Vanda (VNDA) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Chief Financial Officer - Kevin Moran
• President, Chief Executive Officer, and Chairman of the Board - Dr. Mihael Polymeropoulos
• General Counsel - Daniel McGuire

TAKEAWAYS

• Revenue -- $69.8 million, increasing 24% year over year and 38% compared to the second quarter of 2026, driven by growth in the Fanapt franchise and initial NEREUS sales.
• Fanapt Net Product Sales -- $38.8 million, representing a 24% increase from the third quarter of 2025 due to higher volume following the bipolar I disorder commercial expansion.
• HETLIOZ Net Product Sales -- $21.7 million, growing 21% versus the prior-year quarter, though results included $7 million in revenue from orders that arrived on July 1, 2026.
• PONVORY Net Product Sales -- $7.7 million, reflecting a 10% increase year over year while the company continues to dispute approximately $3 million in variable consideration.
• NEREUS Net Product Sales -- $1.6 million, an increase of 60% compared to the second quarter of 2026 following its commercial launch in May 2026.
• Total Operating Expenses -- $93.3 million, decreasing 18% compared to the second quarter of 2026 as key phase III clinical and launch preparation activities concluded.
• Net Loss -- $22.6 million, representing a significant improvement from the $62.5 million net loss reported in the second quarter of 2026.
• Cash Position -- $140.5 million, reflecting a decrease of $29.5 million since June 30, 2026, and $123.4 million since Dec. 31, 2025.
• Fanapt Total Prescriptions -- Up 25% year over year, with weekly prescriptions reaching an 11-year high of nearly 2,800 in late September 2026.
• Fanapt New-to-Brand Prescriptions -- Increased 18% compared to the third quarter of 2025, supported by a 35% increase in face-to-face sales calls during the first nine months of 2026.
• Full-Year Revenue Guidance -- Greater than $240 million, encompassing sales from the company's five commercial products.
• NEREUS Full-Year Revenue Outlook -- Expected to be less than $10 million for 2026 as the company focuses on raising awareness in the consumer market.
• Research and Development Expenses -- $27.6 million, increasing from $22.6 million in the prior-year quarter due to ongoing development programs for BYSANTI and VQW-765.
• Selling, General and Administrative Expenses -- $59.6 million, remaining relatively flat compared to $60.3 million in the third quarter of 2025.
• NEREUS GLP-1 Phase III Results -- Reduced the risk of vomiting by 80% for the most severe cases, defined as patients with more than 10 episodes in one week.
• BYSANTI MDD Study Enrollment -- Reached 55% of the 500-patient target, with top-line results anticipated in the first half of 2027.
• Inventory Levels -- Fanapt wholesaler inventory ended the quarter slightly below four weeks on hand, remaining consistent with historical ranges.
• HETLIOZ Nine-Month Revenue -- $43.2 million, a 21% decrease versus the first nine months of 2025 due to continued generic competition in the U.S.
• Nine-Month Operating Expenses -- $309.6 million, a 15% increase compared to $269.7 million for the same period in 2025.
• Fanapt Sales Force -- Approximately 300 representatives, an expansion completed in the second half of 2025 to increase prescriber frequency.

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RISKS

• Moran stated, "HETLIOZ net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S.," indicating ongoing pressure on the company's sleep disorder franchise.
• Moran noted that "it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025," reflecting high spending on commercial launches and manufacturing supplies.
• Polymeropoulos indicated that recruitment for the iloperidone long-acting injectable program was "extremely slow," leading the company to reconsider the program's direction and explore a PK bridging proposal.

SUMMARY

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) reported revenue growth driven by volume increases in its antipsychotic franchise and early contributions from its newest commercial product launch. Management indicated a transition toward cost moderation as several high-intensity clinical and manufacturing preparation phases reach conclusion. The company is advancing multiple regulatory filings, including a Biologics License Application for Quimilza with a December 2026 PDUFA date and planned supplemental applications for NEREUS and HETLIOZ. Financial objectives for the year include a focus on sustainable long-term value through the expansion of the commercial portfolio to potentially six approved products by year-end.

• BYSANTI is expected to launch in the fourth quarter of 2026 with a more favorable gross-to-net profile than Fanapt, with CFO Moran noting expected gross-to-net in the mid-30% range.
• Management is preparing commercial supplies for Quimilza with the goal of entering the generalized pustular psoriasis market in the first half of 2027, following a Dec. 12, 2026, PDUFA date.
• The company reported that NEREUS sales are highly sensitive to promotion, with CEO Polymeropoulos noting that order volume in the direct-to-consumer channel closely follows pulses in commercial advertising.
• Vanda plans to submit a supplemental NDA for NEREUS for the prevention of vomiting associated with GLP-1 receptor agonist therapy, targeting patients starting or titrating their treatment.
• Polymeropoulos described the expected application of NEREUS for GLP-1 patients as an incidental preventive use during titration rather than a chronic dosing regimen.
• A rare administrative hearing regarding HETLIOZ for the treatment of jet lag disorder is scheduled to take place before an administrative law judge from Dec. 14 to Dec. 18, 2026.
• Management confirmed that the Montgomery-Åsberg Depression Rating Scale is the primary endpoint for the ongoing BYSANTI study in major depressive disorder.

