Vanda Pharmaceuticals - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 revenue was $56.3M, up 18% YoY and 7% QoQ, driven by Fanapt strength; diluted EPS was -$0.38, better than consensus EPS of -$0.45, but revenue missed the $58.7M consensus, reflecting Helios variability and inventory dynamics.*
• Guidance narrowed: total 2025 revenues cut to $210–$230M (from $210–$250M) and year-end cash lowered to $260–$290M (from $280–$320M), citing increased SG&A and R&D investments to support commercial and pipeline execution.
• Commercial KPIs inflected: Fanapt TRx +35% YoY and NBRx +147% YoY; sales force expanded to ~300 reps, supporting sequential script growth and QoQ revenue acceleration.
• Near-term regulatory catalysts: tradipitant PDUFA 12/30/2025; Bysanti PDUFA 2/21/2026; HETLIOZ jet lag sNDA re-review by 1/7/2026 under a collaborative FDA framework—key stock-reaction drivers into 4Q–1Q.

What Went Well and What Went Wrong

What Went Well

• Fanapt outperformance: “total net product sales reaching $56.3 million, up 18% year-over-year, led by a 31% increase in Fanapt sales and 35% growth in prescriptions”.
• Commercial execution: “face-to-face calls in the third quarter of 2025 were more than 20% higher than… Q2 2025, and more than twice… Q3 2024,” with a ~300-rep sales force post Q2 expansion.
• Pipeline momentum and FDA framework: tradipitant and Bysanti under active NDA reviews; imsidolimab BLA submission targeted for Q4; collaborative path with FDA to resolve HETLIOZ jet lag and tradipitant hold disputes.

What Went Wrong

• Profitability pressure: net loss widened to -$22.6M vs -$5.3M YoY; operating expenses rose to $87.5M (from $58.7M), driven by SG&A and R&D tied to launches and imsidolimab license costs.
• Helios revenue variability and potential declines: inventory stocking swings at specialty pharmacies/distributors; management cautions future periods may reflect lower unit sales due to elevated inventory reduction and ongoing generic pressure.
• Cash draw: cash, equivalents, and marketable securities fell by $31.8M QoQ to $293.8M, reflecting net losses and timing of working-capital cash receipts/payments.

Transcript

Operator (participant)

Hello and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Vanda Pharmaceuticals Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. Now, I would like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Kevin Moran (SVP, CFO, and Treasurer)

Thank you, Mark. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third quarter 2025 performance. Our third quarter 2025 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 Tim Williams, 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 (Founder, Chairman, CEO, and President)

Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's third quarter 2025 results. This quarter reflects strong commercial execution, with total net product sales reaching $56.3 million, up 18% year over year, led by a 31% increase in Fanapt sales and 35% growth in prescriptions. HETLIOZ continues to deliver stable performance with $18 million in Q3 sales. We're particularly encouraged by our advanced pipeline with multiple near-term regulatory milestones. The tradipitant NDA for motion sickness is under FDA review, with a PDUFA target action date of December 30, 2025. The Bysanti NDA for bipolar I disorder and schizophrenia is also under FDA review, with a PDUFA target action date of February 21, 2026, and the anticipated Q4 submission of the imsidolimab BLA for generalized pustular psoriasis.

We're also investing strategically in our commercial infrastructure, including increased brand visibility through targeted sponsorships, with the goal of supporting long-term market leadership and future commercial launches. We believe that these milestones, combined with our collaborative framework with the FDA, will position Vanda for sustained growth and expanded therapeutic impact in 2026 and beyond. On commercial updates, during the third quarter, our Fanapt sales force further expanded their efforts, and we continued our broad awareness campaign. Fanapt revenue increased by 31% compared to the same period in the prior year, driven by the launch of the bipolar I indication. Fanapt is now promoted in the U.S. across all 50 states, with a dedicated sales force of approximately 300 representatives.

With the expansion of the sales force that was largely completed during the second quarter, we observed a significant increase in activity, with the total number of calls growing by more than 20% as compared to the second quarter of 2025 and growing by over 100% compared to Q3 of 2024. Since the bipolar launch, demand as measured by total prescriptions (TRx), new prescriptions (NRx), and new-to-brand prescriptions (BRx) reached new highs in the third quarter. The commercialization of Fanapt is also supported by a broad speakers program operating across the country that educates prescribers on the profile of Fanapt and how to use it. We're excited by the progress our commercial organization has made as we continue to support the commercialization of Fanapt, aiming for further growth in the coming periods.

