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Share Name | Share Symbol | Market | Type |
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Vanda Pharmaceuticals Inc | NASDAQ:VNDA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.04 | -0.82% | 4.84 | 4.78 | 4.85 | 5.0319 | 4.79 | 5.00 | 1,288,463 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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03-0491827
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.001
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The Nasdaq Stock Market LLC
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(Nasdaq Global Market)
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Rights to Purchase Series A Junior Participating Preferred Stock
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The Nasdaq Stock Market LLC
(Nasdaq Global Market)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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•
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the ability of Vanda Pharmaceuticals Inc. (we, our, the Company or Vanda) to continue to commercialize HETLIOZ
®
(tasimelteon) for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) in the United States (U.S.) and Europe;
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•
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uncertainty as to the ability to increase market awareness of Non-24 and the market acceptance of HETLIOZ
®
;
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•
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our ability to continue to generate U.S. sales of Fanapt
®
(iloperidone) for the treatment of schizophrenia;
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•
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our dependence on third-party manufacturers to manufacture HETLIOZ
®
and Fanapt
®
in sufficient quantities and quality;
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•
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our level of success in commercializing HETLIOZ
®
and Fanapt
®
in new markets;
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•
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our ability to prepare, file, prosecute, defend and enforce any patent claims and other intellectual property rights;
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our ability to reach agreement with the U.S. Food and Drug Administration (FDA) regarding our regulatory approval strategy, preclinical animal testing requirements or proposed path to approval for tradipitant;
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a loss of rights to develop and commercialize our products under our license agreements;
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the ability to obtain and maintain regulatory approval of our products, and the labeling for any approved products;
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the timing and success of preclinical studies and clinical trials;
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a failure of our products to be demonstrably safe and effective;
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the size and growth of the potential markets for our products and the ability to serve those markets;
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our expectations regarding trends with respect to our revenues, costs, expenses, liabilities and cash, cash equivalents and marketable securities;
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the scope, progress, expansion, and costs of developing and commercializing our products;
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our failure to identify or obtain rights to new products;
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a loss of any of our key scientists or management personnel;
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limitations on our ability to utilize some or all of our prior net operating losses and orphan drug and research and development credits;
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the cost and effects of litigation;
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our ability to obtain the capital necessary to fund our research and development or commercial activities;
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losses incurred from product liability claims made against us; and
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use of our existing cash, cash equivalents and marketable securities.
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ITEM 1.
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BUSINESS
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•
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HETLIOZ
®
(tasimelteon), a product for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), was approved by the U.S. Food and Drug Administration (FDA) in January 2014 and launched commercially in the U.S. in April 2014. In July 2015, the European Commission (EC) granted centralized marketing authorization with unified labeling for HETLIOZ
®
for the treatment of Non-24 in totally blind adults. HETLIOZ
®
was commercially launched in Germany in August 2016. HETLIOZ
®
has potential utility in a number of other circadian rhythm disorders and is presently in clinical development for the treatment of jet lag disorder, Smith-Magenis Syndrome (SMS) and Pediatric Non-24. An assessment of new HETLIOZ
®
clinical opportunities including the treatment of delayed sleep phase disorder and for sleep disorders in patients with neurodevelopmental disorders is ongoing.
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•
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Fanapt
®
(iloperidone), a product for the treatment of schizophrenia, the oral formulation of which was approved by the FDA in May 2009 and launched commercially in the U.S. by Novartis Pharma AG (Novartis) in January 2010. Novartis transferred all the U.S. and Canadian commercial rights to the Fanapt
®
franchise to us on December 31, 2014. Additionally, our distribution partners launched Fanapt
®
in Israel in 2014. Fanapt
®
has potential utility in a number of other disorders. Initial clinical work studying a long acting injectable (LAI) formulation of Fanapt
®
began in 2018. An assessment of new Fanapt
®
clinical opportunities including the treatment of bipolar depression is ongoing.
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•
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Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and the treatment of gastroparesis. An assessment of new tradipitant clinical opportunities including the treatment of motion sickness is ongoing.
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•
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VTR-297, a small molecule histone deacetylase (HDAC) inhibitor presently in clinical development for the treatment of hematologic malignancies.
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•
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Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. An early stage CFTR activator program is planned for the treatment of dry eye and ocular inflammation. In addition, an early stage CFTR inhibitor program is planned for the treatment of secretory diarrhea disorders, including cholera.
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•
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VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.
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•
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Maximize the commercial success of HETLIOZ
®
and Fanapt
®
;
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•
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Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach;
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•
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Pursue the clinical development and regulatory approval of our products;
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•
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Apply our pharmacogenetics and pharmacogenomics expertise to differentiate our products; and
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•
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Expand our product portfolio through the identification and acquisition of additional products.
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Product
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Indication
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Geography
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Select Historical Milestones
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HETLIOZ
®
(tasimelteon)
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Non-24
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United States
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FDA approval in January 2014;
Commercial launch in April 2014
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Europe
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EC approval in July 2015;
Commercial launch in Germany in August 2016
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Fanapt
®
(Oral)
(iloperidone)
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Schizophrenia
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United States
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FDA approval in May 2009;
Commercial launch in January 2010;
U.S. and Canada rights sublicensed to Novartis in October 2009 and reacquired by Vanda in December 2014;
Long term maintenance supplemental New Drug Application (sNDA) approval in May 2016
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Fanaptum
®
(Oral)
(iloperidone) |
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Israel
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Market approval August 2012;
Commercial launch in the fourth quarter of 2014 by our local distribution partner
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Product
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Target Indication
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Select Historical Milestones
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HETLIOZ
®
(tasimelteon)
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Jet Lag Disorder
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Completed a Phase III clinical study (JET8) and reported results in the first quarter of 2018;
Completed a Phase II clinical study (JET) and reported results in the second quarter of 2018;
sNDA PDUFA-VI (as defined below) action target date of August 16, 2019
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SMS
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Completed a placebo controlled study and reported results in the fourth quarter of 2018
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Pediatric Non-24
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Completed a pharmacokinetic study in the first quarter of 2018
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Fanapt
®
(iloperidone)
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Schizophrenia
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Initiated a pharmacokinetic study of the LAI formulation in the fourth quarter of 2018
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Other Disorders
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Potential indications are under evaluation including bipolar depression, major depressive disorder and post-traumatic stress disorder – nightmares
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Tradipitant (VLY-686)
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Chronic Pruritus in Atopic Dermatitis
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Completed a placebo controlled clinical study and reported results in the third quarter of 2017;
Initiated a Phase III study (EPIONE) in the second quarter of 2018
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Gastroparesis
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Completed a placebo controlled study and reported results in the fourth quarter of 2018
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VTR-297
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Oncology
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Initiated a clinical study in patients with hematologic malignancies in the fourth quarter of 2018
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VQW-765
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CNS Disorders
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Potential indications are under strategic evaluation including cognitive impairment
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Number
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Type
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HETLIOZ
®
|
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US 5,856,529
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New chemical entity
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US 9,060,995
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Method of treatment
|
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|
US 9,539,234
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Method of treatment
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|
|
US 9,549,913
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Method of treatment
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|
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US 9,730,910
|
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Method of treatment
|
|
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US 9,855,241
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|
Method of treatment
|
|
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US RE46604
|
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Method of treatment
|
|
|
US 10,071,977
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Drug substance
|
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US 10,149,829
|
|
Method of treatment
|
Fanapt
®
|
|
US 8,586,610
|
|
Method of treatment
|
|
|
US 8,652,776
|
|
Method of treatment
|
|
|
US 8,999,638
|
|
Method of treatment
|
|
|
US 9,072,742
|
|
Method of treatment
|
|
|
US 9,074,254
|
|
Method of treatment
|
|
|
US 9,074,255
|
|
Method of treatment
|
|
|
US 9,074,256
|
|
Method of treatment
|
|
|
US 9,138,432
|
|
Method of treatment
|
|
|
US 9,157,121
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|
Method of treatment
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•
|
For HETLIOZ
®
in the treatment of Non-24, there are no FDA approved direct competitors. Sedative-Hypnotic treatments for certain sleep related disorders include, Ambien
®
(zolpidem) by Sanofi (including Ambien CR
®
), Lunesta
®
(eszopiclone) by Sunovion Pharmaceuticals Inc., Sonata
®
(zaleplon) by Pfizer Inc., Rozerem
®
(ramelteon) by Takeda Pharmaceuticals Company Limited, Silenor
®
(doxepin) by Pernix Therapeutics, Belsomra
®
(suvorexant) by Merck & Co., Inc., generic products such as zolpidem, trazodone and doxepin, and over-the-counter remedies such as Benadryl
®
and Tylenol PM
®
. The class of melatonin agonists includes Rozerem
®
(ramelteon) by Takeda Pharmaceuticals Company Limited, Valdoxan
®
(agomelatine) by Servier, Circadin
®
(long-acting melatonin) by Neurim Pharmaceuticals Ltd. and the food supplement melatonin. Shift work and excessive sleepiness disorder treatments include Nuvigil
®
(armodafinil) and Provigil
®
(modafinil) both by Teva Pharmaceutical Industries Ltd.