INDUSTRY GLOSSARY

• Fanapt (iloperidone): An atypical antipsychotic approved for the treatment of schizophrenia and bipolar I disorder.
• HETLIOZ (tasimelteon): A melatonin receptor agonist indicated for non-24-hour sleep-wake disorder and Smith-Magenis Syndrome.
• PONVORY (ponesimod): A sphingosine 1-phosphate receptor modulator used for the treatment of relapsing forms of multiple sclerosis.
• NEREUS (tradipitant): A neurokinin-1 receptor antagonist launched for motion sickness and in development for other indications.
• BYSANTI (milsaperidone): The active metabolite of iloperidone, approved for schizophrenia and bipolar I disorder.
• Quimilza (imsidolimab): An IL-36 receptor monoclonal antibody under review for generalized pustular psoriasis.
• GLP-1: Glucagon-like peptide-1 receptor agonists, a class of drugs used for diabetes and weight loss often associated with gastrointestinal side effects.
• GPP: Generalized pustular psoriasis, a rare and severe form of psoriasis.
• DSWPD: Delayed sleep-wake phase disorder, a circadian rhythm sleep-wake disorder.
• TRx: Total prescriptions, representing the total number of prescriptions filled during a specific period.
• NBRx: New-to-brand prescriptions, representing patients starting a specific medication for the first time.
• PDUFA: The Prescription Drug User Fee Act, which sets the target deadline for the FDA to complete its review of a drug application.
• sNDA: Supplemental New Drug Application, a request to change a previously approved NDA, such as adding a new indication.
• BLA: Biologics License Application, a request for permission to introduce a biologic product into interstate commerce.

Full Conference Call Transcript

Operator: Ladies and gentlemen, welcome to the Q3 2026 Vanda Pharmaceuticals Inc. earnings call. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, we will conduct a question-and-answer session. If you would like to ask a question at that time, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, please press star one again. I will now turn the call over to Vanda Chief Financial Officer, Kevin Moran.

Kevin Moran: Thanks, Colby. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third quarter 2026 performance. Our third quarter 2026 results were released this afternoon and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today's call is Dr. Mihael Polymeropoulos, our President, Chief Executive Officer, and Chairman of the Board, and Daniel McGuire, our General Counsel. Following my introductory remarks, Mihael will update you on our ongoing activities. I will then comment on our financial results before we open the lines for your questions.

Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances, and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, risk factors, and management's discussion and analysis of financial condition and results of operations, sections of our most recent annual report on Form 10-K, as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings with the SEC, which are available on the SEC's EDGAR system and on our website.

We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events, or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Dr. Mihael Polymeropoulos.

Mihael Polymeropoulos: Thank you, Kevin. Good afternoon, everyone. Thank you for joining us today for Vanda Pharmaceuticals' third quarter 2026 earnings conference call. We are pleased with the strong revenue growth in the third quarter, increasing 24% year-over-year, driven by continued Fanapt momentum and the early contribution from our newest commercial launch, while operating expenses decreased 18% compared to the second quarter as key phase III and launch preparation activities conclude.

Looking ahead, with the commercial launch of BYSANTI expected in fourth quarter, the Quimilza BLA under FDA review with a December PDUFA date, and positive phase III results supporting potential expansions for NEREUS in GLP-1 induced vomiting and HETLIOZ in delayed sleep-wake phase disorder, we are focused on further moderating costs and driving revenue growth from our current portfolio and planned launches to support sustainable long-term value. Some of our financial highlights on operating expenses. During 2025 and 2026, we have advanced multiple phase III programs, continued our commercial activities for Fanapt, HETLIOZ, and PONVORY, and prepared for the commercial launches, including manufacturing commercial supplies of NEREUS, BYSANTI, and Quimilza.

These activities resulted in significantly increased operating expenses in 2025 and 2026. As certain of these activities began concluding in the third quarter of 2026, operating expenses have decreased, and we expect operating expenses to decrease further in future quarters as the remainder of these activities conclude. Some key commercial highlights. Fanapt saw continued strong momentum in Q3 2026, with total prescriptions, TRx, up 25% and new-to-brand prescriptions, NBRx, up 18% versus Q3 2025. Since commercial expansion following the approval of bipolar disorder, Fanapt has seen significant growth, with TRx up 72% and NBRx up 306% versus the second quarter of 2024.

BYSANTI received FDA approval for the treatment of bipolar I disorder and schizophrenia in the first quarter of this year, 2026, and is expected to launch in the fourth quarter of 2026. BYSANTI is protected by data exclusivity through February 20, 2031, and multiple patents, the latest of which expires on May 31, 2044. NEREUS was launched commercially in the U.S. in the second quarter of 2026 with a direct-to-consumer offering via the web portal nereus.us. Sales force promotion began in the third quarter of 2026. During the third quarter of 2026, the NEREUS launch showed strong growth in both total prescriptions and unique prescribers as compared to the second quarter of 2026. Key regulatory and clinical developments.

Recent and upcoming milestones. In October 2026, we announced positive results from the phase III clinical study VP-VLY-686-3601 of NEREUS for the prevention of vomiting associated with GLP-1 receptor agonist therapy. We intend to discuss the results with the FDA and plan to submit a supplemental new drug application, sNDA, seeking approval of NEREUS for the prevention of vomiting associated with GLP-1 receptor agonist therapy. In September of 2026, we announced positive top-line results from the pivotal phase III study of HETLIOZ in adults with delayed sleep-wake phase disorder. We intend to discuss this data with the FDA and to submit a supplemental NDA seeking approval of HETLIOZ for DSWPD.

