VNDA Vanda Pharmaceuticals Inc

Expects Fiapta(TM) (Iloperidone) PDUFA Action July 27, 2008 ROCKVILLE, Md., Feb. 14 /PRNewswire-FirstCall/ -- Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), a biopharmaceutical company focused on the development and commercialization of clinical-stage product candidates for central nervous system disorders, today announced financial and operational results for the fourth quarter and fiscal year ended December 31, 2007. Vanda reported research and development (R&D) expenses in the fourth quarter of 2007 of $12.6 million, compared to third quarter of 2007 R&D expenses of $13.9 million and fourth quarter of 2006 R&D expenses of $7.9 million. The decrease in R&D expenses between the third and fourth quarters is primarily attributable to costs associated with the ongoing Phase III VEC-162 chronic insomnia clinical trial being offset by a non-recurring third quarter milestone charge of $5.0 million for the Fiapta(TM) New Drug Application (NDA) submission in September 2007. The increase in R&D expenses in the fourth quarter of 2007 relative to the fourth quarter of 2006 is primarily attributable to the same VEC-162 Phase III chronic insomnia clinical trial that was initiated in late 2007. For the full year of 2007, total R&D expenses were $47.2 million compared to $52.1 million during 2006. Total expenses for the fourth quarter of 2007 were $22.0 million, compared to $23.5 million in the third quarter of 2007 and $12.4 million in the fourth quarter of 2006. For the full year of 2007, total expenses were $80.0 million, compared to $65.7 million in 2006. Net loss was $20.7 million for the fourth quarter of 2007, compared to $21.9 million in the third quarter of 2007 and $11.9 million in the fourth quarter of 2006. Net loss per common share for the fourth quarter of 2007 was $0.78, compared to $0.82 in the third quarter of 2007, and $0.54 in the fourth quarter of 2006. As of December 31, 2007, Vanda's cash, cash equivalents, and marketable securities totaled approximately $93.2 million. As of December 31, 2007, the company had a total of approximately 26.6 million shares of common stock outstanding. "I am extremely pleased with the successful submission and acceptance of the Fiapta(TM) NDA filing in 2007. This important achievement would not have been possible without the commitment and dedication of the Vanda team," stated Mihael Polymeropoulos, M.D., President and CEO of Vanda. "I am looking forward to an exciting 2008 during which we expect the results from our VEC-162 Phase III chronic insomnia clinical trial and the PDUFA action for Fiapta(TM)." OPERATIONAL HIGHLIGHTS Iloperidone On September 27, 2007 Vanda announced that it had submitted an NDA to the U.S. Food and Drug Administration (FDA) for Fiapta(TM), its investigational atypical antipsychotic for the treatment of schizophrenia. On November 27, 2007 the company announced that the FDA had accepted and filed the NDA. Under the Prescription Drug User Fee Act (PDUFA) of 1992, Vanda expects a PDUFA action on or about July 27, 2008. VEC-162 Vanda has completed enrollment for its VEC-162 Phase III chronic insomnia clinical trial. Vanda expects to report top-line results in June 2008. Vanda enrolled 324 patients in the trial, which is a randomized, double-blind, placebo-controlled 35-day study, measuring sleep onset and maintenance, as well as next-day performance. FINANCIAL DETAILS -- Operating Expenses. Fourth quarter 2007 R&D expenses, primarily consisting of salaries and related costs of R&D personnel, stock-based compensation, and the costs of consultants, materials and supplies associated with the company's clinical trials and research initiatives, were $12.6 million, down from $13.9 million in the previous quarter and up from $7.9 million in the fourth quarter of 2006. The decrease in R&D expenses between the third and fourth quarters of 2007 is primarily attributable to an increase in VEC-162 Phase III chronic insomnia clinical trial costs being offset by a non-recurring third quarter milestone charge of $5.0 million for the Fiapta(TM) NDA submission in September 2007. The increase in R&D expenses in the fourth quarter of 2007 relative to the fourth quarter of 2006 is primarily attributable to the same VEC-162 Phase III chronic insomnia clinical trial that was initiated in late 2007. For the full year of 2007, total R&D expenses were $47.2 million, down from $52.1 million in the full year of 2006. Lower R&D expenses in 2007 resulted from the substantial completion of the Fiapta(TM) Phase III clinical program in 2006. General and administrative (G&A) expenses totaled $9.5 million in the fourth quarter of 2007, down slightly from $9.6 million in the third quarter of 2007, and up from $4.5 million in the fourth quarter of 2006. The increase in G&A expenses in the fourth quarter of 2007 relative to the fourth quarter of 2006 is primarily due to increased Fiapta(TM) pre-launch commercial activities, stock-based compensation charges, salaries and related costs of non-R&D personnel, insurance and facility expenses. For the full year of 2007, total G&A expenses were $32.8 million, up from $13.6 million in the prior year. The increase in G&A expenses