|
•
|
For Fanapt
®
in the treatment of schizophrenia, the atypical antipsychotics competitors are Risperdal
®
(risperidone), including the LAI formulation Risperdal Consta
®
and Invega
®
(paliperidone), including the LAI formulation Invega
®
Sustenna
®
, each by Ortho-McNeil-Janssen Pharmaceuticals, Inc., Zyprexa
®
(olanzapine), including the LAI formulation Zyprexa
®
Relprevv
TM
, each by Eli Lilly and Company, Seroquel
®
and Seroquel XR
®
(quetiapine) by AstraZeneca PLC, Abilify
®
(aripiprazole) by Otsuka America Pharmaceutical Inc., Abilify Maintena
®
(the LAI formulation of Abilify
®
) by Lundbeck/Otsuka America Pharmaceutical Inc., Geodon
®
(ziprasidone) by Pfizer Inc., Saphris
®
(asenapine) by Allergan plc, Latuda
®
(lurasidone) by Sunovion Pharmaceuticals Inc., Rexulti
®
(brexpiprazole) by Lundbeck/Otsuka America Pharmaceutical, Inc., Aristada
TM
(aripiprazole lauroxil) extended-release injectable suspension by Alkermes, Inc., Vraylar
TM
(cariprazine) by Teva Pharmaceutical Industries Ltd., and generic clozapine, as well as the typical antipsychotics haloperidol, chlorpromazine, thioridazine, and sulpiride (all of which are generic).
|
•
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preclinical laboratory tests, animal studies and formulation studies under Current Good Laboratory Practices (cGLP);
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•
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submission to the FDA of an IND, which must become effective before human clinical trials may begin;
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•
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execution of adequate and well-controlled clinical trials to establish the safety and efficacy of the drug for each indication for which approval is sought;
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•
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submission to the FDA of an NDA;
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•
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with Current Good Manufacturing Practices (cGMP); and
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•
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FDA review and approval of the NDA.
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•
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Phase I: refers typically to closely-monitored clinical trials and includes the initial introduction of an investigational new drug into human patients or healthy volunteer subjects. Phase I trials are designed to determine the safety, metabolism and pharmacologic actions of a drug in humans, the potential side effects associated with increasing drug doses and, if possible, to gain early evidence of the drug’s effectiveness. Phase I trials also include the study of structure-activity relationships and mechanism of action in humans, as well as studies in which investigational new drugs are used as research tools to explore biological phenomena or disease processes. During Phase I trials, sufficient information about a drug’s pharmacokinetics and pharmacological effects should be obtained to permit the design of well-controlled, scientifically valid Phase II studies. The total number of subjects and patients included in Phase I trials varies, but is generally in the range of 20 to 80 people.
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•
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Phase II: refers to controlled clinical trials conducted to evaluate appropriate dosage and the effectiveness of a drug for a particular indication or indications in patients with a disease or condition under study and to determine the common short-term side effects and risks associated with the drug. These trials are typically well-controlled, closely monitored and conducted in a relatively small number of patients, usually involving no more than several hundred subjects.
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•
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Phase III: refers to expanded controlled and uncontrolled clinical trials. These trials are performed after preliminary evidence suggesting effectiveness of a drug has been obtained. Phase III trials are intended to gather additional information about the effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling. Phase III trials usually include several hundred to several thousand subjects.
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•
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Phase IV: refers to post-approval studies, when applicable, are conducted following initial approval, typically to gain additional experience and data from treatment of patients in the intended therapeutic indication.
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•
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an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications;
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expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;
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•
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expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans;
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•
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addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
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•
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expanded the types of entities eligible for the 340B drug discount program;
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•
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established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point‑of‑sale‑discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D. Public Law No. 115-123, also known as the Bipartisan Budget Act of 2018 enacted on February 9, 2018 increased the manufacturer discount from 50% to 70% effective in 2019 for applicable drugs;
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•
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established a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
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•
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established the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. However, the IPAB implementation has been not been clearly defined. The PPACA provided that under certain circumstances, IPAB recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings; and
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•
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established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation from 2011 to 2019. Other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in 2013 and will stay in effect through 2024 unless additional congressional action is taken, and the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Further, there have been several recent U.S. congressional inquiries and proposed state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.
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ITEM 1A.
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RISK FACTORS
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defend our patents and intellectual property from generic competition;
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maintain commercial manufacturing arrangements with third-party manufacturers;
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•
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produce, through a validated process, sufficiently large quantities of inventory of our products to meet demand;
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•
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continue to maintain and grow a wide variety of internal sales, distribution and marketing capabilities sufficient to sustain growth in sales of our products;
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•
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gain broad acceptance of our products from physicians, health care payors, patients, pharmacists and the medical community;
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properly price and obtain adequate coverage and reimbursement of these products by governmental authorities, private health insurers, managed care organizations and other third-party payors;
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maintain compliance with ongoing labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other post-market requirements;
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obtain regulatory approval to expand the labeling of our approved products for additional indications;
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•
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obtain regulatory approval for HETLIOZ
®
or Fanapt
®
in additional countries;
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•
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adequately protect against and effectively respond to any claims by holders of patents and other intellectual property rights that our products infringe their rights; and
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•
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adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops in respect to our products, as well as the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.
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acceptable evidence of safety and efficacy;
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relative convenience and ease of administration;
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the prevalence and severity of any adverse side effects;
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availability of alternative treatments; and
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pricing and cost effectiveness.
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•
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the FDA determining that additional clinical studies are required with respect to the tradipitant for the treatment of chronic pruritus in atopic dermatitis and/or the treatment of gastroparesis;
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•
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safety, efficacy or other concerns arising from clinical or non-clinical studies in these programs; or
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•
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the FDA determining that the tradipitant clinical trial programs raise safety concerns or do not demonstrate adequate efficacy.
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•
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the FDA determining that additional clinical studies are required with respect to either the SMS or jet lag disorder program;
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•
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safety, efficacy or other concerns arising from clinical or non-clinical studies in either the SMS or jet lag disorder program, or the manufacturing processes or facilities used for either the SMS or jet lag disorder programs; or
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•
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the FDA determining that either the SMS or jet lag disorder program raises safety concerns or does not demonstrate adequate efficacy.
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•
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our collaboration agreements are expected to be for fixed terms and subject to termination under various circumstances, including, in many cases, on short notice without cause;
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•
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our collaborators may develop and commercialize, either alone or with others, products and services that are similar to or competitive with our products which are the subject of their collaboration with us; and
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•
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our collaborators may change the focus of their commercialization efforts.
|
•
|
not provide us accurate or timely information regarding their inventories, the number of patients who are using HETLIOZ
®
or complaints about HETLIOZ
®
;
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•
|
reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support HETLIOZ
®
;
|
•
|
not devote the resources necessary to sell HETLIOZ
®
in the volumes and within the time frames that we expect;
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•
|
be unable to satisfy financial obligations to us or others; or
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•
|
cease operations.
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•
|
not provide us accurate or timely information regarding their inventories, demand from wholesaler customers buying Fanapt
®
or complaints about Fanapt
®
;
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•
|
reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support Fanapt
®
;
|
•
|
not devote the resources necessary to sell Fanapt
®
in the volumes and within the time frames that we expect;
|
•
|
be unable to satisfy financial obligations to us or others; or
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•
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cease operations.
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•
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developing products;
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•
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undertaking preclinical testing and clinical trials;
|
•
|
obtaining FDA and other regulatory approvals of products; and
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•
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manufacturing, marketing and selling products.
|
•
|
For HETLIOZ
®
in the treatment of Non-24, there are no FDA approved direct competitors. Sedative-Hypnotic treatments for certain sleep related disorders include, Ambien
®
(zolpidem) by Sanofi (including Ambien CR
®
), Lunesta
®
(eszopiclone) by Sunovion Pharmaceuticals Inc., Sonata
®
(zaleplon) by Pfizer Inc., Rozerem
®
(ramelteon) by Takeda Pharmaceuticals Company Limited, Silenor
®
(doxepin) by Pernix Therapeutics, Belsomra
®
(suvorexant) by Merck & Co., Inc., generic products such as zolpidem, trazodone and doxepin, and over-the-counter remedies such as Benadryl
®
and Tylenol PM
®
. The class of melatonin agonists includes Rozerem
®
(ramelteon) by Takeda Pharmaceuticals Company Limited, Valdoxan
®
(agomelatine) by Servier, Circadin
®
(long-acting melatonin) by Neurim Pharmaceuticals Ltd. and the food supplement melatonin. Shift work and excessive sleepiness disorder treatments include Nuvigil
®
(armodafinil) and Provigil
®
(modafinil) both by Teva Pharmaceutical Industries Ltd.