If approved, HETLIOZ would be the first FDA-approved medicine indicated for this condition. The biologics license application, BLA, for Quimilza in generalized pustular psoriasis, or GPP, is under review by the FDA with a Prescription Drug User Fee Act, PDUFA, target action date of December 12, 2026. The results of the pivotal clinical study were published in the April 28, 2026, issue of the NEJM Evidence. The phase III study of BYSANTI as a once-daily adjunctive treatment for major depressive disorder, MDD, is ongoing, with results expected in the first half of 2027. The study is enrolling patients in 54 sites in the U.S. and Europe and has enrolled 55% of the 500-patient enrollment target.

The primary endpoint of the study is the change from baseline to week six of the Montgomery-Åsberg Depression Rating Scale, MADRS, comparing iloperidone and placebo. Secondary endpoints include Clinical Global Impression Severity, CGIS, and Clinical Global Impression Change, CGIC. Finally, on ongoing regulatory proceedings. We continue to progress the FDA formal hearing regarding HETLIOZ for the treatment of jet lag disorder. The proceeding, a rare administrative hearing process granted after the D.C. Circuit set aside the FDA's prior refusal to approve the application, is advancing according to schedule and is expected to culminate in a five-day hearing before the administrative law judge from December 14, 2026, to December 18, 2026.

We continue to pursue our legal challenge to the FDA's final order refusing to hold a hearing or to approve our sNDA for HETLIOZ in the treatment of insomnia. Following oral argument before the U.S. Court of Appeals for the D.C. Circuit in September 2026, the matter is awaiting decision. We continue to pursue our challenge to the FDA's final order refusing to hold a hearing or to approve the company's NDA for NEREUS in gastroparesis. Briefing is currently underway before the D.C. Circuit and is due to be completed in mid-November. With that, I'll turn now to Kevin to discuss our financial results. Kevin?

Kevin Moran: Thank you, Mihael. I'll begin by summarizing our financial results for the first nine months of 2026 before turning to discuss the third quarter of 2026. Total revenues for the first nine months of 2026 were $172.1 million, an 8% increase compared to $158.9 million for the same period in 2025. The first nine months of 2026 include increased Fanapt revenue as a result of the continued commercialization efforts for Fanapt in bipolar I disorder, increased PONVORY revenue, and revenue contribution from the newly launched NEREUS, partially offset by decreased HETLIOZ revenue as a result of generic competition. Let me break this down by product.

Fanapt net product sales were $104.3 million for the first nine months of 2026, a 24% increase compared to $84.1 million in the same period in 2025. The increase to net product sales relative to the first nine months of 2025 was attributable to an increase in volume. Turning to HETLIOZ. HETLIOZ net product sales were $43.2 million for the first nine months of 2026, a 21% decrease compared to $55 million for the same period in 2025. The decrease was attributable to a decrease in volume as a result of continued generic competition in the U.S.

Of note, for the third quarter of 2026, HETLIOZ continued to be the leading product from a market share perspective, despite generic competition now for nearly four years. Turning next to PONVORY. PONVORY net product sales were $21.9 million for the first nine months of 2026, an 11% increase compared to $19.8 million for the same period in 2025. Of note, an amount of variable consideration related to PONVORY net product sales is subject to dispute, of which approximately $3 million was recognized for the three months ended December 31, 2024. Finally, turning to NEREUS. NEREUS net product sales were $2.6 million for the first nine months of 2026.

As a reminder, NEREUS launched commercially in the U.S. in May 2026 with the direct-to-consumer offering via the web portal nereus.us. Sales force promotion using our existing sales force commenced during the third quarter of 2026. For the first nine months of 2026, Vanda recorded a net loss of $133.6 million, compared to a net loss of $79.3 million for the same period in 2025. The net loss for the first nine months of 2026 included income tax expense of $0.4 million as compared to an income tax benefit of $21.4 million for the same period in 2025.

As a reminder, the company recorded a one-time non-cash income tax charge in the fourth quarter of 2025 to establish a valuation allowance against all of Vanda's deferred tax assets. Tax expense is expected to be nominal going forward until such time that a valuation allowance is no longer required. Operating expenses for the first nine months of 2026 were $309.6 million, compared to $269.7 million for the same period in 2025. The $39.9 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the continued commercialization efforts for Fanapt in bipolar I disorder, the NEREUS commercial launch, and the upcoming BYSANTI commercial launch.

Higher R&D expenses primarily related to our VQW-765, BYSANTI, and various other development programs, partially offset by lower expenses on our Quimilza or imsidolimab program. The first nine months of 2025 included an upfront payment to Anaptys for the exclusive global license agreement for the development and commercialization of Quimilza. On the commercial side, starting in 2024, we commenced a host of activities as a result of the commercial launches of Fanapt in bipolar I disorder and PONVORY in multiple sclerosis, and more recently, the launch of NEREUS and upcoming launch of BYSANTI. We maintain strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships, with the goal of supporting long-term market leadership and future commercial launches.

Vanda's cash equivalents, and marketable securities, referred to as cash, as of September 30, 2026, was $140.5 million, representing a decrease of $123.4 million compared to December 31, 2025, and a decrease of $29.5 million compared to June 30, 2026.

The change in cash during the third quarter of 2026 as compared to the second quarter of 2026 was driven by the net loss in the third quarter of 2026, excluding the impact of non-cash charges such as stock-based compensation and amortization of our intangible and right of use assets, as well as timing of cash received from customers for revenue and related payments of rebates to payers, and the timing of cash paid to third parties for services related to operating expenses and inventory production.

