ROCKVILLE, Md., Feb. 16 /PRNewswire-FirstCall/ -- Vanda
Pharmaceuticals Inc. (Vanda) (NASDAQ:VNDA), a biopharmaceutical
company focused on the development and commercialization of
clinical-stage products for central nervous system disorders, today
announced financial and operational results for the fourth quarter
and full year ended December 31, 2009. Vanda reported a net loss of
$9.2 million for the fourth quarter of 2009, compared to $7.7
million for the third quarter of 2009 and $7.5 million for the
fourth quarter of 2008. Total revenue for the fourth quarter of
2009 was $4.5 million, consisting of $2.6 million in upfront
licensing revenue and $1.9 million in product revenue for inventory
sold to Novartis Pharma AG (Novartis). The remaining $197.4 million
in deferred revenue relating to the $200.0 million upfront payment
received from Novartis pursuant to the Fanapt(TM) (iloperidone)
license agreement will be recognized ratably ($2.2 million per
month) through May 2017. Total expenses for the fourth quarter of
2009 were $13.8 million, compared to $7.7 million for the third
quarter of 2009 and $7.7 million for the fourth quarter of 2008.
Research and development (R&D) expenses for the fourth quarter
of 2009 were $2.3 million, compared to $2.1 million for the third
quarter of 2009 and $3.6 million for the fourth quarter of 2008.
For the full year of 2009, total expenses were $40.5 million,
compared to $52.8 million for 2008. Total 2009 R&D expenses
were $13.9 million, compared to $23.9 million during 2008. As of
December 31, 2009, Vanda's cash, cash equivalents, and marketable
securities totaled approximately $205.3 million. As of December 31,
2009, a total of approximately 27.6 million shares of Vanda common
stock were outstanding. Net loss per common share for the fourth
quarter of 2009 was $0.34, compared to $0.28 for the third quarter
of 2009 and $0.28 for the fourth quarter of 2008. For the full year
of 2009, net loss per common share was $1.33, compared to $1.92 for
the full year of 2008. OPERATIONAL HIGHLIGHTS During the fourth
quarter of 2009, Vanda focused its efforts on the successful
transition to Novartis of commercial, regulatory and manufacturing
documents, materials and supplies relating to Fanapt(TM). On
January 11, 2010, Vanda announced that Novartis Pharmaceuticals
Corporation had launched Fanapt(TM) in the U.S. Vanda has explored,
and continues to evaluate, the regulatory path and commercial
opportunity for Fanapt(TM) outside of the U.S. and Canada. Vanda
also continued the clinical, regulatory and commercial evaluation
of tasimelteon, its selective melatonin receptor agonist, during
the fourth quarter of 2009. Compounds that bind selectively to
melatonin receptors are candidates to treat sleep disorders,
including Circadian Rhythm Sleep Disorders (CRSDs), and
additionally are believed to offer potential benefits in mood
disorders. Tasimelteon is currently in Phase III stage of
development for the treatment of sleep disorders and CRSDs and is
ready for Phase II trials for the treatment of depression. On
January 19, 2010, the U.S. Food and Drug Administration (FDA)
granted orphan drug designation status for tasimelteon in a
specific CRSD, Non-24-Hour Sleep/Wake Disorder in blind persons.
The FDA grants orphan drug designation to drugs that may provide
significant therapeutic advantage over existing treatments and
target conditions affecting 200,000 or fewer U.S. patients per
year. Orphan drug designation provides potential financial and
regulatory incentives, including study design assistance, tax
credits, waiver of FDA user fees, and up to seven years of market
exclusivity upon marketing approval. As Vanda continues to explore
the path to a New Drug Application (NDA) for tasimelteon, the
orphan drug designation in Non-24 Hour Sleep/Wake Disorder has the
potential to strengthen the tasimelteon program by offering
clinical development and commercialization benefits. FINANCIAL
DETAILS -- Operating Expenses. R&D expenses of $2.3 million for
the fourth quarter of 2009 consisted primarily of $0.9 million of
salaries and benefits, $0.5 million of non-cash stock based
compensation costs for R&D personnel, $0.3 million in
consulting fees and $0.2 million for an on-going carcinogenicity
study. This compares to $2.1 million for the third quarter of 2009
and $3.6 million for the fourth quarter of 2008. The increase in
R&D expenses in the fourth quarter of 2009 relative to the
third quarter of 2009 is primarily due to 2009 employee bonus
expense. The decrease in R&D expenses in the fourth quarter of
2009 relative to the fourth quarter of 2008 is primarily due to the
regulatory consulting fees relating to Fanapt(TM) accrued in the
fourth quarter of 2008. For the full year of 2009, total R&D
expenses were $13.9 million, compared to $23.9 million for 2008.