|
•
|
For Fanapt
®
in the treatment of schizophrenia, the atypical antipsychotics competitors are Risperdal
®
(risperidone), including the long acting injectable (LAI) formulation Risperdal Consta
®
and Invega
®
(paliperidone), including the LAI formulation Invega
®
Sustenna
®
, each by Ortho-McNeil-Janssen Pharmaceuticals, Inc., Zyprexa
®
(olanzapine), including the LAI formulation Zyprexa
®
Relprevv
TM
, each by Eli Lilly and Company, Seroquel
®
and Seroquel XR
®
(quetiapine) by AstraZeneca PLC, Abilify
®
(aripiprazole) by Otsuka America Pharmaceutical Inc., Abilify Maintena
®
(the LAI formulation of Abilify
®
) by Lundbeck/Otsuka America Pharmaceutical Inc., Geodon
®
(ziprasidone) by Pfizer Inc., Saphris
®
(asenapine) by Allergan plc, Latuda
®
(lurasidone) by Sunovion Pharmaceuticals Inc., Rexulti
®
(brexpiprazole) by Lundbeck/Otsuka America Pharmaceutical, Inc., Aristada
TM
(aripiprazole lauroxil) extended-release injectable suspension by Alkermes, Inc., Vraylar
TM
(cariprazine) by Teva Pharmaceutical Industries Ltd., and generic clozapine, as well as the typical antipsychotics haloperidol, chlorpromazine, thioridazine, and sulpiride (all of which are generic).
|
•
|
a product may not be shown to be safe or effective;
|
•
|
the FDA or foreign agency may interpret data from preclinical and clinical trials in different ways than we do;
|
•
|
the FDA or foreign agency may not approve our or our partners’ manufacturing processes or facilities;
|
•
|
a product may not be approved for all the indications we request;
|
•
|
the FDA or foreign agency may change its approval policies or adopt new regulations;
|
•
|
the FDA or foreign agency may not meet, or may extend, the Prescription Drug User Fee Act Amendments of 2017 (PDUFA-VI) date or its foreign equivalent with respect to a particular NDA or foreign application; and
|
•
|
the FDA or foreign agency may not agree with our regulatory approval strategies or components of the regulatory filings, such as clinical trial designs.
|
•
|
the size and nature of the patient population;
|
•
|
the design of the trial protocol for our clinical trials;
|
•
|
the eligibility and exclusion criteria for the trial in question;
|
•
|
the availability of competing therapies and competing clinical trials, and physician and patient perception of our product candidates and our other product candidates being studied in relation to these other potential options;
|
•
|
the availability of raw materials and the possibility of raw materials expiring prior to their use;
|
•
|
difficulty in maintaining contact with patients after treatment, resulting in incomplete data;
|
•
|
poor effectiveness of our products during clinical trials;
|
•
|
unforeseen safety issues or side effects;
|
•
|
the number and location of clinical sites in our clinical trials;
|
•
|
the proximity and availability of clinical trial sites for prospective patients;
|
•
|
the availability of time and resources at the institutions where clinical trials are and will be conducted;
|
•
|
the availability of adequate financing to fund ongoing clinical trial expenses;
|
•
|
the study endpoints that rely on subjective patient reported outcomes; and
|
•
|
governmental or regulatory delays and changes in regulatory requirements and guidelines.
|
•
|
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
|
•
|
regulatory authorities may withdraw their approval of the product;
|
•
|
we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and
|
•
|
our or the product’s reputation may suffer.
|
•
|
our ability to obtain and maintain regulatory approval for our products both in the U.S. and in foreign countries;
|
•
|
our level of success in commercializing HETLIOZ
®
in the U.S., Europe and other jurisdictions in which HETLIOZ
®
may receive regulatory approval, if any;
|
•
|
our level of success in raising awareness regarding Non-24 in the medical and patient communities;
|
•
|
our level of success in marketing and selling Fanapt
®
in the U.S. and our or our partners’ level of success in marketing and selling Fanapt
®
in Israel and other jurisdictions in which we may receive regulatory approval, if any;
|
•
|
our ability to enter into and maintain agreements to develop and commercialize our products;
|
•
|
our ability to develop, have manufactured and market our products;
|
•
|
our ability to obtain adequate reimbursement coverage for our products from insurance companies, government programs and other third party payors; and
|
•
|
our ability to obtain additional research and development funding from collaborative partners or funding for our products.
|
•
|
the costs of our marketing or awareness campaigns;
|
•
|
the progress of our research and development programs for our products, including clinical trials;
|
•
|
the time and expense that will be required to pursue FDA and/or foreign regulatory approvals for our products and whether such approvals are obtained on a timely basis, if at all;
|
•
|
the time and expense required to prosecute, enforce and/or challenge patent and other intellectual property rights;
|
•
|
the cost of third party manufacturers;
|
•
|
the number of additional products we pursue;
|
•
|
how competing technological and market developments affect our products;
|
•
|
the cost of possible acquisitions of technologies, products, product rights or companies;
|
•
|
the cost of obtaining licenses to use technology owned by others for proprietary products and otherwise;
|
•
|
the costs and effects of potential litigation; and
|
•
|
the costs associated with recruiting and compensating a highly skilled workforce in an environment where competition for such employees may be intense.
|
•
|
our level of success in commercializing HETLIOZ
®
and Fanapt
®
globally;
|
•
|
outcomes of ongoing and potential patent litigation;
|
•
|
costs of developing and maintaining sales, marketing and distribution channels and our ability to sell our products;
|
•
|
market acceptance of our products;
|
•
|
costs involved in establishing and maintaining manufacturing capabilities for commercial quantities of our products;
|
•
|
the number of potential formulations and products in development;
|
•
|
progress with preclinical studies and clinical trials;
|
•
|
time and costs involved in obtaining regulatory (including FDA) approval;
|
•
|
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property claims;
|
•
|
competing technological and market developments;
|
•
|
costs for recruiting and retaining employees and consultants;
|
•
|
costs for training physicians; and
|
•
|
legal, accounting, insurance and other professional and business related costs.
|
•
|
because most of our third-party manufacturers and formulators are located outside of the U.S., there may be difficulties in importing our products or their components into the U.S. as a result of, among other things, FDA import inspections, incomplete or inaccurate import documentation or defective packaging; and
|
•
|
because of the complex nature of our products, our manufacturers may not be able to successfully manufacture our products in a cost-effective and/or timely manner.
|
•
|
mergers;
|
•
|
acquisitions;
|
•
|
strategic alliances;
|
•
|
licensing agreements; and
|
•
|
co-promotion and similar agreements.
|
•
|
product sales;
|
•
|
cost of product sales;
|
•
|
marketing and other expenses;
|
•
|
manufacturing or supply issues;
|
•
|
the timing and amount of royalties or milestone payments;
|
•
|
our addition or termination of development programs;
|
•
|
variations in the level of expenses related to our products or future development programs;
|
•
|
regulatory developments affecting our products or those of our competitors;
|
•
|
our execution of collaborative, licensing or other arrangements, and the timing of payments we may make or receive under these arrangements;
|
•
|
any intellectual property infringement or other lawsuit in which we may become involved; and
|
•
|
the timing and recognition of stock-based compensation expense.
|
•
|
our level of success in commercializing our products;
|
•
|
our level of success in executing our commercialization strategies;
|
•
|
publicity regarding actual or potential testing or trial results relating to products under development by us or our competitors;
|
•
|
the outcome of regulatory review relating to products under development by us or our competitors;
|
•
|
regulatory developments in the U.S. and foreign countries;
|
•
|
developments concerning any collaboration or other strategic transaction we may undertake;
|
•
|
publicity regarding actual or potential litigation involving us;
|
•
|
announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors;
|
•
|
safety issues with our products or those of our competitors;
|
•
|
announcements of technological innovations or new therapeutic products or methods by us or others;
|
•
|
actual or anticipated variations in our quarterly operating results;
|
•
|
changes in estimates of our financial results or recommendations by securities analysts or failure to meet such financial expectations;
|
•
|
changes in government regulations or policies;
|
•
|
changes in patent legislation or patent decisions or adverse changes to patent law;
|
•
|
additions or departures of key personnel or members of our board of directors;
|
•
|
the publication of negative research or articles about our company, our business or our products by industry analysts or others;
|
•
|
market rumors or press reports;
|
•
|
publicity regarding actual or potential transactions involving us; and
|
•
|
economic, political and other external factors beyond our control.
|
•
|
responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees;
|
•
|
perceived uncertainties as to future direction may result in the loss of potential acquisitions, collaborations or in-licensing opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; and
|
•
|
if individuals are elected to a board of directors with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders.