Total revenue from our three commercial branded products, Fanapt, HETLIOZ, and PONVORY, reached $158.9 million in the first nine months of 2025. HETLIOZ continues to be the market share leader despite the availability of three generic products, a testament to the brand loyalty of our patient customers over the last 11 years. We're continuing to build out and train our dedicated PONVORY sales force team addressing prescribers for multiple sclerosis. In the last two quarters, we saw an increase in underlying patient demand as we intensified our consumer and prescriber awareness programs. During the first nine months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY.

We maintained 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. Key regulatory clinical updates. Collaborative framework for resolution of disputes with the FDA. On October 1, 2025, we announced the collaborative framework with the U.S. Food and Drug Administration for the resolution of certain disputes regarding HETLIOZ and tradipitant. Pursuant to the agreement, the FDA will conduct an expedited re-review of the partial clinical hold, preventing long-term clinical status of tradipitant for the treatment of motion sickness by November 26, 2025. The FDA will continue its review of Vanda's New Drug Application for this indication with the existing Prescription Drug User Fee Act target action date of December 30, 2025.

The FDA will conduct an expedited re-review of Vanda's supplemental New Drug Application S-NDA for HETLIOZ for the treatment of Jet Lag disorder by January 7, 2026, including consideration of alternative or narrowed indications focusing on the sleep-related aspects of Jet Lag disorder. Bysanti. The NDA for Bysanti for the acute treatment of bipolar I disorder and the treatment of schizophrenia is under review by the FDA with a PDUFA target action date of February 21, 2026. If approved, exclusivity for Bysanti, including pending patent applications, could extend in the 2040s. Bysanti is a new chemical entity which was initially identified as an active metabolite of allopurinol. Vanda discovered that milsapiridone, when administered orally, quickly interconverts to allopurinol. In clinical studies, milsapiridone and allopurinol have been shown to be bioequivalent at both low and high doses, administered both in single and multiple dose studies.

The results of these clinical studies were presented in late May at the 2025 American Society of Clinical Psychopharmacology annual meeting in Scottsdale, Arizona. The Bysanti Phase III clinical study for use as once-daily adjunctive treatment for major depressive disorder is ongoing and enrolling patients. Results are expected in 2026. We plan to randomize approximately 500 patients to do the clinical study across approximately 50 sites. As the number of patients randomized increases, we'll be in a better place to estimate the time to completion. Tradipitant. The NDA for tradipitant for motion sickness is under review by the FDA with a PDUFA target action date of December 30, 2025. In the fourth quarter of 2024, Vanda initiated a clinical trial to study tradipitant in the prevention of vomiting induced by GLP-1 analog, Wegovy, semaglutide. The trial is now complete, and results are expected in the fourth quarter of 2025.

Allopurinol long-acting injectable. The Phase III study of the long-acting injectable formulation of allopurinol in the treatment of schizophrenia and relapse prevention is ongoing and enrolling patients. We plan to randomize approximately 400 patients into the clinical study across approximately 60 sites. In general, we have seen similar clinical studies run by other organizations, and they take around two years to complete. As the number of patients randomized increases, we'll be in a better place to estimate completion of that study. A clinical study of the long-acting injectable formulation of allopurinol in people with treatment-resistant hypertension is now ongoing, and Vanda plans to begin enrolling patients soon. Imsidolimab. A BLA for imsidolimab in the treatment of the rare orphan disorder, generalized pustular psoriasis, is expected to be submitted to the FDA in the fourth quarter of 2025. PONVORY.

Investigational new drug applications for PONVORY in the treatments of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024. Vanda has initiated the psoriasis study and plans to initiate the study in ulcerative colitis in early 2026. Early stage program highlights. VKW-765 and alpha-7 nicotinic acetylcholine receptor bisialogist are currently in clinical development for the treatment of acute performance anxiety in social situations. Vanda has initiated the Phase III program and is enrolling patients. We plan to randomize approximately 500 patients into the clinical study across approximately 30 sites, and as the number of patients of randomization increases, we'll be able to estimate time to completion. The IND for VCA894A in the treatment of sarcomatous disease, axonal type 2S or CMT2S, and inherited peripheral neuropathy for which there is no available treatment was accepted by the FDA in 2024.

Previously, in 2023, VCA894A was granted orphan drug designation for the same indication. The Phase I clinical study for VCA894A enrolled the patient who has already received several doses of VCA894A. With that, I'll turn now to Kevin to discuss our financial results. Kevin.

Kevin Moran (SVP, CFO, and Treasurer)

Thank you, Mihael. I will begin by summarizing our financial results for the first nine months of 2025 before turning to discuss the third quarter of 2025. Total revenues for the first nine months of 2025 were $158.9 million, a 9% increase compared to $145.6 million for the same period in 2024. The increase was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. Fanapt net product sales were $84.1 million for the first nine months of 2025, a 24% increase compared to $67.6 million in the same period in 2024. This increase to net product sales relative to the first nine months of 2024 was attributable to an increase in volume, partially offset by a decrease in price net of deductions.