Lower R&D expenses resulted from the lower clinical trial costs
and related manufacturing costs incurred in 2009. -- General and
administrative (G&A) expenses of $9.2 million for the fourth
quarter of 2009 consisted primarily of $1.3 million of salaries and
benefits and $1.9 million of non-cash stock based compensation
costs for G&A personnel, as well as $1.2 million of legal fees
and $3.7 million of consulting fees and financial advisors fees
primarily relating to the transaction with Novartis, and $0.2
million of insurance costs. This compares to $5.3 million for the
third quarter of 2009 and $4.1 million for the fourth quarter of
2008. The increase in G&A expenses in the fourth quarter of
2009 relative to the third quarter of 2009 and the fourth quarter
of 2008 is primarily due to an increase in legal and consulting
fees and financial advisor fees accrued in the fourth quarter of
2009 relating to the transaction with Novartis. For the full year
of 2009, total G&A expenses were $23.7 million, compared to
$28.9 million for 2008. The year-over-year decrease in G&A
expenses is primarily due to decreased commercial and marketing
expenses relating to Fanapt(TM). -- Employee stock-based
compensation expense recorded in the fourth quarter of 2009 totaled
$2.4 million. Of these non-cash charges, $0.5 million was recorded
as R&D expense and $1.9 million was recorded as G&A
expense. For the third quarter of 2009 and the fourth quarter of
2008, total stock-based compensation expense was $3.3 million and
$0.7 million, respectively. The decrease in stock-based
compensation expense in the fourth quarter of 2009 relative to the
third quarter of 2009 is the result of the full vesting of
non-qualified options issued at a higher fair market value. The
increase in stock-based compensation expense in the fourth quarter
of 2009 relative to the fourth quarter of 2008 is primarily due to
a lower stock-based compensation expense resulting from the
workforce reduction in the fourth quarter of 2008. For the full
year of 2009, total stock-based compensation was $10.8 million,
compared to $13.4 million for 2008. -- Cash and marketable
securities increased by $184.6 million during the fourth quarter of
2009. Changes included $9.2 million of net losses, the payment of
the $5.0 million balance due to Novartis for the milestone payment
relating to the FDA's approval of the NDA for Fanapt(TM) and
increases in other working capital of $1.9 million, offset by
increases in the deferred revenue of $197.4 million, $3.0 million
in non-cash depreciation, amortization, and stock-based
compensation expense and $0.3 million in proceeds from the exercise
of employee stock options. -- Vanda's cash, cash equivalents and
marketable securities as of December 31, 2009 totaled approximately
$205.3 million, compared to approximately $46.5 million as of
December 31, 2008. -- Net loss for the fourth quarter of 2009 was
$9.2 million, compared to a net loss of $7.7 million for the third
quarter of 2009 and a net loss of $7.5 million for the fourth
quarter of 2008. For the full year of 2009, net loss was $35.9
million, compared to $51.1 million for the full year of 2008. --
Net loss per common share for the fourth quarter of 2009 was $0.34,
compared to $0.28 for the third quarter of 2009 and $0.28 for the
fourth quarter of 2008. For the full year of 2009, net loss per
common share was $1.33, compared to $1.92 for the full year of
2008. FINANCIAL GUIDANCE Vanda's primary objective over the next
quarter is to conserve cash while supporting the Fanapt(TM) launch.
In addition, the Company intends to engage in discussions with
several foreign regulatory agencies to review their filing
requirements with respect to Fanapt(TM). Vanda also plans to
continue the clinical, regulatory and commercial evaluation of
tasimelteon. Although Vanda incurred transaction-related costs of
approximately $6.0 million in the fourth quarter of 2009, which
included financial advisor fees, consulting fees, legal expenses
and employee bonuses, and $2.0 million in Fanapt(TM) inventory
costs, Vanda's fixed overhead costs are expected to be
approximately $10.0 million to $12.0 million annually. Vanda will
recognize revenue of $26.8 million in 2010 for the amortization of
the deferred upfront payment received from Novartis. The forecasted
royalty revenue and sales milestones based on sales of Fanapt(TM)
by Novartis can not be determined at this time. Vanda expects to
receive approximately $7.7 million from Novartis for Fanapt(TM)
inventory, of which $2.0 million was recorded as a receivable at
year-end. Vanda is currently working with its tax advisors to
determine its tax liability relating to the receipt of the $200.0
million upfront payment from Novartis in late 2009. Generally,
under the Internal Revenue Code, an accrual basis taxpayer is
required to include in taxable income certain cash payments in the
year received. Revenue Procedure 2004-34, however, allows taxpayers
a limited deferral beyond the taxable year of receipt for certain
advance payments. For federal income tax purposes, Vanda may avail
itself of the provisions of this Revenue Procedure to defer
recognition of income on the upfront payment from Novartis. As a
result, only a portion of the $200.0 million upfront payment from
Novartis that was received in 2009 is expected to be included in
taxable income for the tax year ended December 31, 2009. Any of the
income from the $200.0 million payment that was not recognized in
2009 will be recognized in taxable income for the year ending
December 31, 2010 and is expected to create income tax liabilities
for the Company. The timing of the payment of the income taxes due
is largely dependent upon when the income is recognized for
financial statement purposes, as well as the Company's ability to
utilize its carry forward tax attributes in offsetting the income
recognized from the receipt of the $200.0 million upfront payment.