The decrease as compared to the balance as of December 31, 2025, was also driven by the one-time milestone payment of $10 million made to Eli Lilly in the first quarter of 2026 for the approval of NEREUS in the U.S. As a reminder, payments made in advance of production are capitalized as prepaid expense. Commercial products are capitalized as inventory on our balance sheet after production, while pre-commercial products are generally expensed as incurred as R&D costs. The timing of production of pre-commercial products, including the Quimilza program, may result in future variability of our R&D expense and cash payments. Turning now to our quarterly results.

Total revenues were $69.8 million for the third quarter of 2026, a 24% increase compared to $56.3 million for the third quarter of 2025, and a 38% increase compared to $50.5 million in the second quarter of 2026. The increases as compared to the third quarter of 2025 and the second quarter of 2026 were primarily due to an increase in HETLIOZ revenue as a result of the timing of purchases by specialty pharmacy customers during the year, the timing of shipments to customers at the end of the second quarter of 2026, and growth in Fanapt revenue as a result of the bipolar I commercial launch. Let me break this down now by product.

Fanapt net product sales were $38.8 million for the third quarter of 2026, a 24% increase compared to $31.2 million in the third quarter of 2025, and an 8% increase compared to $36 million in the second quarter of 2026. The increases to net product sales relative to the third quarter of 2025 and second quarter of 2026 were primarily attributable to increases in volume. Fanapt total prescriptions, or TRx, as reported by IQVIA Xponent in the third quarter of 2026, increased by 25% compared to the third quarter of 2025, and 6% compared to the second quarter of 2026. Historically, Fanapt inventory at wholesalers has ranged between three and four weeks on hand, as calculated based off trailing demand.

As of the end of the third quarter of 2026, Fanapt inventory at wholesalers was slightly below four weeks on hand, which was lower than the level of inventory weeks on hand as of the second quarter of 2026 and the fourth quarter of 2025, but generally consistent with the historic range. Turning to HETLIOZ. HETLIOZ net product sales were $21.7 million for the third quarter of 2026, a 21% increase compared to $18 million in the third quarter of 2025, and a 289% increase compared to $5.6 million in the second quarter of 2026.

The increase in net product sales relative to the third quarter of 2025 and the second quarter of 2026 was primarily attributable to an increase in volume due to the timing of purchases by specialty pharmacy customers during the year and shipments to customers at the end of the second quarter of 2026. HETLIOZ net product sales in the third quarter of 2026 includes orders totaling approximately $7 million in revenue that were shipped on June 29, 2026 and arrived on July 1, 2026. These orders were recognized as revenue in the third quarter of 2026. HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period.

During the third quarter of 2026, there was stocking of inventory by certain of our specialty pharmacy customers. Going forward, HETLIOZ net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers, or may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. Turning to PONVORY.

PONVORY net product sales were $7.7 million for the third quarter of 2026, an increase of 10% compared to $7 million in the third quarter of 2025, and a decrease of 2% compared to $7.9 million in the second quarter of 2026. The specialty distributor and specialty pharmacy inventory on hand levels during these periods were in line with normal ranges. Additionally, as we have previously discussed, an amount of variable consideration related to PONVORY net product sales is subject to dispute, of which approximately $3 million was recognized for the three months ended December 31, 2024. Finally, turning to NEREUS.

NEREUS net product sales were $1.6 million for the third quarter of 2026, an increase of 60% compared to $1 million in the second quarter of 2026. As previously mentioned, NEREUS launched commercially in the U.S. in the second quarter of 2026 with a direct-to-consumer offering via the web portal, nereus.us. Sales force promotion using our existing sales force commenced during the third quarter of 2026. NEREUS is sold using both the traditional wholesaler channel and also directly through the nereus.us website. Revenue recognized during the third quarter of 2026 primarily related to units sold through the wholesaler channel. During the second quarter of 2026, there was an initial stocking of NEREUS by wholesalers.

During the second and third quarters of 2026, we constrained NEREUS net product sales to an amount not probable of significant revenue reversal. The constrained revenue relates to the uncertainties of patient demand and product returns related to the elevated levels of inventory on hand at wholesalers. For the third quarter of 2026, Vanda recorded a net loss of $22.6 million, compared to a net loss of $22.6 million for the third quarter of 2025 and compared to a net loss of $62.5 million for the second quarter of 2026.

The significant improvement of nearly $40 million in net loss between the second and third quarters of 2026 is primarily the result of an increase in total revenues of $19.3 million, combined with a decrease in total operating expenses of $21 million. The net loss for the third quarter of 2026 includes income tax expense of $0.2 million, as compared to an income tax benefit of $5.8 million for the third quarter of 2025 and compared to an income tax expense of $0.1 million in the second quarter of 2026. Operating expenses in the third quarter of 2026 were $93.3 million, compared to $87.5 million in the third quarter of 2025 and $114.3 million in the second quarter of 2026.

The $5.8 million increase between the third quarter of 2025 and the third quarter of 2026 was primarily driven by higher R&D expenses related to our various development programs and flat SG&A expenses, including higher spending on Vanda's commercial products offset by lower legal expenses. The $21 million decrease between the second and third quarter of 2026 was primarily driven by lower R&D expenses, primarily related to our VQW-765, NEREUS, Fanapt, and other development programs, and lower SG&A expenses related to spending on Vanda's commercial products and lower legal expenses.

With regards to the launches of Fanapt in bipolar I disorder and PONVORY in multiple sclerosis, as I've mentioned, the launches were initiated in 2024, and we continue to enhance our commercial infrastructure through the third quarter of 2026, with the impact of these commercial efforts contributing to revenue growth for these products in 2026 and expected to continue to contribute revenue growth for these products in coming periods. We have already seen significant growth in our commercial activities.