|
•
|
authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt;
|
•
|
do not provide for cumulative voting in the election of directors, which would allow holders of less than a majority of the stock to elect some directors;
|
•
|
establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
|
•
|
require that directors only be removed from office for cause;
|
•
|
provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office;
|
•
|
limit who may call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and
|
•
|
establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED CONSOLIDATED FINANCIAL DATA
|
|
Year Ended December 31,
|
||||||||||||||||||
(in thousands, except for share and per share amounts)
|
2018 (1)
|
|
2017 (1)
|
|
2016 (1)
|
|
2015 (1)
|
|
2014 (1)(2)
|
||||||||||
Statements of Operations Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
193,118
|
|
|
$
|
165,083
|
|
|
$
|
146,017
|
|
|
$
|
109,925
|
|
|
$
|
50,157
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of goods sold excluding amortization
|
20,508
|
|
|
17,848
|
|
|
24,712
|
|
|
23,462
|
|
|
1,583
|
|
|||||
Research and development
|
43,594
|
|
|
38,547
|
|
|
29,156
|
|
|
29,145
|
|
|
19,230
|
|
|||||
Selling, general and administrative
|
105,751
|
|
|
123,841
|
|
|
99,787
|
|
|
84,531
|
|
|
84,644
|
|
|||||
Intangible asset amortization
|
1,527
|
|
|
1,750
|
|
|
10,933
|
|
|
12,972
|
|
|
2,254
|
|
|||||
Gain on arbitration settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77,616
|
)
|
|||||
Total operating expenses
|
171,380
|
|
|
181,986
|
|
|
164,588
|
|
|
150,110
|
|
|
30,095
|
|
|||||
Income (loss) from operations
|
21,738
|
|
|
(16,903
|
)
|
|
(18,571
|
)
|
|
(40,185
|
)
|
|
20,062
|
|
|||||
Other income
|
3,608
|
|
|
1,472
|
|
|
665
|
|
|
320
|
|
|
124
|
|
|||||
Income (loss) before income taxes
|
25,346
|
|
|
(15,431
|
)
|
|
(17,906
|
)
|
|
(39,865
|
)
|
|
20,186
|
|
|||||
Provision for income taxes
|
138
|
|
|
136
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
|
$
|
(39,865
|
)
|
|
$
|
20,186
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.50
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
0.58
|
|
Diluted
|
$
|
0.48
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
0.55
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
50,859,947
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|
42,250,254
|
|
|
34,774,163
|
|
|||||
Diluted
|
53,045,257
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|
42,250,254
|
|
|
36,686,723
|
|
|
December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
61,005
|
|
|
$
|
33,627
|
|
|
$
|
40,426
|
|
|
$
|
50,843
|
|
|
$
|
60,901
|
|
Marketable securities
|
196,355
|
|
|
109,786
|
|
|
100,914
|
|
|
92,337
|
|
|
68,921
|
|
|||||
Working capital
|
246,117
|
|
|
99,494
|
|
|
123,855
|
|
|
115,230
|
|
|
133,944
|
|
|||||
Total assets
|
332,130
|
|
|
205,425
|
|
|
210,374
|
|
|
213,050
|
|
|
171,704
|
|
|||||
Total liabilities
|
56,708
|
|
|
74,038
|
|
|
79,044
|
|
|
80,023
|
|
|
10,887
|
|
|||||
Accumulated deficit
|
(336,218
|
)
|
|
(361,426
|
)
|
|
(345,859
|
)
|
|
(327,849
|
)
|
|
(287,984
|
)
|
|||||
Total stockholders’ equity
|
275,422
|
|
|
131,387
|
|
|
131,330
|
|
|
133,027
|
|
|
160,817
|
|
|
(1)
|
We adopted Accounting Standards Codification (ASC) Subtopic 606
Revenue from Contracts with Customers
(ASC 606), effective January 1, 2018, using the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for the years ended December 31,
2017
,
2016
,
2015
and
2014
are accounted for in accordance with ASC 605.
|
(2)
|
Net income for the year ended December 31, 2014 includes a gain on arbitration settlement of $77.6 million, or $2.23 and $2.12 per basic and diluted share, respectively.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
HETLIOZ
®
(tasimelteon), a product for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), was approved by the U.S. Food and Drug Administration (FDA) in January 2014 and launched commercially in the U.S. in April 2014. In July 2015, the European Commission (EC) granted centralized marketing authorization with unified labeling for HETLIOZ
®
for the treatment of Non-24 in totally blind adults. HETLIOZ
®
was commercially launched in Germany in August 2016. HETLIOZ
®
has potential utility in a number of other circadian rhythm disorders and is presently in clinical development for the treatment of jet lag disorder, Smith-Magenis Syndrome (SMS) and Pediatric Non-24. An assessment of new HETLIOZ
®
clinical opportunities including the treatment of delayed sleep phase disorder and for sleep disorders in patients with neurodevelopmental disorders is ongoing.
|
•
|
Fanapt
®
(iloperidone), a product for the treatment of schizophrenia, the oral formulation of which was approved by the FDA in May 2009 and launched commercially in the U.S. by Novartis Pharma AG (Novartis) in January 2010. Novartis transferred all the U.S. and Canadian commercial rights to the Fanapt
®
franchise to us on December 31, 2014. Additionally, our distribution partners launched Fanapt
®
in Israel in 2014. Fanapt
®
has potential utility in a number of other disorders. Initial clinical work studying a long acting injectable (LAI) formulation of Fanapt
®
began in 2018. An assessment of new Fanapt
®
clinical opportunities including the treatment of bipolar depression is ongoing.
|
•
|
Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and the treatment of gastroparesis. An assessment of new tradipitant clinical opportunities including the treatment of motion sickness is ongoing.
|
•
|
VTR-297, a small molecule histone deacetylase (HDAC) inhibitor presently in clinical development for the treatment of hematologic malignancies.
|
•
|
Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. An early stage CFTR activator program is planned for the treatment of dry eye and ocular inflammation. In addition, an early stage CFTR inhibitor program is planned for the treatment of secretory diarrhea disorders, including cholera.
|
•
|
VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.
|
•
|
In December 2018, we announced positive results from a Phase II clinical study (2301) of tradipitant in gastroparesis. Gastroparesis patients treated with tradipitant demonstrated significant improvement in nausea and most of the core gastroparesis symptoms.
|
•
|
We expect to meet with the FDA to further define and confirm the path towards approval of tradipitant in the treatment of patients with gastroparesis, including the planned initiation of a Phase III clinical study in the second quarter of 2019.
|
•
|
Enrollment in the Phase III clinical study (EPIONE) of tradipitant in atopic dermatitis is ongoing. Results are expected in the first half of 2020. A second Phase III clinical study is expected to begin in the first quarter of 2020.
|
•
|
In January 2019, we initiated a Phase II clinical study of tradipitant in motion sickness. Study results are expected in the second quarter of 2019.
|
•
|
In December 2018, we announced positive results from a clinical study of HETLIOZ
®
in SMS. SMS patients treated with HETLIOZ
®
demonstrated significant improvement in overall sleep quality and overall total nighttime sleep duration.
|
•
|
We expect to meet with the FDA in the second quarter of 2019 to confirm the regulatory path forward for HETLIOZ
®
in the treatment of patients with SMS and expects to file a supplemental New Drug Application (sNDA) in the third quarter of 2019.
|
•
|
In December 2018, we announced that the FDA had accepted the HETLIOZ
®
sNDA for the treatment of jet lag disorder with a Prescription Drug User Fee Act target action date of August 16, 2019.
|
•
|
We plan in the third quarter of 2019 to initiate a Phase II clinical study of HETLIOZ
®
in delayed sleep phase disorder (DSPD) in patients who have a mutation in the CRY1 gene which is believed to be causative in a subset of patients with the disorder.
|
•
|
Enrollment is ongoing in a pharmacokinetic study for the LAI formulation of Fanapt
®
. A randomized clinical study of the LAI formulation in schizophrenia is planned to begin in 2019.
|
•
|
A randomized study of Fanapt
®
in bipolar disorder is planned to begin in 2019.
|
•
|
Enrollment is ongoing in a Phase I clinical study (1101) of VTR-297 in hematologic malignancies.
|
•
|
In April 2018, we submitted a protocol amendment to the FDA, proposing a 52-week open-label extension (OLE) period for patients who had completed the tradipitant Phase II clinical study (2301) in gastroparesis. In May 2018, based on feedback from the FDA, we amended the protocol limiting the duration of treatment in the 2301 study to a total of three months, while continuing to seek further dialogue with the FDA on extending the study duration to 52-weeks. As a part of this negotiation process, in September 2018, we submitted a new follow-on 52-week OLE protocol to the FDA (2302) for patients who had completed the 2301 study. While waiting for further feedback, no patients were ever enrolled in any study beyond 12 weeks.
|
•
|
On December 19, 2018, the FDA imposed a partial clinical hold (PCH) on the two proposed studies, stating that we are required first to conduct additional chronic toxicity studies in canines, monkeys or minipigs before allowing patients access in any clinical protocol beyond 12 weeks. The PCH was not based on any safety or efficacy data related to tradipitant. Rather, the FDA informed us that these additional toxicity studies are required by a guidance document.
|
•
|
On February 5, 2019, we filed a lawsuit against the FDA in the United States District Court for the District of Columbia, challenging the FDA’s legal authority to issue the PCH, and seeking an order to set it aside (see Part I, Item 3,
Legal Proceedings
of this annual report on Form 10-K for additional information).
|
•
|
We do not expect the PCH to have any material impact on our ongoing clinical studies in atopic dermatitis and motion sickness or the planned Phase III study in gastroparesis. At present, the PCH has not had any impact on the potential timing of an NDA filing or approval for these indications. We will continually reassess this situation as events unfold.