As of December 31, 2008, Vanda has approximately $123.7 million of
net operating loss carry forwards incurred since 2003, which
potentially may be used in part to offset future taxable income and
thereby reduce Vanda's U.S. federal income taxes that would
otherwise be payable. Section 382 of the Internal Revenue Code
(Section 382), imposes an annual limit on the ability of a
corporation that undergoes an "ownership change" to use its net
operating loss carry forwards to reduce its tax liability. As a
result of certain changes in Vanda's shareholder base, Vanda's
ability to utilize its net operating losses to offset future
taxable income in any particular year may be limited pursuant to
Section 382. CONFERENCE CALL Vanda has scheduled a conference call
for today, Tuesday, February 16, 2010, at 9:30 AM ET. During the
call, Mihael H. Polymeropoulos, M.D., President and CEO, and
Stephanie Irish, Acting CFO, will discuss quarterly results and
other corporate activities. Investors can call 1-866-730-5762
(domestic) and 1-857-350-1586 (international) prior to the 9:30 AM
start time and ask for the Vanda Pharmaceuticals conference call
hosted by Dr. Polymeropoulos (participant passcode 75344663). A
replay of the call will be available Tuesday, February 16, 2010, at
12:30 PM ET and will be accessible until Tuesday, February 23,
2010, 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 85072095. The conference call will be
broadcast simultaneously on the Vanda'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 18, 2010. ABOUT VANDA
PHARMACEUTICALS INC.: Vanda Pharmaceuticals Inc. is a
biopharmaceutical company focused on the development and
commercialization of clinical-stage products for central nervous
system disorders. For more on Vanda Pharmaceuticals Inc., please
visit http://www.vandapharma.com/. CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS Various statements in this release are
"forward-looking statements" under the securities laws. Words such
as, but not limited to, "believe," "expect," "anticipate,"
"estimate," "intend," "plan," "targets," "likely," "will," "would,"
and "could," and similar expressions or words, identify
forward-looking statements. Forward-looking statements are based
upon current expectations that involve risks, changes in
circumstances, assumptions and uncertainties. Important factors
that could cause actual results to differ materially from those
reflected in the company's forward-looking statements include,
among others: the extent and effectiveness of the development,
sales and marketing and distribution support Fanapt(TM) receives;
Vanda's ability to successfully commercialize Fanapt(TM) outside of
the U.S. and Canada; delays in the completion of Vanda's clinical
trials; a failure of Vanda's products to be demonstrably safe and
effective; Vanda's failure to obtain regulatory approval for its
products or to comply with ongoing regulatory requirements for its
products; a lack of acceptance of Vanda's products in the
marketplace, or a failure to become or remain profitable; Vanda's
expectations regarding trends with respect to its costs and
expenses; Vanda's inability to obtain the capital necessary to fund
its commercial and research and development activities; Vanda's
failure to identify or obtain rights to new products; Vanda's
failure to develop or obtain sales, marketing and distribution
resources and expertise or to otherwise manage its growth; a loss
of any of Vanda's key scientists or management personnel; losses
incurred from product liability claims made against Vanda; a loss
of rights to develop and commercialize Vanda's products under its
license and sublicense agreements and other factors that are
described in the "Risk Factors" section (Part II, Item 1A) of
Vanda's quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2009 (File No. 001-34186). In addition to the risks
described above and in Part II, Item 1A of Vanda's quarterly report
on Form 10-Q, other unknown or unpredictable factors also could
affect Vanda's results. There can be no assurance that the actual
results or developments anticipated by Vanda will be realized or,
even if substantially realized, that they will have the expected
consequences to, or effects on, Vanda. Therefore, no assurance can
be given that the outcomes stated in such forward-looking
statements and estimates will be achieved. All written and verbal
forward-looking statements attributable to Vanda or any person
acting on its behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to herein. Vanda
cautions investors not to rely too heavily on the forward-looking
statements Vanda makes or that are made on its behalf. The
information in this release is provided only as of the date of this
release, and Vanda undertakes no obligation, and specifically