Several lead indicators suggest a strong and continued market response to our commercial activities related to Fanapt for bipolar I disorder, including total prescriptions, or TRx, increased by approximately 25% in the third quarter of 2026 as compared to the third quarter of 2025. In September of 2026, weekly TRx for Fanapt reached an 11-year high of nearly 2,800 prescriptions for the week ending September 25, 2026. New patient starts, as reflected by NBRx, increased by 18% in the third quarter of 2026 as compared to the third quarter of 2025.

Since the commercial expansion following the approval of bipolar I disorder, Fanapt has seen significant growth, with TRx up over 70% and NBRx up over 300% as compared to the second quarter of 2024. Of particular note, Fanapt was one of the fastest-growing branded atypical antipsychotics in the market throughout 2025 and into the third quarter of 2026 based on several prescription metrics. Our Fanapt sales force expanded to approximately 300 representatives in the second half of 2025. This expansion has allowed us to significantly increase our reach and frequency with prescribers.

To that end, the number of face-to-face calls in the first nine months of 2026 were 35% higher than the number of face-to-face calls in the first nine months of 2025. Fanapt performance remains the focus of Vanda's commercial initiatives and encourages us to continue to invest in this differentiated medicine and the franchise-extending launch of BYSANTI, expected in the fourth quarter of 2026.

Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ, PONVORY, and now NEREUS already commercially available, and with BYSANTI recently approved for bipolar I disorder and schizophrenia, and a Biologics License Application or BLA for Quimilza now under review by the FDA, Vanda could have six approved products by the end of this year. Turning now to our financial guidance. Vanda is updating its full year 2026 total revenue guidance and expects to achieve the following financial objectives in 2026. Total revenues from Fanapt, BYSANTI, HETLIOZ, PONVORY, and NEREUS of greater than $240 million.

Additionally, note that NEREUS launched commercially in the U.S. in May of 2026 with the direct-to-consumer offering via the web portal, nereus.us. Sales force promotion using our existing sales force commenced in the third quarter. The NEREUS launch showed strong growth in both total prescriptions and unique prescribers in Q3 2026 as compared to Q2 2026, with both increasing by over 100%. We are at the very beginning of the commercial launch of NEREUS in a consumer market with a broad base of prescribers.

While we believe the NEREUS opportunity in motion sickness is significant, the initial growth is likely to progress slower as we continue to raise awareness of NEREUS, and therefore it is likely that revenue will be less than $10 million for the full year of 2026. As previously communicated, Vanda is not providing 2026 cash guidance at this time. However, it is likely that Vanda's 2026 cash burn will be greater than the cash burn in 2025. During 2025 and 2026, we have advanced multiple phase III programs, continued execution on the commercialization of Fanapt and PONVORY, and prepared for the commercial launches, including manufacturing commercial supplies of NEREUS, BYSANTI, and Quimilza.

These activities resulted in significantly increased operating expenses in 2025 and 2026. As certain of these activities began concluding in the third quarter of 2026, operating expenses have decreased by 18% to $93.3 million from $114.3 million in Q2 of 2026. Vanda expects operating expenses to decrease further in future quarterly periods as the remainder of these activities conclude. With that, I'll now turn the call back to Mihael.

Mihael Polymeropoulos: Thank you very much, Kevin. At this point, we'll be happy to answer your questions.

Operator: Thank you. We will now begin the question-and-answer session. Again, if you would like to ask a question, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, simply press star one again. Our first question comes from Ram Selvaraju with H.C. Wainwright & Co. Your line is open. Ram, your line is open.

Ram Selvaraju: Thanks so much for taking my questions. I just wanted to ask in particular about how quickly you expect Quimilza launch to be affected, assuming timely approval on December 12th. Also, I wanted to check in to see what the status is with progress on the BYSANTI MDD clinical development pivotal program, as well as if you can offer us any additional updates regarding the iloperidone LAI program. Thank you.

Mihael Polymeropoulos: Yeah. Thank you, Ram. On Quimilza launch preparation, we are working very hard on manufacturing commercial supplies as we speak, in anticipation of good results by the FDA on December 12th. That means that we could be ready with commercial product a few months after December. It's hard at this time to exactly estimate, but certainly our goal in preparation is to be on the market in the first half of 2027. Your second question was on progress on MDD. The study has been enrolling now, for about 18 months, in over 50 sites, in the U.S. and Europe. More than 50% of the study is now enrolled. To remind you, the enrollment target is 500 patients.

We've seen enrollment vary from month to month, but we're confident with additional sites we'll be able to meet our enrollment goals, which is to complete in the first half of 2027. Third question was on iloperidone LAI. As we have discussed previously, recruitment in that program was extremely slow, and also a discovery that in this placebo-controlled relapse prevention study, the relapse rates were extremely small. Something has been recently observed in other similar clinical programs, which let us reconsider the direction of that program. We're considering potentially a PK bridging proposal to the FDA, to be able to bring the program forward using existing PK data, both in oral and in the Long-Acting Injectable.

This is developing, and we're going to have more of that in the future.

Ram Selvaraju: Can you just clarify what factors at this juncture that are known, if any, might impact whether or not ultimately, the sNDA for tradipitant in prevention of GLP-1 receptor agonist-associated nausea and vomiting could be accorded priority review? Thank you.