Turning to HETLIOZ, HETLIOZ net product sales were $55 million for the first nine months of 2025, a 3% decrease compared to $56.6 million in the same period in 2024. The decrease to net product sales relative to the first nine months of 2024 was attributable to a decrease in volume. Of note, through the third quarter of 2025, HETLIOZ continues to retain the majority of market share despite generic competition for now over two and a half years. Finally, turning to PONVORY. PONVORY net product sales were $19.8 million for the first nine months of 2025, a 7% decrease compared to $21.3 million in the same period in 2024. The decrease in net product sales relative to the first nine months of 2024 was attributable to a decrease in price net of deductions.

For the first nine months of 2025, Vanda recorded a net loss of $79.3 million compared to a net loss of $14 million for the same period in 2024. The net loss for the first nine months of 2025 included an income tax benefit of $21.4 million as compared to an income tax benefit of $2.4 million for the same period in 2024. Operating expenses for the first nine months of 2025 were $269.7 million compared to $176 million for the same period in 2024.

The $93.7 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, and higher R&D expenses primarily related to the exclusive global license agreement with Anaptys for the development and commercialization of Imsidolimab, which was entered into during the first quarter of 2025. During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt and bipolar I disorder and PONVORY and multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. During the first nine months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY.

We maintained 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, cash equivalents, and marketable securities, referred to as cash, as of September 30, 2025, was $293.8 million, representing a decrease of $80.9 million compared to December 31, 2024, and a decrease of $31.8 million compared to June 30, 2025. The change in cash during the third quarter of 2025 as compared to the second quarter of 2025 was driven by the net loss in the third quarter of 2025, as well as timing of cash received from customers for revenue and related payments of rebates to payers, as well as the timing of cash paid to third parties for services related to operating expenses. Turning now to our quarterly results.

Total revenues were $56.3 million for the third quarter of 2025, an 18% increase compared to $47.7 million for the third quarter of 2024, and a 7% increase compared to $52.6 million in the second quarter of 2025. The increase as compared to the third quarter of 2024 was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. The increase as compared to the second quarter of 2025 was due to both growth in Fanapt revenue as a result of the bipolar launch and higher HETLIOZ revenue. Let me now break this down by product. Fanapt net product sales were $31.2 million for the third quarter of 2025, a 31% increase compared to $23.9 million in the third quarter of 2024, and a 7% increase compared to $29.3 million in the second quarter of 2025.

Fanapt total prescriptions, or TRx, as reported by IQVIA Exponent in the third quarter of 2025, increased by 35% compared to the third quarter of 2024 and 11% compared to the second quarter of 2025. Fanapt new patient starts in the third quarter of 2025, as reflected by new-to-brand prescriptions, or NBRx, increased by 147% compared to the third quarter of 2024 and by 14% compared to the second quarter of 2025. The increase in Fanapt revenue between the third quarter of 2025 and the third quarter of 2024 was primarily attributable to an increase in volume, partially offset by a decrease in price net of deductions. The increase in Fanapt revenue between the third quarter of 2025 and the second quarter of 2025 was attributable to an increase in volume, partially offset by a decrease in price net of deductions.

These increases in volume were primarily driven by increased total prescription demand, as well as increased wholesaler inventory levels. 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 2025, Fanapt inventory at wholesalers was just above four weeks on hand, which was consistent with the level of inventory weeks on hand as of the fourth quarter of 2024, but slightly above the historic range. Turning to HETLIOZ. HETLIOZ net product sales were $18 million for the third quarter of 2025, a 1% increase compared to $17.9 million in the third quarter of 2024, and an 11% increase compared to $16.2 million in the second quarter of 2025.

The increase in net product sales relative to the third quarter of 2024 was primarily attributable to an increase in volume sold, almost entirely offset by a decrease in price net of deductions. The increase in net product sales relative to the second quarter of 2025 was primarily attributable to an increase in price net of deductions, partially offset by a decrease in volume. HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. 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.

Additionally, the company constrained HETLIOZ net product sales for the first nine months of 2025 and for the years ended December 31, 2024, and 2023 to an amount not probable of significant revenue reversal. As a result, HETLIOZ net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved. Finally, turning to PONVORY. PONVORY net product sales were $7 million for the third quarter of 2025, an increase of 20% compared to $5.9 million in the third quarter of 2024, and a decrease of 1% compared to $7.1 million in the second quarter of 2025. The increase in net product sales as compared to the third quarter of 2024 was attributable to an increase in volume.