is primarily due to increased salaries, benefits and stock-based compensation expense, increased business and commercial development expenses, and higher insurance, legal and professional fees associated with being a public company. Employee stock-based compensation expense recorded in the fourth quarter of 2007 was $5.2 million. Of the total $5.2 million of non-cash charges, $1.0 million was recorded in R&D expenses and $4.2 million was recorded in G&A expenses. In the third quarter of 2007 and the fourth quarter of 2006, total stock-based compensation was $5.2 million and $1.6 million, respectively. For the full year of 2007, total stock-based compensation was $19.5 million, up from $6.1 million in the prior year. The increase in stock-based compensation is primarily the result of the higher fair value of options granted during 2007 compared to options granted in prior periods. -- Net loss for the fourth quarter of 2007 was $20.7 million. This compares to a net loss of $21.9 million in the third quarter of 2007, and $11.9 million in the fourth quarter of 2006. For the full year of 2007, net loss was $74.1 million, up from $63.5 million for the full year of 2006. -- Net loss per common share for the fourth quarter of 2007 was $0.78, compared to $0.82 in the third quarter of 2007 and $0.54 in the fourth quarter of 2006. For the full year of 2007, net loss per common share was $2.81, compared to $3.97 in the full year of 2006. -- Cash and marketable securities decreased by $16.2 million during the fourth quarter. Changes included $20.7 million of net losses and decreases in accrued R&D expenses and accounts payable of $2.5 million, offset by $5.3 million in non-cash depreciation, amortization, and stock-based compensation expenses, decreases in prepaid expenses of $1.6 million and net decreases in other working capital of $0.1 million. -- Vanda's cash, cash equivalents, and marketable securities at the end of the fourth quarter of 2007 totaled approximately $93.2 million, compared to approximately $109.4 million as of September 30, 2007, and approximately $31.9 million as of December 31, 2006. FINANCIAL GUIDANCE The company anticipates that its current cash balance will be sufficient to fund operations through the Fiapta(TM) PDUFA action date and into the fourth quarter of 2008. Vanda plans to focus its efforts primarily on completing and reporting the top-line results for the ongoing VEC-162 Phase III chronic insomnia clinical trial and continuing essential Fiapta(TM) pre-launch commercial activities. CONFERENCE CALL The company has scheduled a conference call for today, Thursday, February 14, 2008 at 10:30 AM ET. During the call, Mihael H. Polymeropoulos, M.D., President and CEO, and Steven A. Shallcross, Sr. Vice President and CFO, will discuss quarterly results and other corporate activities. Investors can call 1-866-578-5747 (domestic) and 1-617-213-8054 (international) prior to the 10:30 AM start time and ask for the Vanda Pharmaceuticals conference call hosted by Dr. Polymeropoulos. A replay of the call will be available Thursday, February 14, 2008, at 12:30 PM ET and will be accessible until Thursday, February 21, 2008, at 5:00 PM ET. The replay call-in number is 1-888-286-8010 for domestic callers and 1-617-801-6888 for international callers. The access number is 16341258. The conference call will be broadcast simultaneously on the company's Web site, http://www.vandapharma.com/. Investors should click on the Investor Relations tab and are advised to go to the Web site at least 15 minutes early to register, download, and install any necessary software. The call will also be archived on the Vanda Web site for a period of 30 days, through March 15, 2008. ABOUT VANDA PHARMACEUTICALS INC.: Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and commercialization of clinical-stage product candidates for central nervous system disorders. The company has three product candidates. Vanda's lead product candidate, Fiapta(TM) (iloperidone), is a compound for the treatment of schizophrenia and bipolar disorder, for which Vanda has recently submitted an NDA to the FDA. Vanda's second product candidate, VEC-162, is a compound for the treatment of sleep and mood disorders, which is currently in Phase III for chronic insomnia. Vanda's third product candidate, VSF-173, is a compound for the treatment of excessive sleepiness in Phase II. For more on Vanda Pharmaceuticals Inc., please visit http://www.vandapharma.com/. NOTE REGARDING FORWARD-LOOKING STATEMENTS This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding Vanda's plans for its product candidates. Words such as, but not limited to, "look forward to," "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "should," and "could," and similar expressions or words identify forward-looking statements. Such forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. Vanda is at an early stage of development and may not ever have any products that generate significant revenue. Important factors that could cause actual results to differ materially from those reflected in Vanda's forward-looking statements include, among others, a failure of Vanda's product candidates to be demonstrably safe