|
(in thousands)
|
Rebates &
Chargebacks
|
|
Discounts,
Returns
and Other
|
|
Total
|
||||||
Balances at December 31, 2015
|
$
|
33,423
|
|
|
$
|
3,557
|
|
|
$
|
36,980
|
|
Provision related to current period sales
|
56,133
|
|
|
19,451
|
|
|
75,584
|
|
|||
Adjustments for prior period sales
|
(1,842
|
)
|
|
790
|
|
|
(1,052
|
)
|
|||
Credits/payments made
|
(56,512
|
)
|
|
(17,340
|
)
|
|
(73,852
|
)
|
|||
Balances at December 31, 2016
|
31,202
|
|
|
6,458
|
|
|
37,660
|
|
|||
Provision related to current period sales
|
53,406
|
|
|
23,751
|
|
|
77,157
|
|
|||
Adjustments for prior period sales
|
(3,883
|
)
|
|
1,362
|
|
|
(2,521
|
)
|
|||
Credits/payments made
|
(60,496
|
)
|
|
(24,214
|
)
|
|
(84,710
|
)
|
|||
Balances at December 31, 2017
|
20,229
|
|
|
7,357
|
|
|
27,586
|
|
|||
Provision related to current period sales
|
59,317
|
|
|
23,796
|
|
|
83,113
|
|
|||
Adjustments for prior period sales
|
811
|
|
|
370
|
|
|
1,181
|
|
|||
Credits/payments made
|
(58,223
|
)
|
|
(21,823
|
)
|
|
(80,046
|
)
|
|||
Balances at December 31, 2018
|
$
|
22,134
|
|
|
$
|
9,700
|
|
|
$
|
31,834
|
|
|
Year Ended December 31,
|
|||||||||||||
(in thousands)
|
2018
|
|
2017
|
|
Net
Change
|
|
Percent
|
|||||||
HETLIOZ
®
product sales, net
|
$
|
115,835
|
|
|
$
|
89,978
|
|
|
$
|
25,857
|
|
|
29
|
%
|
Fanapt
®
product sales, net
|
77,283
|
|
|
75,105
|
|
|
2,178
|
|
|
3
|
%
|
|||
|
$
|
193,118
|
|
|
$
|
165,083
|
|
|
$
|
28,035
|
|
|
17
|
%
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Direct project costs (1)
|
|
|
|
||||
HETLIOZ
®
|
12,709
|
|
|
16,894
|
|
||
Fanapt
®
|
3,438
|
|
|
2,179
|
|
||
Tradipitant
|
16,978
|
|
|
11,645
|
|
||
VTR-297
|
2,190
|
|
|
1,978
|
|
||
CFTR
|
3,870
|
|
|
1,949
|
|
||
Other
|
619
|
|
|
425
|
|
||
|
39,804
|
|
|
35,070
|
|
||
Indirect project costs (1)
|
|
|
|
||||
Stock-based compensation
|
1,290
|
|
|
1,152
|
|
||
Other indirect overhead
|
2,500
|
|
|
2,325
|
|
||
|
3,790
|
|
|
3,477
|
|
||
Total research and development expense
|
$
|
43,594
|
|
|
$
|
38,547
|
|
(1)
|
We record direct costs, including personnel costs and related benefits, on a project-by-project basis. Many of our research and development costs are not attributable to any individual project because we share resources across several development projects. We record indirect costs that support a number of our research and development activities in the aggregate, including stock-based compensation.
|
|
Year Ended December 31,
|
|||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Net Change
|
|
Percent
|
|||||||
HETLIOZ
®
product sales, net
|
$
|
89,978
|
|
|
$
|
71,671
|
|
|
$
|
18,307
|
|
|
26
|
%
|
Fanapt
®
product sales, net
|
75,105
|
|
|
74,346
|
|
|
759
|
|
|
1
|
%
|
|||
|
$
|
165,083
|
|
|
$
|
146,017
|
|
|
$
|
19,066
|
|
|
13
|
%
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Direct project costs (1)
|
|
|
|
||||
HETLIOZ
®
|
$
|
16,894
|
|
|
$
|
12,658
|
|
Fanapt
®
|
2,179
|
|
|
2,598
|
|
||
Tradipitant
|
11,645
|
|
|
7,010
|
|
||
VTR-297
|
1,978
|
|
|
2,218
|
|
||
CFTR
|
1,949
|
|
|
—
|
|
||
Other
|
425
|
|
|
—
|
|
||
|
35,070
|
|
|
24,484
|
|
||
Indirect project costs (1)
|
|
|
|
||||
Stock-based compensation
|
1,152
|
|
|
2,087
|
|
||
Other indirect overhead
|
2,325
|
|
|
2,585
|
|
||
|
3,477
|
|
|
4,672
|
|
||
Total research & development expense
|
$
|
38,547
|
|
|
$
|
29,156
|
|
|
(1)
|
We record direct costs, including personnel costs and related benefits, on a project-by-project basis. Many of our research and development costs are not attributable to any individual project because we share resources across several development projects. We record indirect costs that support a number of our research and development activities in the aggregate, including stock-based compensation expense.
|
(in thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
61,005
|
|
|
$
|
33,627
|
|
Marketable securities:
|
|
|
|
||||
U.S. Treasury and government agencies
|
69,270
|
|
|
60,618
|
|
||
Corporate debt
|
105,910
|
|
|
49,168
|
|
||
Asset-backed securities
|
21,175
|
|
|
—
|
|
||
Total marketable securities
|
196,355
|
|
|
109,786
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
257,360
|
|
|
$
|
143,413
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
Non-cash charges
|
12,568
|
|
|
13,610
|
|
|
21,015
|
|
|||
Net change in operating assets and liabilities
|
(7,790
|
)
|
|
(26
|
)
|
|
(11,108
|
)
|
|||
Operating activities
|
29,986
|
|
|
(1,983
|
)
|
|
(8,103
|
)
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Acquisition of intangible asset
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(368
|
)
|
|
(1,664
|
)
|
|
(1,407
|
)
|
|||
Net purchases of marketable securities
|
(84,292
|
)
|
|
(8,567
|
)
|
|
(8,618
|
)
|
|||
Investing activities
|
(109,660
|
)
|
|
(10,231
|
)
|
|
(10,025
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Net proceeds from offering of common stock
|
100,870
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of employee stock options and other
|
6,256
|
|
|
5,251
|
|
|
7,751
|
|
|||
Financing activities
|
107,126
|
|
|
5,251
|
|
|
7,751
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(38
|
)
|
|
42
|
|
|
5
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
27,414
|
|
|
$
|
(6,921
|
)
|
|
$
|
(10,372
|
)
|
|
Cash payments due by year
|
||||||||||||||||||||||||||
(in thousands)
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||
Operating leases (1)
|
$
|
22,757
|
|
|
$
|
2,483
|
|
|
$
|
2,495
|
|
|
$
|
2,335
|
|
|
$
|
2,355
|
|
|
$
|
2,420
|
|
|
$
|
10,669
|
|
Milestone obligation (2) (3)
|
200
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase commitments (4)
|
7,315
|
|
|
5,122
|
|
|
847
|
|
|
890
|
|
|
456
|
|
|
—
|
|
|
—
|
|
|||||||
|
$
|
30,272
|
|
|
$
|
7,805
|
|
|
$
|
3,342
|
|
|
$
|
3,225
|
|
|
$
|
2,811
|
|
|
$
|
2,420
|
|
|
$
|
10,669
|
|
|
(1)
|
This table includes minimum annual future payments under operating leases and subleases for a total of 43,462 square feet of office space for our headquarters office at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. that generally expire in 2028, an operating lease for 2,880 square feet of office space for our European headquarters in London that has a noncancellable lease term ending in 2021, and 1,249 square feet of office space in Berlin under a short-term operating lease.
|
(2)
|
This table does not include potential future milestone obligations under our license agreement with Lilly for the exclusive rights to develop and commercialize tradipitant of $97.0 million, which consist of $2.0 million due upon the filing of the first marketing authorization for tradipitant in either the U.S. or the E.U., $10.0 million and $5.0 million for the first approval of a marketing authorization for tradipitant in the U.S. and the E.U., respectively, and up to $80.0 million for future sales milestones.
|
(3)
|
This table does not include potential future milestone obligations under our license agreement with the University of California San Francisco for the exclusive rights to develop and commercialize a portfolio of CFTR activators and inhibitors under which we could be obligated to make potential future milestone payments of up to $45.2 million, which includes $12.2 million for pre-NDA approval milestones and $33.0 million for future regulatory approval and sales milestones. Included in the $12.2 million in pre-NDA approval milestones is a $350,000 milestone due upon the conclusion of a Phase I study for each licensed product but not to exceed $1.1 million in total for the CFTR portfolio.
|
(4)
|
Purchase commitments include noncancellable purchase commitments for agreements longer than one year and primarily relate to commitments for advertising and data services. This table does not include various other long-term agreements entered into for services with other third party vendors due to the cancelable nature of the services. Additionally, this table does not include rebates, chargebacks or discounts recorded as liabilities at the time that product sales are recognized as revenue.
|
ITEM 7A.
|
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
|
|
|
Vanda Pharmaceuticals Inc.
|
||
|
|
|
|
|
February 19, 2019
|
|
By:
|
|
/s/ Mihael H. Polymeropoulos, M.D.
|
|
|
|
|
Mihael H. Polymeropoulos, M.D.
|
|
|
|
|
President and Chief Executive Officer
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Mihael H. Polymeropoulos, M.D.
|
|
President and Chief Executive Officer and Director (principal executive officer)
|
|
February 19, 2019
|
Mihael H. Polymeropoulos, M.D.