Mihael Polymeropoulos: Yeah, it's hard to gauge into the FDA's priority review. What is, I would say a positive is that this is a large unmet medical need. We see very significant effect sizes, as we reported a couple of days ago, that in the most severe cases, that people who vomited more than 10x in the week following the injection, the reduction in that risk rate was by 80%, so highly meaningful. It would be the first adjunctive treatment for a very significant unmet medical need in a large category that affects millions of Americans. But it's hard to speculate on priority review.

In terms of next steps, first things first, we'll be preparing for the supplemental NDA, including meeting with the FDA to make sure we have a package that would be acceptable.

Ram Selvaraju: Thank you very much.

Mihael Polymeropoulos: Sure. Thank you.

Operator: Your next question comes from the line of Les Sulewski with Oppenheimer & Co. Your line is open.

Les Sulewski: Thank you for taking my questions, and congrats on the progress. Just a few from me here. On Fanapt, new-to-brand prescriptions were up 18% versus, I believe, 32% in Q2. Any sort of read-through from the strong second quarter? On BYSANTI, the commercial supply is expected in Q3 and now launch is in Q4. What was the hold up on that, and is there any product in the channel today? Then just to go back to NEREUS. Now that the sales force promotion has started, what are you seeing on the refill rates and pills per fill data? Then separately, on the GLP-1 front, in phase III, you reported the vomiting cut by 27% versus roughly half in phase II.

I guess what explains that gap? And will the sNDA filing rest on the primary endpoint or the post hoc extreme vomiting data? Thank you.

Mihael Polymeropoulos: Fantastic. I am trying to remember all the questions. So I will start with the last one on NEREUS. You are correct to observe that in the primary endpoint, which was any vomiting. Any single episode of vomiting in the week after the semaglutide injection counted as vomiting. That is the same primary endpoint that we had in the prior study. And the relative rate of reduction was 27% in this study and 50% in the smaller phase II study. And we believe that is due to variability, both with sites and patients in a larger study.

And it is a phenomenon that you may be quite familiar with, that phase II studies that are positive usually find their way into phase III, and therefore there is a very well-understood regression to the mean. In the detail behind that, though, you may have noticed that the placebo rates for the phase III and phase II study were almost identical at 58%. So what actually differed was the rate in phase II study for drug was 29%, versus 42%, 43% in the phase III. And this is something that motivated us to try to understand more of the stability of this number.

And as we sought to explore what happens in severe cases, you see actually the change to narrow between the phase II and the phase III study. And for the extreme vomiters, people with more than 10 vomiting episodes in the week following semaglutide injection, we saw almost identical rates between the phase III, 81%, and phase II, 83%. So we believe that the 27% and 50% is an instability of the effect due to site and patient variability. But nonetheless, the result remains very robust and reproducible. I think you asked about the filing. Yes, the primary endpoint is the declared primary endpoint, and we will be supporting it with a phase II study.

We are supporting it with the pooled analysis, but also the key secondary endpoint, which also succeeded, which was rate of vomiting in people with, at the same time, severe nausea of greater equal to 3 in a 5-point scale. There again, the results confirmed the phase II findings. Kevin, what was the other question?

Kevin Moran: Yeah. On the NBRx side, back to the first one there, Les. Yep, you are right that we did see a lower rate of NBRx growth in the third quarter relative to the rate that we saw in the second quarter, which is to be expected as you continue to go on that the growth rates themselves will be smaller because it is off of a larger base. The encouraging part there is that we continue to see strong NBRx growth year-over-year and very strong receptivity in the market to our reps and the Fanapt product being added to prescribers and brought to new patients.

It also provides a nice bridge for us as we, to segue to your next question, look to launch BYSANTI by the end of the year. Timing there, why do not I turn to Mihael for a quick update on that?

Mihael Polymeropoulos: Yeah. The timing depends actually on completion of our commercial manufacturing supplies. We have about 10 different strengths, which is a lot of work. They are almost ready to go. We are very hopeful that we are going to be out in the market, as we said, in Q4, and hopefully before the end of Q4. Everything is being manufactured and will be ready to go, finishing the last touches.

Kevin Moran: Les, I think the last one was around what we have seen on refill and quantity fill on NEREUS. As you can imagine, early in the launch year, we are seeing variability. You see some fills with a small number of pills, some fills with almost a full bottle of fills. Still seeing variability across the space there and starting to see refills. Again, it has been a short period of time, relatively speaking, but we have seen refills coming through as well. Small numbers early in the launch, but both are encouraging in terms of the activity.

Mihael Polymeropoulos: It may be worth adding that through nereus.us, we also have a direct line with patients and they can actually comment on their experiences. They have been enthusiastic of life-changing experiences based on the effects of NEREUS. We are very encouraged by that. What we are learning during this very early stage of the launch is that the product is very promotionally sensitive. We see that by pulsing commercial ads and seeing the receptivity and in fact, orders in the nereus.us being in close timing proximity. What we are trying to understand and optimize is the level of promotional awareness support and the return on investment.

All early signs are encouraging, both in that channel and the retail channel, which is more of organic growth. Just to underscore a little bit about the prescriber base. In the retail channel, we can actually characterize who are the prescribers. By specialty, the vast majority are in primary care, which would be expected for this indication. There is a spattering of other specialties, including neurology, psychiatry, gastroenterology, and ENT which actually underscores something very significant about the commercial launch, that consumer awareness is the driving factor while this large and distributed number of specialties of prescribers is not going to be something addressable with a regular sales force tactic.

Les Sulewski: Very helpful. Thank you both.

Mihael Polymeropoulos: Sure.

