

Total revenue for the first nine months of 2026 was $172.1 million (up 8% YoY), with Q3 2026 revenue at $69.8 million (up 24% YoY, up 38% QoQ).

• FNAP: Net product sales of $104.3 million (first nine months, +24% YoY) and $38.8 million (Q3, +24% YoY). It is the largest contributor, driving overall growth.
• Hetlios: Net product sales of $43.2 million (first nine months, -21% YoY due to generic competition) and $21.7 million (Q3, +21% YoY but highly variable due to specialty pharmacy inventory stocking).
• Ponvori: Net product sales of $21.9 million (first nine months, +11% YoY) and $7.7 million (Q3, +10% YoY). Variable consideration disputes exist regarding prior periods.
• Nereus: Net product sales of $2.6 million (first nine months) and $1.6 million (Q3, +60% QoQ). Revenue is constrained due to wholesaler inventory levels and patient demand uncertainty.

• Full Year 2026 Total Revenue: Updated guidance expects total revenues from FNAP, Bisanti, Hetlios, Ponvori, and Nereus to be greater than $240 million.
• Cash Guidance: No specific cash guidance provided for 2026, but cash burn is likely to exceed 2025 levels due to ongoing commercialization and development costs.
• Nereus Revenue Estimate: Full-year 2026 revenue for Nereus is expected to be less than $10 million, reflecting early-stage growth in a consumer market.
• Expense Trend: Operating expenses are expected to decrease further in future quarters as development and launch preparation activities conclude.

• Generic Competition: Hetlios faces continued erosion from generic competitors in the U.S., although it remains the leading product by market share.
• Inventory Volatility: Hetlios and Nereus revenues are subject to variability based on specialty pharmacy and wholesaler inventory stocking levels, which can cause significant period-to-period fluctuations.
• Regulatory Uncertainty: Delays or rejections in FDA reviews (e.g., Quimilza PDUFA, Nereus SNDA priority review) could impact launch timelines and revenue projections.
• Litigation Risk: Ongoing legal challenges against the FDA regarding Iloperidone, Hetlius, and Nereus indications carry risks of unfavorable rulings that could limit approved uses.

Q: What explains the gap between the 50% reduction in vomiting seen in Phase II versus the 27% in Phase III for Nereus?

A: Management attributes the difference to 'regression to the mean' and site/patient variability in larger studies. While the primary endpoint showed a 27% reduction, severe cases (>10 vomiting episodes) saw an 81% reduction in Phase III, consistent with Phase II data. The filing will rely on the primary endpoint supported by secondary endpoints and pooled analyses.

Q: How will the transition from FNAP to Bisanti occur given their overlapping patent lives?

A: The transition will be gradual, taking 3-4 months post-launch to see quantifiable shifts due to 90-day prescription cycles. Bisanti has more favorable gross-to-net economics (mid-30s vs. ~50% for FNAP). The strategy focuses on capturing new patient starts while encouraging switches from FNAP, with both products being promoted simultaneously through end-of-2027.

Q: What is the intended dosing strategy for Nereus in the GLP-1 indication?

A: Nereus is positioned for short-term, incidental use rather than chronic dosing. It will be used preventively a few days before GLP-1 initiation/restart/titration and for several days after, targeting patients experiencing GI tolerability issues during dose escalation. Pharmacokinetic modeling suggests efficacy at lower semaglutide doses similar to higher doses.

Q: Will Vanda break out Bisanti and FNAP revenue separately upon launch?

A: Yes, management expects to disclose separate revenue figures for FNAP and Bisanti moving forward. While specific split percentages are not guided, the favorable economics of Bisanti make even a partial switch from FNAP significant for margins.

Q: What is the pricing philosophy for Nereus in the GLP-1 space?

A: Access is the primary driver. While currently priced at $255 retail with discounts via Nereus.us, management anticipates expanding payer coverage for the GLP-1 indication. Pricing flexibility will be prioritized to ensure patient access once the SNDA is approved, likely beyond late 2027.