Nov. 2, 2009 (PR Newswire) -- ROCKVILLE, Md., Nov. 2 /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 third quarter ended September 30, 2009.
Vanda reported a net loss of $7.7 million for the third quarter of 2009, compared to $12.4 million for the second quarter of 2009 and $10.9 million for the third quarter of 2008. Total expenses for the third quarter of 2009 were $7.7 million, compared to $12.4 million for the second quarter of 2009 and $11.2 million for the third quarter of 2008. Research and development (R&D) expenses for the third quarter of 2009 were $2.1 million, compared to $7.2 million for the second quarter of 2009 and $3.8 million for the third quarter of 2008. The decrease in R&D expenses in the third quarter of 2009 relative to the second quarter of 2009 is primarily due to the regulatory consulting fees accrued in the second quarter as a result of the approval of Fanapt(TM) (iloperidone) by the U.S. Food and Drug Administration (FDA). The decrease in R&D expenses in the third quarter of 2009 relative to the third quarter of 2008 is primarily due to the completion of the Phase III clinical trial of tasimelteon in chronic primary insomnia in 2008.
As of September 30, 2009, Vanda's cash, cash equivalents, and marketable securities totaled approximately $20.7 million. As of September 30, 2009, a total of approximately 27.2 million shares of Vanda common stock were outstanding. Net loss per common share for the third quarter of 2009 was $0.28, compared to $0.46 for the second quarter of 2009 and $0.41 for the third quarter of 2008.
OPERATIONAL HIGHLIGHTS
On October 12, 2009, Vanda entered into an amended and restated sublicense agreement with Novartis Pharma AG (Novartis). The parties had originally entered into a sublicense agreement on June 4, 2004 pursuant to which Vanda obtained certain worldwide exclusive licenses from Novartis relating to Fanapt(TM). The agreement is subject to, and will become effective upon, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), which is expected by the end of 2009.
Pursuant to the agreement, Novartis will have exclusive commercialization rights to all formulations of Fanapt(TM) in the U.S. and Canada. Except for two post-approval studies started by Vanda prior to the execution date of the agreement, which Vanda is obligated to complete, Novartis will be responsible for the further clinical development activities in the U.S. and Canada, including the development of a long-acting injectable (or depot) formulation of Fanapt(TM).
Pursuant to the terms of the agreement, Vanda will be entitled to an upfront payment of $200 million, which it expects to receive within 30 days after the effective date of the agreement. Vanda will be eligible for additional payments totaling up to $265 million upon the achievement of certain commercial and development milestones for Fanapt(TM) in the U.S. and Canada. Vanda will also receive royalties, which, as a percentage of net sales, are in the low double-digits, on net sales of Fanapt(TM) in the U.S. and Canada. In addition, Vanda will no longer be required to make any future milestone payments with respect to sales of Fanapt(TM) or any future royalty payments with respect to sales of Fanapt(TM) in the U.S. and Canada.
Vanda retains exclusive rights to Fanapt(TM) outside the U.S. and Canada and Vanda will have exclusive rights to use any of Novartis' data for Fanapt(TM) for developing and commercializing Fanapt(TM) outside the U.S. and Canada. At Novartis' option, the parties will enter into good faith discussions relating to the co-commercialization of Fanapt(TM) outside of the U.S. and Canada or, alternatively, Novartis will receive a royalty on net sales of Fanapt(TM) outside of the U.S. and Canada.
Vanda continued the clinical, regulatory and commercial evaluation for tasimelteon, a MT1/MT2 melatonin agonist, currently in Phase III stage of development.
FINANCIAL DETAILS
-- Operating Expenses. Third quarter 2009 R&D expenses of $2.1 million
consisted primarily of $0.5 million of salaries and benefits, $0.7
million of non-cash stock based compensation costs for R&D personnel,
$0.2 million for the carcinogenicity study and $0.2 million in
consulting fees. This compares to $7.2 million for the second quarter
of 2009 and $3.8 million for the third quarter of 2008. The decrease in
R&D expenses in the third quarter of 2009 relative to the second quarter
of 2009 is primarily due to the regulatory consulting fees accrued in
the second quarter as a result of the approval of Fanapt(TM) by the FDA.
The decrease in R&D expenses in the third quarter of 2009 relative to
the third quarter of 2008 is primarily due to the completion of the
Phase III clinical trial of tasimelteon in chronic primary insomnia in
2008.
-- General and administrative (G&A) expenses of $5.3 million for the third
quarter of 2009 consisted primarily of $0.4 million of salaries and
benefits and $2.6 million of non-cash stock based compensation costs for
G&A personnel, as well as $0.5 million of legal fees, $0.7 million of
commercial costs and $0.2 million of insurance costs. This compares to
$5.0 million for the second quarter of 2009 and $7.4 million for the
third quarter of 2008. The decrease in G&A expenses in the third
quarter of 2009 relative to the third quarter of 2008 is primarily due
to lower stock-based compensation and commercial expenses.
-- Employee stock-based compensation expense recorded in the third quarter
of 2009 totaled $3.3 million. Of these non-cash charges, $0.7 million
was recorded as R&D expense and $2.6 million was recorded as G&A
expense. For the second quarter of 2009 and the third quarter of 2008,
total stock-based compensation expense was $2.8 million and $3.6
million, respectively. The increase in stock-based compensation expense
in the third quarter of 2009 relative to the second quarter of 2009 is
the result of the issuance of additional non-qualified stock options in
2009. The decrease in stock-based compensation expense in the third
quarter of 2009 relative to the third quarter of 2008 is primarily due
to a lower stock-based compensation expense resulting from the workforce
reduction in the fourth quarter of 2008.
-- Cash and marketable securities decreased by $8.3 million during the
third quarter of 2009.