Operator: Your next question comes from the line of Madison El-Saadi with B. Riley Securities. Your line is open.

Madison El-Saadi: Hi. Congrats on the progress and thanks for taking our question. A couple from us. One's a bit of a follow-up. Do you expect the GLP-1 label would restrict NEREUS to the titration phase or permit more of a chronic dosing throughout maintenance? Is it possible that the sNDA positioning NEREUS to support starting at the target GLP-1 dose versus at the titration dose? Secondly, if you could give a sense of the user profile of those patients that are currently using NEREUS. I know it's very early in the launch, but just curious what these patients look like, if it's one particular segment. Afterwards, a follow-up please. Thanks.

Mihael Polymeropoulos: Yeah. Thank you, Madison. So, a bit on how we envision NEREUS in a GLP-1 prevention of vomiting label. What we have studied is the acute administration of NEREUS a few days prior to a semaglutide injection in an otherwise naive candidate patient, and then follow on with an additional seven days of administration post-injection. This data, we believe supports the prevention of vomiting induced by GLP-1, period. How we envision this to be used, has to do with the natural history of the GI tolerability. As you may know, the vast majority of GI complaints with GLP-1 agonists is around the injection period. That is right after the injection period and the peak of concentration.

Then, the GI tolerability improves and symptoms dissipate. We have now in these two controlled studies, for the first time to our knowledge, we have exactly timed that tolerability issue. I think we gave a glimpse of that in our press release, where we characterized that the majority of vomiting episodes occur on days one and two. So that beyond day three, placebo has a minimal number of episodes as well as drug does. Which would actually confirm and suggest that the GI tolerability issues are short-lived after an injection.

There's a different open question which we think we have the answer, which is, we used a highly emetogenic challenge of 1 mg subcutaneous to ensure a large number of episodes, so we can actually be able to see the effect of the drug. This is a method that has been effectively used in other similar programs with highly emetogenic chemotherapeutics, as you're aware. The question is, how does the drug work at 0.5 mg or even at the starting dose of 0.25 mg of semaglutide? Two answers there. The logical answer is that if a drug overcomes a bigger challenge, it should overcome a lower challenge.

In this study, though, we were able to answer the question by observation as well. What we, again, gave a glimpse at the press release was that an exploration of pharmacokinetic relationship between semaglutide levels and drug response supports that the drug will have a significant relative risk reduction effect from placebo at lower doses as well. The reason we say that is because the natural spread of semaglutide blood concentrations after administration of 1 mg allowed us the opportunity to build a PK/PD, Pharmacokinetic/Pharmacodynamic model, where actually we see the level of reduction at low exposures and higher exposures to be approximately the same. So, I think we're answering the questions of how the drug can be labeled.

But you had an additional, I think, nuanced question is, who is going to be the target patient? We believe the target patient is someone who is starting or restarting semaglutide or any other GLP-1 agonist or one that is titrating. The use of the drug will be short and used as a preventive a few days before the initiation, restart, or higher titration, and then for a few days right after. So not a chronic use, but rather an incidental use for the prevention of vomiting induced by GLP-1.

If you think about how is that prescriber decision to be made, a patient that may have experienced semaglutide GI tolerabilities at a lower level and is about to escalate because it's necessary to escalate, that would be a very good candidate. Another candidate would be someone who escalated, experienced GI tolerability issues, discontinued. Now they may get a chance to come back to the drug. So there are two populations that we think are going to be the most likely candidates. Now, I forgot the other question.

Madison El-Saadi: No, that's very helpful. That was it on those. Then, if I may, a follow-up regarding Fanapt and BYSANTI. Could you remind us if you expect to break out BYSANTI and Fanapt revenue once it launches? Now that we have some clarity on the launch, do you have a sense of how much of the Fanapt to BYSANTI transition could occur by, say, mid-2027? Thanks.

Mihael Polymeropoulos: Yeah. I pass this on to Kevin. I know that we have not guided yet on this. I would say, in modeling, given the economics and gross to net economics of BYSANTI, which are far more favorable than Fanapt, even a smaller portion of the 100% will be highly significant in that switch. Now, of course, we're going to be very focused on patient preference, physician preference, and payer dynamics as we will communicate. But Kevin?

Kevin Moran: Yeah. So maybe just a couple additional pieces of information there, Madison. First, on the question around breaking it out between Fanapt and BYSANTI. My expectation is that we will break it out between the two products in our disclosures. Obviously, we haven't had to do that yet, but that's my expectation as we move forward. Then on your second question around the expectations around potentially the split in the business. As Mihael mentioned, we haven't guided that. There are obviously a number of sensitivities that we look at in terms of looking at that timeline. But to Mihael's point, the gross to net is significantly favorable on BYSANTI relative to Fanapt.

The Fanapt gross net that we've spoken about is in the neighborhood of about 50%, whereas our expectation on BYSANTI is that it'll be more in the mid-30s. But the other thing I would tell you is the class, and Fanapt as part of that class presents itself as a good candidate for this type of strategy, because there's a number of new patients starting on a monthly basis. Right? So, in terms of the opportunity there to bring patients to HETLIOZ treatment, given the number of NBRx's that we talk about with Fanapt and in the class, it presents a good opportunity to bring patients onto HETLIOZ treatment as we head into next year and throughout next year.