declines any obligation, to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. VANDA PHARMACEUTICALS INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months
Ended Year Ended ------------------ ---------- Dec. 31, Dec. 31,
Dec. 31, Dec. 31, 2009 2008 2009 2008 ---- ---- ---- ---- Revenue
from licensing agreement $2,568,807 $ - $2,568,807 $ - Product
revenue 1,978,937 - 1,978,937 - --------- ----- --------- -----
Total revenue 4,547,744 - 4,547,744 - Operating expenses: Cost of
sales - licensing agreement 376,792 - 982,935 - Cost of sales -
product 1,914,690 - 1,914,690 - Research and development 2,253,041
3,559,543 13,873,961 23,935,541 General and administrative
9,245,317 4,095,118 23,724,101 28,909,580 --------- ---------
---------- ---------- Total operating expenses 13,789,840 7,654,661
40,495,687 52,845,121 ---------- --------- ---------- ----------
Loss from operations (9,242,096) (7,654,661) (35,947,943)
(52,845,121) Interest income 4,706 150,642 89,097 1,780,880 Net
loss $(9,237,390) $(7,504,019) $(35,858,846) $(51,064,241)
=========== =========== ============ ============ Basic and diluted
net loss per share attributable to common stockholders $(0.34)
$(0.28) $(1.33) $(1.92) ====== ====== ====== ====== Shares used in
calculation of basic and diluted net loss per share attributable to
common stockholders 27,286,667 26,652,187 27,015,271 26,650,126
========== ========== ========== ========== VANDA PHARMACEUTICALS
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31,
December 31, 2009 2008 ---- ---- ASSETS Current assets: Cash and
cash equivalents $205,295,488 $39,079,304 Marketable securities -
7,378,798 Accounts receivable 3,163,898 - Inventory 2,398,517 -
Prepaid expenses, deposits and other current assets 2,092,581
1,287,400 --------- --------- Total current assets 212,950,484
47,745,502 Property and equipment, net 1,316,302 1,758,111
Restricted cash 430,230 430,230 Intangible asset, net 11,017,065 -
---------- ------- Total assets $225,714,081 $49,933,843
============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $2,423,877 $512,382 Accrued
expenses 2,321,301 2,898,417 Deferred revenues, current portion
26,788,991 - ---------- --------- Total current liabilities
31,534,169 3,410,799 ---------- --------- Long-term liabilities:
Deferred rent 506,852 502,770 Deferred revenues, noncurrent portion
170,642,202 - ----------- --------- Total liabilities 202,683,223
3,913,569 ----------- --------- Stockholders' equity: Common stock
27,569 26,653 Additional paid-in capital 283,836,642 270,988,157
Accumulated other comprehensive loss - (20,029) Accumulated deficit
(260,833,353) (224,974,507) ------------ ------------ Total
stockholders' equity 23,030,858 46,020,274 ---------- ----------
Total liabilities and stockholders' equity $225,714,081 $49,933,843
============ =========== VANDA PHARMACEUTICALS INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Year Ended
---------- December 31, December 31, 2009 2008 ---- ---- Cash flows
from operating activities: Net loss $(35,858,846) $(51,064,241)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 441,809 530,805 Employee
and non-employee stock-based compensation 11,230,227 13,387,789
Loss on disposal of assets - (174) Amortization of discounts and
premiums on marketable securities 138,095 (235,162) Amortization of
intangible assets 982,935 - Changes in assets and liabilities:
Prepaid expenses and other current assets (805,181) 495,200
Accounts receivable (3,163,898) - Deposits - 150,000 Inventory
(2,398,517) - Accounts payable 1,911,495 (2,475,697) Accrued
expenses (577,116) (6,892,577) Deferred rent 4,082 148,728 Deferred
revenue 197,431,193 - ----------- ------- Net cash provided by
(used in) operating activities 169,336,278 (45,955,329) -----------
----------- Cash flows from investing activities: Acquisition of
intangible asset (12,000,000) - Purchases of property and equipment
- (943,659) Purchases of marketable securities (11,365,815)
(14,786,080) Proceeds from sales of marketable securities 126,547
11,258,094 Maturities of marketable securities 18,500,000
47,560,000 Net cash provided by (used in) investing activities
(4,739,268) 43,088,355 ---------- ---------- Cash flows from
financing activities: Proceeds from exercise of stock options
1,619,174 - --------- -------- Net cash provided by financing
activities 1,619,174 - --------- -------- Effect of foreign
currency - 16,745 --------- ------ Net change in cash and cash
equivalents 166,216,184 (2,850,229) Cash and cash equivalents,
beginning of period 39,079,304 41,929,533 ---------- ----------
Cash and cash equivalents, end of period $205,295,488 $39,079,304
============ =========== DATASOURCE: Vanda Pharmaceuticals Inc.
CONTACT: Stephanie R. Irish, Acting Chief Financial Officer of
Vanda Pharmaceuticals Inc., +1-240-599-4500, Web Site:
http://www.vandapharma.com/
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