|
|
|
||
|
|
|
|
|
/s/ James P. Kelly
|
|
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
|
|
February 19, 2019
|
James P. Kelly
|
|
|
||
|
|
|
|
|
/s/ H. Thomas Watkins
|
|
Chairman of the Board and
Director
|
|
February 19, 2019
|
H. Thomas Watkins
|
|
|
||
|
|
|
|
|
/s/ Michael Cola
|
|
Director
|
|
February 19, 2019
|
Michael Cola
|
|
|
||
|
|
|
|
|
/s/ Richard W. Dugan
|
|
Director
|
|
February 19, 2019
|
Richard W. Dugan
|
|
|
||
|
|
|
|
|
/s/ Vincent J. Milano
|
|
Director
|
|
February 19, 2019
|
Vincent J. Milano
|
|
|
|
Page
|
(in thousands, except for share and per share amounts)
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
61,005
|
|
|
$
|
33,627
|
|
Marketable securities
|
196,355
|
|
|
109,786
|
|
||
Accounts receivable, net
|
28,780
|
|
|
17,601
|
|
||
Inventory
|
994
|
|
|
840
|
|
||
Prepaid expenses and other current assets
|
11,998
|
|
|
8,003
|
|
||
Total current assets
|
299,132
|
|
|
169,857
|
|
||
Property and equipment, net
|
4,417
|
|
|
5,306
|
|
||
Intangible assets, net
|
24,542
|
|
|
26,069
|
|
||
Non-current inventory and other
|
4,039
|
|
|
4,193
|
|
||
Total assets
|
$
|
332,130
|
|
|
$
|
205,425
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
21,584
|
|
|
$
|
20,335
|
|
Product revenue allowances
|
31,231
|
|
|
23,028
|
|
||
Milestone obligations under license agreements
|
200
|
|
|
27,000
|
|
||
Total current liabilities
|
53,015
|
|
|
70,363
|
|
||
Other non-current liabilities
|
3,693
|
|
|
3,675
|
|
||
Total liabilities
|
56,708
|
|
|
74,038
|
|
||
Commitments and contingencies (Notes 9 and 16)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 150,000,000 shares authorized; 52,477,593 and 44,938,133 shares issued and outstanding at December 31, 2018 and 2017, respectively
|
52
|
|
|
45
|
|
||
Additional paid-in capital
|
611,587
|
|
|
492,802
|
|
||
Accumulated other comprehensive income (loss)
|
1
|
|
|
(34
|
)
|
||
Accumulated deficit
|
(336,218
|
)
|
|
(361,426
|
)
|
||
Total stockholders’ equity
|
275,422
|
|
|
131,387
|
|
||
Total liabilities and stockholders’ equity
|
$
|
332,130
|
|
|
$
|
205,425
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands, except for share and per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net product sales
|
$
|
193,118
|
|
|
$
|
165,083
|
|
|
$
|
146,017
|
|
Total revenues
|
193,118
|
|
|
165,083
|
|
|
146,017
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of goods sold excluding amortization
|
20,508
|
|
|
17,848
|
|
|
24,712
|
|
|||
Research and development
|
43,594
|
|
|
38,547
|
|
|
29,156
|
|
|||
Selling, general and administrative
|
105,751
|
|
|
123,841
|
|
|
99,787
|
|
|||
Intangible asset amortization
|
1,527
|
|
|
1,750
|
|
|
10,933
|
|
|||
Total operating expenses
|
171,380
|
|
|
181,986
|
|
|
164,588
|
|
|||
Income (loss) from operations
|
21,738
|
|
|
(16,903
|
)
|
|
(18,571
|
)
|
|||
Other income
|
3,608
|
|
|
1,472
|
|
|
665
|
|
|||
Income (loss) before income taxes
|
25,346
|
|
|
(15,431
|
)
|
|
(17,906
|
)
|
|||
Provision for income taxes
|
138
|
|
|
136
|
|
|
104
|
|
|||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.50
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
Diluted
|
$
|
0.48
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
50,859,947
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|||
Diluted
|
53,045,257
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Net foreign currency translation gain (loss)
|
(22
|
)
|
|
30
|
|
|
(1
|
)
|
|||
Change in net unrealized gain (loss) on marketable securities
|
57
|
|
|
(122
|
)
|
|
20
|
|
|||
Tax provision on other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net of tax
|
35
|
|
|
(92
|
)
|
|
19
|
|
|||
Comprehensive income (loss)
|
$
|
25,243
|
|
|
$
|
(15,659
|
)
|
|
$
|
(17,991
|
)
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
|
|||||||||||||
(in thousands, except for share amounts)
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balances at December 31, 2015
|
42,815,291
|
|
|
$
|
43
|
|
|
$
|
460,794
|
|
|
$
|
39
|
|
|
$
|
(327,849
|
)
|
|
$
|
133,027
|
|
Issuance of common stock from the exercise of stock options and settlement of restricted stock units
|
1,185,323
|
|
|
1
|
|
|
7,750
|
|
|
—
|
|
|
—
|
|
|
7,751
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
8,543
|
|
|
—
|
|
|
—
|
|
|
8,543
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,010
|
)
|
|
(18,010
|
)
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|||||
Balances at December 31, 2016
|
44,000,614
|
|
|
44
|
|
|
477,087
|
|
|
58
|
|
|
(345,859
|
)
|
|
131,330
|
|
|||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units
|
937,519
|
|
|
1
|
|
|
5,250
|
|
|
—
|
|
|
—
|
|
|
5,251
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
10,465
|
|
|
—
|
|
|
—
|
|
|
10,465
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,567
|
)
|
|
(15,567
|
)
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
|
—
|
|
|
(92
|
)
|
|||||
Balances at December 31, 2017
|
44,938,133
|
|
|
45
|
|
|
492,802
|
|
|
(34
|
)
|
|
(361,426
|
)
|
|
131,387
|
|
|||||
Net proceeds from public offering of common stock
|
6,325,000
|
|
|
6
|
|
|
100,864
|
|
|
—
|
|
|
—
|
|
|
100,870
|
|
|||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units
|
1,214,460
|
|
|
1
|
|
|
6,255
|
|
|
—
|
|
|
—
|
|
|
6,256
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
11,666
|
|
|
—
|
|
|
—
|
|
|
11,666
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,208
|
|
|
25,208
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|||||
Balances at December 31, 2018
|
52,477,593
|
|
|
52
|
|
|
611,587
|
|
|
1
|
|
|
(336,218
|
)
|
|
275,422
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation of property and equipment
|
1,429
|
|
|
1,234
|
|
|
935
|
|
|||
Stock-based compensation
|
11,666
|
|
|
10,465
|
|
|
8,543
|
|
|||
Amortization of premiums (discounts) on marketable securities
|
(2,221
|
)
|
|
(426
|
)
|
|
62
|
|
|||
Intangible asset amortization
|
1,527
|
|
|
1,750
|
|
|
10,933
|
|
|||
Other non-cash adjustments, net
|
167
|
|
|
587
|
|
|
542
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(11,207
|
)
|
|
2,525
|
|
|
(4,298
|
)
|
|||
Prepaid expenses and other assets
|
(4,258
|
)
|
|
3,652
|
|
|
(6,159
|
)
|
|||
Inventory
|
70
|
|
|
(1,060
|
)
|
|
200
|
|
|||
Accounts payable and other liabilities
|
(618
|
)
|
|
5,953
|
|
|
575
|
|
|||
Product revenue allowances
|
8,223
|
|
|
(11,096
|
)
|
|
(1,426
|
)
|
|||
Net cash provided by (used in) operating activities
|
29,986
|
|
|
(1,983
|
)
|
|
(8,103
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisition of intangible asset
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(368
|
)
|
|
(1,664
|
)
|
|
(1,407
|
)
|
|||
Purchases of marketable securities
|
(282,395
|
)
|
|
(148,135
|
)
|
|
(165,405
|
)
|
|||
Maturities of marketable securities
|
198,103
|
|
|
139,568
|
|
|
156,787
|
|
|||
Net cash used in investing activities
|
(109,660
|
)
|
|
(10,231
|
)
|
|
(10,025
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Net proceeds from offering of common stock
|
100,870
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of employee stock options
|
6,256
|
|
|
5,251
|
|
|
7,751
|
|
|||
Net cash provided by financing activities
|
107,126
|
|
|
5,251
|
|
|
7,751
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(38
|
)
|
|
42
|
|
|
5
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
27,414
|
|
|
(6,921
|
)
|
|
(10,372
|
)
|
|||
Cash, cash equivalents and restricted cash
|
|
|
|
|
|
||||||
Beginning of year
|
34,335
|
|
|
41,256
|
|
|
51,628
|
|
|||
End of year
|
$
|
61,749
|
|
|
$
|
34,335
|
|
|
$
|
41,256
|
|
•
|
HETLIOZ
®
(tasimelteon), a product for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), was approved by the U.S. Food and Drug Administration (FDA) in January 2014 and launched commercially in the U.S. in April 2014. In July 2015, the European Commission (EC) granted centralized marketing authorization with unified labeling for HETLIOZ
®
for the treatment of Non-24 in totally blind adults. HETLIOZ
®
was commercially launched in Germany in August 2016. HETLIOZ
®
has potential utility in a number of other circadian rhythm disorders and is presently in clinical development for the treatment of jet lag disorder, Smith-Magenis Syndrome (SMS) and Pediatric Non-24. An assessment of new HETLIOZ
®
clinical opportunities including the treatment of delayed sleep phase disorder and for sleep disorders in patients with neurodevelopmental disorders is ongoing.