Mihael Polymeropoulos: Yeah. And just to add, as we're anxiously getting ready to launch HETLIOZ, at the same time, we will be patient with the switch, because of the very clear dynamics of prescription lengths. Quite a few prescriptions in this domain are for 90 days, and therefore, you would not expect a switch, but in a gradual manner for these longer scripts. So I would say, before we can start seeing the first quantifiable results of that switch, it may be three to four months after the launch.

Madison El-Saadi: Understood. Very helpful, guys. Thanks a lot.

Mihael Polymeropoulos: Sure. Thank you.

Operator: Your next question comes from Olivia Saunders with Cantor Fitzgerald. Your line is open.

Olivia Saunders: Hi, good afternoon. Thank you for the question. A quick follow-up on BYSANTI. Just given the timing of BYSANTI's upcoming launch relative to Fanapt's LOE, how are you guys thinking about the pace of conversion? Any thoughts on the proportion of patients that you think you'll be able to transition in 2027, and whether there are maybe some ways to accelerate that transition so that you can get the most out of that launch? I don't know if there are maybe physician incentives to switch over or anything else. Then I've got a quick follow-up on tradipitant.

Mihael Polymeropoulos: Yeah, certainly. The way we see the, as you say, transition, this is more of a transition of the company's emphasis, as we recognize benefits of the new drug, especially for potential indications, the developing of Long-Acting Injectable formulations. It is important to underscore something that Kevin said. The majority of patients who go and start on a new antipsychotic brand are patients who are stopping another drug and moving on to another one. They're not new patients in the market. With that, Fanapt is not immune to that turnover. Maybe it is a little more sticky than others, but it's not immune to that turnover. Therefore, our emphasis is dual.

To both capture new patient starts that are switching from other antipsychotics, but also, of course, offer BYSANTI as a good solution for people who are seeing good results on Fanapt. You're going to see that the NBRx or the new starts will be a mixture of new starts and Fanapt transition. We would like to have all of them and more. As I was answering Madison's question, it's going to take three to four months to start seeing this pickup. Kevin.

Kevin Moran: I think that's right. Olivia, the only thing I would also just kind of spell out with the timeline is, given we're in the fourth quarter of 2026 and the LOE on Fanapt is towards the end of 2027, we have a nice runway here where we're going to have both products being emphasized, as Mihael mentioned, for the transition.

Olivia Saunders: Okay. Got it. On NEREUS or tradipitant, how are you guys thinking about the price point as you look to next year's label expansion into GLP-1 patients? Is this predominantly going to be a similar cash pay model? Are you expecting more of a reimbursement footprint here? Is there anything that you can do from a pricing standpoint just to try to help drive initial adoption?

Mihael Polymeropoulos: First of all, it is a little early. We need to get our data ready, get the application, early RAM us for priority review. Absent that, it's going to be a 12-month review or so after application. So we're talking about most probably beyond late 2027. A bit on pricing, to remind everybody that in the motion sickness market, we have priced the drug at a WAC of $255, which is the retail price, and a 67% discount for cash paying customers under certain restrictions, government, et cetera, on our website, nereus.us. In terms of the philosophy of pricing for a GLP-1 indication, the most important thing for us is access.

We develop drugs so people who need them can have them. So that is going to be the overarching philosophy as we think pricing or pricing flexibility. But we believe that NEREUS is priced now well, and we begin to recognize that both from the cash pay consumer, but also the early elements of payer coverage. It is early to see that full map, but we do see payer coverage on the retail channel.

Olivia Saunders: Okay. Thank you very much, Mihael.

Mihael Polymeropoulos: Thanks, Olivia.

Operator: Your next question comes from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hi. Thank you for the updates. Really quickly, two questions. First one on BYSANTI. For MDD, if it succeeds in first half 2027, do you intend to file on a single phase III, or do you plan to run another phase III? Secondly, on GPP, can you remind us the patient TAM and the pricing power you could have? For that application, have you guys entered into final labeling discussions? Thank you.

Mihael Polymeropoulos: Yeah. On the MDD, we certainly hope that the study will be positive with a good and persuasive magnitude of response. Based on that and the history of the related drug, Fanapt, the active metabolite is BYSANTI, and their bioequivalence, the approval of Fanapt and BYSANTI for schizophrenia and bipolar disorder and the large body of evidence of approximately 18 years that we will file successfully with one MDD study. Just to remind that this was exactly our conviction on the bipolar data, and the FDA agreed with that. Your question was on Quimilza and GPP. That is, as you know, an emerging market. They're telling me I have to fix something here, but okay, we're good.

As such, awareness around the recognition and diagnosis of the disorder is increasing given the availability of another drug for the last couple of years. It is hard really to estimate. Different epidemiological surveys may suggest there are several thousand patients in the U.S. Very few of them are currently under treatment. We think Quimilza will offer a good solution based on the strong and robust data on reduction of acute flares, but also the prevention of additional flares, and therefore a maintenance indication.

Remind you that we feel that the backbone of an IgG4 antibody is a differentiating feature that predictably leads to a smaller percent of anti-drug antibodies and therefore some of it would be blocking antibodies, where with an IgG4 backbone, you expect less, and we see less, and therefore no surprises on the continuation of effect of a drug. The launch plan is being formulated, and we're engaging with a lot of the key opinion leaders across the U.S. and the world in the academic centers where most of these patients are resolved diagnostically.

Andrew Tsai: Thank you.

Mihael Polymeropoulos: Thank you, Andrew.

Operator: With no further questions in queue, I would like to turn the conference back over to Vanda's management for closing remarks.

Mihael Polymeropoulos: Thank you all for joining us. Good night.

Operator: This concludes today's earnings call. You may now disconnect.

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