The decrease in net product sales as compared to the second quarter of 2025 was attributable to a decrease in volume sold, almost entirely offset by an increase in price net of deductions. During the second quarter of 2025, there was an increase in net product sales as compared to the first quarter of 2025, which was attributable to an increase in volume sold, a portion of which was driven by increased underlying patient demand, albeit modest, but was also impacted by increased specialty pharmacy and specialty distributor inventory on hand levels above the historic range. The inventory on hand levels remained elevated as of the end of the third quarter of 2025, but had decreased closer to the historic range. As a reminder, we completed the acquisition of the U.S.

And Canadian rights to PONVORY in December 2023 and initiated the commercial launch of PONVORY in the third quarter of 2024. As such, this represents the fourth full quarter of PONVORY revenue recognition since the initiation of commercial launch activities and significant progress in diversifying our product mix with innovative and value-generating products. 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. For the third quarter of 2025, Vanda recorded a net loss of $22.6 million compared to a net loss of $5.3 million for the third quarter of 2024.

From an income tax perspective, the net loss for the third quarter of 2025 included an income tax benefit of $5.8 million as compared to an income tax benefit of $0.9 million for the third quarter of 2024. On the tax side, the company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence. The company generated a pre-tax loss for the quarter ended September 30, 2025. If the company continues to generate pre-tax losses and/or if the company's projections indicate pre-tax losses in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in the future. An increase in the valuation allowance would result in a non-cash income tax expense during the period of change.

The current deferred tax assets reflected in the balance sheet as of September 30, 2025, amount to $103.1 million. If it is determined that the company needs a valuation allowance against its deferred tax assets in a future period, the non-cash income tax expense recorded during the period of change could be equal to the significant majority of the $103.1 million balance. Operating expenses in the third quarter of 2025 were $87.5 million compared to $58.7 million in the third quarter of 2024. The $28.9 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt and bipolar I disorder and PONVORY and multiple sclerosis and higher R&D expenses.

During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt and bipolar I disorder and PONVORY and multiple sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. During the first nine months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY. We maintained 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.

With regards to the launches of Fanapt and bipolar I disorder and PONVORY and multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we expect to continue the build-out of our commercial infrastructure with the impact of these commercial efforts expected to contribute to revenue growth in 2025 and beyond. We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong initial and continued market response to our commercial launch of Fanapt for bipolar disorder, including new patient starts as reflected by NBRx, increasing by 147% in the third quarter of 2025 as compared to the third quarter of 2024. In the third quarter of 2025 as compared to the third quarter of 2024, total prescriptions, or TRx, increased by approximately 35%.

Of particular note, Fanapt was one of the fastest growing atypical antipsychotics in the market through the first nine months of 2025 based on several prescription metrics. Our Fanapt sales force size continues to expand. As of the end of the third quarter of 2024, our sales force numbered approximately 150 representatives, and currently, we have approximately 300 representatives following our additional expansion during the second quarter of 2025. These expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, face-to-face calls in the third quarter of 2025 were more than 20% higher than face-to-face calls in the second quarter of 2025, and face-to-face calls in the third quarter of 2025 were more than twice the face-to-face calls in the third quarter of 2024.

In addition to our Fanapt sales force, we have established a specialty sales force to market PONVORY to neurology prescribers around the country. We have grown this sales force to approximately 50 representatives in the third quarter of 2025. Of particular note, PONVORY underlying patient demand increased, albeit modestly, for the second consecutive quarter. Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ, and PONVORY already commercially available, and with HETLIOZ for Jet Lag currently being re-reviewed by the FDA, and the tradipitant NDA for motion sickness under review by the FDA, the milsapiridone, or hopefully to be known under the brand name Bysanti, NDA for bipolar I disorder and schizophrenia under review by the FDA, and a Biologics License Application, or BLA, for imsidolimab expected to be submitted later this year, Vanda could have six products commercially available in 2026.

Turning now to our financial guidance. Vanda is providing an update to its prior 2025 guidance. Vanda expects to achieve the following financial objectives in 2025. Total revenues from Fanapt, HETLIOZ, and PONVORY of between $210 million-$230 million. This compares to prior guidance of between $210 million-$250 million. Year-end 2025 cash of between $260 million-$290 million. This compares to prior guidance of between $280 million-$320 million. This revised revenue range, narrowed to the lower end of the original revenue range, reflects strong Fanapt revenue growth in 2025 that is expected to grow on a quarterly basis and potentially accelerate with the full impact of the expanded sales force.