and effective, a failure to obtain regulatory approval for the company's products or to comply with ongoing regulatory requirements, a lack of acceptance of Vanda's product candidates in the marketplace, a failure of the company to become or remain profitable, Vanda's inability to obtain the capital necessary to fund its research and development activities, a loss of any of the company's key scientists or management personnel, and other factors that are described in the "Risk Factors" section (Part II, Item 1A) of Vanda's report on Form 10-Q for the quarter ended September 30, 2007 (File No. 000-51863). No forward-looking statements can be guaranteed and actual results may differ materially from such statements. The information in this release is provided only as of the date of this release, and Vanda undertakes no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law. VANDA PHARMACEUTICALS INC. (A Development Stage Enterprise) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Year Ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 Revenues from services $ - $ - $ - $ - Operating expenses: Research and development 12,574,735 7,939,988 47,234,867 52,070,776 General and administrative 9,472,938 4,467,225 32,803,508 13,637,664 Total operating expenses 22,047,673 12,407,213 80,038,375 65,708,440 Loss from operations (22,047,673) (12,407,213) (80,038,375) (65,708,440) Interest income 1,299,076 516,291 5,907,219 2,202,654 Interest expense - (4) - (4,833) Other income - - 71,345 - Total other income, net 1,299,076 516,287 5,978,564 2,197,821 Loss before tax provision (20,748,597) (11,890,926) (74,059,811) (63,510,619) Income tax provision (191) 549 9,879 549 Net loss $ (20,748,406) $ (11,891,475) $ (74,069,690) $ (63,511,168) Basic and diluted net loss per common share $ (0.78) $ (0.54) $ (2.81) $ (3.97) Shares used in calculation of basic and diluted net loss per common share 26,644,540 21,932,730 26,360,177 16,001,815 VANDA PHARMACEUTICALS INC. (A Development Stage Enterprise) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, 2007 December 31, 2006 ASSETS Current assets: Cash and cash equivalents $41,929,533 $30,928,895 Marketable securities 43,243,960 941,981 Prepaid expenses, deposits and other current assets 1,781,881 1,949,466 Total current assets 86,955,374 33,820,342 Marketable securities, long-term 7,979,331 - Property and equipment, net 1,345,845 1,859,704 Deposits 150,000 150,000 Restricted cash 430,230 430,230 Total assets $96,860,780 $36,260,276 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,988,069 $2,783,249 Accrued expenses 9,789,738 6,322,808 Total current liabilities 12,777,807 9,106,057 Long-term liabilities: Deferred rent 354,042 238,413 Deferred grant revenue - 129,950 Other long-term liabilities - 28,984 Total liabilities 13,131,849 9,503,404 Stockholders' equity: Common stock 26,653 22,129 Additional paid-in capital 257,600,368 126,578,588 Accumulated other comprehensive gain (loss) 12,176 (3,269) Deficit accumulated during the development stage (173,910,266) (99,840,576) Total stockholders' equity 83,728,931 26,756,872 Total liabilities and stockholders' equity $96,860,780 $36,260,276 VANDA PHARMACEUTICALS INC. (A Development Stage Enterprise) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Year Ended December 31, December 31, 2007 2006 Cash flows from operating activities: Net loss $(74,069,690) $(63,511,168) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 571,586 575,372 Employee and non-employee stock-based compensation 19,622,814 6,131,827 Loss on disposal of assets 28,713 29,528 Accretion of discount on investments (1,571,905) (378,739) Changes in assets and liabilities: Prepaid expenses and other current assets 168,987 270,745 Deposits - 690,000 Accounts payable 204,029 526,711 Accrued expenses 3,465,028 3,811,373 Deferred grant revenue (147,464) - Other liabilities 86,644 234,833 Net cash used in operating activities (51,641,258) (51,619,518) Cash flows from investing activities: Purchases of property and equipment (279,433) (1,354,156) Proceeds from sales of property and equipment 200,179 - Purchases of marketable securities (138,953,879) (102,232,608) Proceeds from sales of marketable securities 3,577,859 82,137,888 Maturities of marketable securities 86,695,000 29,670,000 Net cash provided by (used in) investing activities (48,760,274) 8,221,124 Cash flows from financing activities: Principal payments on obligations under capital lease - (1,540) Principal payments on note payable - (141,074) Proceeds from exercise of stock options and warrants 148,640 127,115 Proceeds from issuance of common stock, net of issuance costs 111,254,850 53,329,951 Net cash provided by financing activities 111,403,490 53,314,452 Effect of foreign currency translation (1,320) 22 Net increase in cash and cash equivalents 11,000,638 9,916,080 Cash and cash equivalents, beginning of period 30,928,895 21,012,815 Cash and cash equivalents, end of period $41,929,533 $30,928,895 DATASOURCE: Vanda Pharmaceuticals Inc. CONTACT: Steven A. Shallcross, Senior Vice President & CFO of Vanda Pharmaceuticals Inc., +1-240-599-4500, Web site: http://www.vandapharma.com/

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