|
•
|
Fanapt
®
(iloperidone), a product for the treatment of schizophrenia, the oral formulation of which was approved by the FDA in May 2009 and launched commercially in the U.S. by Novartis Pharma AG (Novartis) in January 2010. Novartis transferred all the U.S. and Canadian commercial rights to the Fanapt
®
franchise to the Company on December 31, 2014. Additionally, the Company’s distribution partners launched Fanapt
®
in Israel in 2014. Fanapt
®
has potential utility in a number of other disorders. Initial clinical work studying a long acting injectable (LAI) formulation of Fanapt
®
began in 2018. An assessment of new Fanapt
®
clinical opportunities including the treatment of bipolar depression is ongoing.
|
•
|
Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and the treatment of gastroparesis. An assessment of new tradipitant clinical opportunities including the treatment of motion sickness is ongoing.
|
•
|
VTR-297, a small molecule histone deacetylase (HDAC) inhibitor presently in clinical development for the treatment of hematologic malignancies.
|
•
|
Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. An early stage CFTR activator program is planned for the treatment of dry eye and ocular inflammation. In addition, an early stage CFTR inhibitor program is planned for the treatment of secretory diarrhea disorders, including cholera.
|
•
|
VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.
|
|
Year Ended December 31,
|
||||||||||
(
in thousands
)
|
2018
|
|
2017
|
|
2016
|
||||||
HETLIOZ
®
product sales, net
|
$
|
115,835
|
|
|
$
|
89,978
|
|
|
$
|
71,671
|
|
Fanapt
®
product sales, net
|
77,283
|
|
|
75,105
|
|
|
74,346
|
|
|||
|
$
|
193,118
|
|
|
$
|
165,083
|
|
|
$
|
146,017
|
|
|
Year Ended December 31,
|
|||||||
Percent of Net Product Sales
|
2018
|
|
2017
|
|
2016
|
|||
Distributor A
|
37
|
%
|
|
32
|
%
|
|
23
|
%
|
Distributor B
|
17
|
%
|
|
10
|
%
|
|
1
|
%
|
Distributor C
|
14
|
%
|
|
15
|
%
|
|
16
|
%
|
Distributor D
|
12
|
%
|
|
12
|
%
|
|
15
|
%
|
Distributor E
|
12
|
%
|
|
15
|
%
|
|
16
|
%
|
Distributor F
|
5
|
%
|
|
11
|
%
|
|
16
|
%
|
|
December 31,
|
||||
Percent of Accounts Receivable, Net
|
2018
|
|
2017
|
||
Distributor A
|
30
|
%
|
|
28
|
%
|
Distributor B
|
15
|
%
|
|
9
|
%
|
Distributor C
|
20
|
%
|
|
18
|
%
|
Distributor D
|
16
|
%
|
|
21
|
%
|
Distributor E
|
13
|
%
|
|
10
|
%
|
(in thousands)
|
Reserve for Product Returns
|
||
Balances at December 31, 2015
|
$
|
1,059
|
|
Additions
|
2,507
|
|
|
Credits/payments
|
(486
|
)
|
|
Balances at December 31, 2016
|
3,080
|
|
|
Additions
|
5,978
|
|
|
Credits/payments
|
(4,939
|
)
|
|
Balances at December 31, 2017
|
4,119
|
|
|
Additions
|
2,684
|
|
|
Credits/payments
|
(1,616
|
)
|
|
Balances at December 31, 2018
|
$
|
5,187
|
|
December 31, 2018
(in thousands) |
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Market
Value
|
||||||||
U.S. Treasury and government agencies
|
$
|
69,275
|
|
|
$
|
12
|
|
|
$
|
(17
|
)
|
|
$
|
69,270
|
|
Corporate debt
|
105,897
|
|
|
38
|
|
|
(25
|
)
|
|
105,910
|
|
||||
Asset-backed securities
|
21,189
|
|
|
—
|
|
|
(14
|
)
|
|
21,175
|
|
||||
|
$
|
196,361
|
|
|
$
|
50
|
|
|
$
|
(56
|
)
|
|
$
|
196,355
|
|
December 31, 2017
(in thousands) |
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Market Value |
||||||||
U.S. Treasury and government agencies
|
$
|
60,681
|
|
|
$
|
—
|
|
|
$
|
(63
|
)
|
|
$
|
60,618
|
|
Corporate debt
|
49,168
|
|
|
12
|
|
|
(12
|
)
|
|
49,168
|
|
||||
|
$
|
109,849
|
|
|
$
|
12
|
|
|
$
|
(75
|
)
|
|
$
|
109,786
|
|
•
|
Level 1 — defined as observable inputs such as quoted prices in active markets
|
•
|
Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable
|
•
|
Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions
|
|
|
|
Fair Value Measurement as of December 31, 2017 Using
|
||||||||||||
(in thousands)
|
December 31,
2017 |
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
U.S. Treasury and government agencies
|
$
|
60,618
|
|
|
$
|
60,618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt
|
53,164
|
|
|
—
|
|
|
53,164
|
|
|
—
|
|
||||
|
$
|
113,782
|
|
|
$
|
60,618
|
|
|
$
|
53,164
|
|
|
$
|
—
|
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Current assets
|
|
|
|
||||
Work-in-process
|
$
|
48
|
|
|
$
|
80
|
|
Finished goods
|
946
|
|
|
760
|
|
||
|
$
|
994
|
|
|
$
|
840
|
|
Non-Current assets
|
|
|
|
||||
Raw materials
|
$
|
86
|
|
|
$
|
87
|
|
Work-in-process
|
2,290
|
|
|
2,821
|
|
||
Finished goods
|
516
|
|
|
408
|
|
||
|
$
|
2,892
|
|
|
$
|
3,316
|
|
(in thousands)
|
Estimated
Useful Life
(Years)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Computer and other equipment
|
3
|
|
$
|
3,642
|
|
|
$
|
3,342
|
|
Furniture and fixtures
|
5 - 7
|
|
1,488
|
|
|
1,929
|
|
||
Leasehold improvements
|
5 - 11
|
|
4,506
|
|
|
4,515
|
|
||
|
|
|
9,636
|
|
|
9,786
|
|
||
Accumulated depreciation and amortization
|
|
(5,219
|
)
|
|
(4,480
|
)
|
|||
|
|
|
$
|
4,417
|
|
|
$
|
5,306
|
|
|
|
|
December 31, 2018
|
||||||||||
(in thousands)
|
Estimated
Useful Life
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
HETLIOZ
®
|
February 2035
|
|
$
|
33,000
|
|
|
$
|
8,458
|
|
|
$
|
24,542
|
|
Fanapt
®
|
November 2016
|
|
27,941
|
|
|
27,941
|
|
|
—
|
|
|||
|
|
|
$
|
60,941
|
|
|
$
|
36,399
|
|
|
$
|
24,542
|
|
|
|
|
December 31, 2017
|
||||||||||
(in thousands)
|
Estimated
Useful Life
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
HETLIOZ
®
|
May 2034
|
|
$
|
33,000
|
|
|
$
|
6,931
|
|
|
$
|
26,069
|
|
Fanapt
®
|
November 2016
|
|
27,941
|
|
|
27,941
|
|
|
—
|
|
|||
|
|
|
$
|
60,941
|
|
|
$
|
34,872
|
|
|
$
|
26,069
|
|
(in thousands)
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||
HETLIOZ
®
|
$
|
24,542
|
|
|
$
|
1,518
|
|
|
$
|
1,518
|
|
|
$
|
1,518
|
|
|
$
|
1,518
|
|
|
$
|
1,518
|
|
|
$
|
16,952
|
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Compensation and employee benefits
|
$
|
6,363
|
|
|
$
|
5,323
|
|
Research and development expenses
|
5,593
|
|
|
4,663
|
|
||
Royalties payable
|
5,172
|
|
|
4,394
|
|
||
Consulting and other professional fees
|
2,924
|
|
|
3,961
|
|
||
Other
|
1,532
|
|
|
1,994
|
|
||
|
$
|
21,584
|
|
|
$
|
20,335
|
|
|
Cash Payments Due by Year
|
||||||||||||||||||||||||||
(in thousands)
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||
Operating leases
|
$
|
22,757
|
|
|
$
|
2,483
|
|
|
$
|
2,495
|
|
|
$
|
2,335
|
|
|
$
|
2,355
|
|
|
$
|
2,420
|
|
|
$
|
10,669
|
|
Milestone obligations
|
200
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase commitments
|
7,315
|
|
|
5,122
|
|
|
847
|
|
|
890
|
|
|
456
|
|
|
—
|
|
|
—
|
|
|||||||
|
$
|
30,272
|
|
|
$
|
7,805
|
|
|
$
|
3,342
|
|
|
$
|
3,225
|
|
|
$
|
2,811
|
|
|
$
|
2,420
|
|
|
$
|
10,669
|
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Foreign currency translation
|
$
|
7
|
|
|
$
|
29
|
|
Available-for-sale securities
|
(6
|
)
|
|
(63
|
)
|
||
|
$
|
1
|
|
|
$
|
(34
|
)
|
2006 and 2016 Plans
(in thousands, except for share and per share amounts)
|
Number of
Shares
|
|
Weighted Average
Exercise Price at Grant Date
|
|
Weighted Average
Remaining Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 31, 2015
|
6,252,448
|
|
|
$
|
11.87
|
|
|
6.16
|
|
$
|
7,498
|
|
Granted
|
866,011
|
|
|
8.43
|
|
|
|
|
|
|||
Forfeited
|
(392,700
|
)
|
|
11.23
|
|
|
|
|
|
|||
Expired
|
(279,766
|
)
|
|
17.38
|
|
|
|
|
|
|||
Exercised
|
(897,657
|
)
|
|
8.63
|
|
|
|
|
4,264
|
|
||
Outstanding at December 31, 2016
|
5,548,336
|
|
|
11.62
|
|
|
5.58
|
|
32,453
|
|
||
Granted
|
643,000
|
|
|
14.44
|
|
|
|
|
|
|||
Forfeited
|
(290,729
|
)
|
|
10.73
|
|
|
|
|
|
|||
Expired
|
(605,617
|
)
|
|
29.87
|
|
|
|
|
|
|||
Exercised
|
(575,206
|
)
|
|
9.13
|
|
|
|
|
3,140
|
|
||
Outstanding at December 31, 2017
|
4,719,784
|
|
|
10.03
|
|
|
5.63
|
|
24,421
|
|
||
Granted
|
567,500
|
|
|
19.22
|
|
|
|
|
|
|||
Forfeited
|
(232,527
|
)
|
|
13.99
|
|
|
|
|
|
|||
Exercised
|
(685,715
|
)
|
|
9.12
|
|
|
|
5,945
|
|
|||
Outstanding at December 31, 2018
|
4,369,042
|
|
|
11.15
|
|
5.28
|
|
65,438
|
|
|||
Exercisable at December 31, 2018
|
3,487,495
|
|
|
10.01
|
|
4.48
|
|
56,222
|
|
|||
Vested and expected to vest at December 31, 2018
|
4,248,680
|
|
|
10.96
|
|
5.18
|
|
64,466
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Research and development
|
$
|
1,290
|
|
|
$
|
1,152
|
|
|
$
|
2,087
|
|
Selling, general and administrative
|
10,376
|
|
|
9,313
|
|
|
6,456
|
|
|||
|
$
|
11,666
|
|
|
$
|
10,465
|
|
|
$
|
8,543
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Weighted average expected volatility
|
58
|
%
|
|
57
|
%
|
|
57
|
%
|
Weighted average expected term (years)
|
5.90
|
|
|
5.89
|
|
|
6.08
|
|
Weighted average risk-free rate
|
2.68
|
%
|
|
1.97
|
%
|
|
1.37
|
%
|
|
Year Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
53
|
|
|
65
|
|
|
66
|
|
|||
Foreign
|
99
|
|
|
(66
|
)
|
|
142
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
—
|
|
|
—
|
|
|||
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
(14
|
)
|
|
137
|
|
|
(104
|
)
|
|||
Provision for income taxes
|
$
|
138
|
|
|
$
|
136
|
|
|
$
|
104
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Federal tax at statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes
|
1.7
|
%
|
|
1.7
|
%
|
|
0.8
|
%
|
U.S. Tax Cuts and Job Act (1)
|
0.0
|
%
|
|
-262.6
|
%
|
|
0.0
|
%
|
Change in valuation allowance - U.S. Tax Cuts and Jobs Act
|
0.0
|
%
|
|
262.6
|
%
|
|
0.0
|
%
|
Other change in valuation allowance (2)
|
-16.4
|
%
|
|
-47.8
|
%
|
|
-38.4
|
%
|
Research and development credit
|
-9.1
|
%
|
|
9.0
|
%
|
|
3.8
|
%
|
Orphan drug credit
|
-2.7
|
%
|
|
6.3
|
%
|
|
7.6
|
%
|
Section 162(m) limitation
|
3.1
|
%
|
|
8.1
|
%
|
|
0.0
|
%
|
Other tax rate changes
|
-0.7
|
%
|
|
-2.6
|
%
|
|
3.9
|
%
|
Other changes in state deferred taxes (3)
|
5.9
|
%
|
|
5.1
|
%
|
|
0.0
|
%
|
Stock-based compensation
|
-3.9
|
%
|
|
-13.0
|
%
|
|
-12.5
|
%
|
Other items
|
1.6
|
%
|
|
-2.7
|
%
|
|
-0.8
|
%
|
Effective tax rate
|
0.5
|
%
|
|
-0.9
|
%
|
|
-0.6
|
%
|
|
(1)
|
Includes the effect of the Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate.
|
(2)
|
Reductions in 2018 valuation allowances are attributable to profitable 2018 U.S. results.
|
(3)
|
Includes adjustments to state deferred taxes based on changes to filing jurisdictions.
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
55,742
|
|
|
$
|
59,222
|
|
Stock-based compensation
|
5,202
|
|
|
5,383
|
|
||
Accrued and deferred expenses
|
2,096
|
|
|
1,967
|
|
||
Allowance for returns and uncollectable receivables
|
1,247
|
|
|
1,051
|
|
||
Research and development and orphan drug credit carryforwards
|
48,066
|
|
|
43,976
|
|
||
Intangible assets
|
—
|
|
|
3,745
|
|
||
Other
|
1,405
|
|
|
1,123
|
|
||
Total deferred tax assets
|
113,758
|
|
|
116,467
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(1,247
|
)
|
|
—
|
|
||
Other
|
(576
|
)
|
|
(386
|
)
|
||
Total deferred tax liabilities
|
(1,823
|
)
|
|
(386
|
)
|
||
Deferred tax assets, net
|
111,935
|
|
|
116,081
|
|
||
Valuation allowance
|
111,950
|
|
|
116,110
|
|
||
Net deferred tax assets (liabilities)
|
$
|
(15
|
)
|
|
$
|
(29
|
)
|
(in thousands)
|
Balance at
Beginning
of Year
|
|
Additions
|
|
Reductions
|
|
Balance at
End of
Year
|
||||||||
Year Ended:
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
$
|
116,110
|
|
|
$
|
4,036
|
|
|
$
|
(8,196
|
)
|
|
$
|
111,950
|
|
December 31, 2017
|
146,012
|
|
|
12,403
|
|
|
(42,305
|
)
|
|
116,110
|
|
||||
December 31, 2016
|
139,037
|
|
|
11,031
|
|
|
(4,056
|
)
|
|
146,012
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands, except for share and per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
25,208
|
|
|
$
|
(15,567
|
)
|
|
$
|
(18,010
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares outstanding, basic
|
50,859,947
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|||
Effect of dilutive securities
|
2,185,310
|
|
|
—
|
|
|
—
|
|
|||
Weighted average shares outstanding, diluted
|
53,045,257
|
|
|
44,735,146
|
|
|
43,449,441
|
|
|||
Net income (loss) per share, basic and diluted:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.50
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
Diluted
|
$
|
0.48
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.41
|
)
|
Antidilutive securities excluded from calculations of diluted net income (loss) per share
|
903,265
|
|
|
3,136,515
|
|
|
4,943,797
|
|
(in thousands, except for per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
43,592
|
|
|
$
|
47,350
|
|
|
$
|
49,135
|
|
|
$
|
53,041
|
|
Gross profit (1)
|
38,680
|
|
|
41,739
|
|
|
43,670
|
|
|
46,994
|
|
||||
Income from operations
|
2,442
|
|
|
3,913
|
|
|
6,233
|
|
|
9,150
|
|
||||
Net income
|
3,066
|
|
|
4,611
|
|
|
7,171
|
|
|
10,360
|
|
||||
Net income per share, basic
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.14
|
|
|
$
|
0.20
|
|
Net income per share, diluted
|
$
|
0.06
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.19
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
37,415
|
|
|
$
|
42,056
|
|
|
$
|
41,336
|
|
|
$
|
44,276
|
|
Gross profit (1)
|
32,958
|
|
|
37,095
|
|
|
36,379
|
|
|
39,053
|
|
||||
Loss from operations
|
(7,906
|
)
|
|
(1,924
|
)
|
|
(4,923
|
)
|
|
(2,150
|
)
|
||||
Net loss
|
(7,645
|
)
|
|
(1,534
|
)
|
|
(4,550
|
)
|
|
(1,838
|
)
|
||||
Net loss per share, basic and diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
(1)
|
Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization.
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1#
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3†
|
|
|
|
|
|
10.4†
|
|
|
|
|
|
10.5†
|
|
|
|
|
|
10.6†
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11#
|
|
|
|
|
|
10.12
|
|
Exhibit
Number
|
|
Description
|
|
|
|
10.13#
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16#
|
|
|
|
|
|
10.17#
|
|
|
|
|
|
10.18#
|
|
|
|
|
|
10.19#
|
|
|
|
|
|
10.20#
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22#
|
|
|
|
|
|
10.23†
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25†
|
|
|
|
|
|
10.26†
|
|
|
|
|
|
10.27†
|
|
|
|
|
|
10.28†
|
|
|
|
|
|
10.29†
|
|
|
|
|
|
1 Year Vanda Pharmaceuticals Chart |
1 Month Vanda Pharmaceuticals Chart |
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