The revised and lowered year-end 2025 cash guidance reflects the impact of the significant investments that Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and strategic investments in commercial infrastructure, including Vanda's direct-to-consumer campaign launched in the first quarter, which continued to drive meaningful gains in brand awareness for the company and its products, as well as increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With that, I'll now turn the call back to Mihael.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Thank you very much, Kevin. At this point, we will be happy to answer your questions.

Operator (participant)

We will now begin the question and answer session. If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Raghuram, please go ahead.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Thanks very much for taking my questions. I was wondering if you could first and foremost comment on some hypothetical scenarios with respect to the interactions with the FDA and if these ultimately result in approval decisions, particularly as this pertains to tradipitant, when those approvals might occur. Should we expect the possibility of tradipitant approval sometime in the first half of 2026 if ultimately the interactions with the FDA proceed positively?

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Yes. Thank you very much, Ram. First of all, I would say and I reiterate that we're very pleased with the new collaborative framework that has been established with the FDA. Just as a background, that comes after the significant development of a win in the appellate court by Vanda in August of this year, where we challenged the decision of rejection of HETLIOZ for Jet Lag without a hearing. The court canceled the rejection by the FDA and sent it back to the FDA for further proceedings. This was one of the precipitating factors, alongside with the new management at the FDA, where we sat down with them to develop a path forward. We're very quickly able to agree on several initial steps.

The first one, as we mentioned, is the re-review of the HETLIOZ sNDA for Jet Lag and a promise to be completed by early January of 2026. On your question on tradipitant, tradipitant review is ongoing, and we expect the decision by December 30, 2026. The reason we are optimistic is that, so far, there have been no issues raised with the efficacy of the drug, and therefore, we're encouraged that this could lead to approval. One area that's very relevant with the collaborative framework to tradipitant is the reconsideration of the partial clinical hold. To give context, this is a clinical hold on a longer-term motion sickness study. The initial study lasted 12 months, and people could take up to 90 doses.

We asked for an extension of that study with an amendment to further study tradipitant for an additional 12 months and an additional 90 doses within that period. That is when, about a year ago or so, the FDA objected to that additional extension, suggesting that an additional long-term, six-month, dog toxicity study is needed. Of course, we have contested that, but now the FDA was willing to reconsider that decision, and that is now with CDER, with a promise to issue a decision by the end of November. If cleared, alongside what is almost agreed upon, I would say, efficacy demonstrated for tradipitant motion sickness, we'll be optimistic for an approval by the end of this year.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Okay. Thanks. That's very helpful. Secondly, I wanted to ask about PONVORY performance and what you look for in terms of future quarterly growth rate, pickup in revenue from this product, particularly given the current investment that you're making in sales and marketing, you know, behind the product at this point. Maybe you can give us a sense of what kind of quarterly growth you would expect in terms of net sales for PONVORY over the course of the next two, three quarters. That would be helpful. Thank you.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Yeah. I will let Kevin comment on the future growth, but I would say we're still in the early phase. The sales force that was built to about 50 people is actually a very recent event. In the last quarter or so, fully staffed. The speaker programs are just starting, and PONVORY has been a smaller piece of our direct-to-consumer campaign so far. That being said, these are significant investments, and we're investing towards future growth. I will pass it on to Kevin for a comment.

Kevin Moran (SVP, CFO, and Treasurer)

Yep. Thanks, Mihael, and thanks, Ram, for the question. Just as a bit of reminder on the background here, we acquired the product from J&J at the end of 2023, and at that point, J&J had ceased support for the product a little over a year prior to that. We completed the transition of the PONVORY product from J&J right at the end of the third quarter of last year, so about a year ago. What we saw during that period from when J&J ceased commercial support through the first quarter of this year was a decline in the underlying patient demand. That would be expected given that there wasn't any active support in the market from essentially the end of 2022 through roughly the end of the third quarter of last year.

What we've seen in the last two quarters that's very encouraging to us is we've seen increases in the underlying patient demand, both from the first quarter to the second quarter, and then again from the second quarter to the third quarter. There have been some buying patterns from the SPs and SDs that have made the quarterly revenue a little bit up or a little bit down depending on the timing of their purchases, but the underlying demand during those two periods is up. For us, that's an encouraging sign that our commercial strategy and support for the product is beginning to take hold. As

Mihael mentioned, with the recent investment in the commercial sales force that, as I mentioned in my script, was completed during the third quarter of this year, we're hopeful that we'll begin to see that trend continue and potentially increase as we exit this year and head into next year, where we have not yet provided guidance beyond 2025.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Okay. And then just very quickly, two other timeline aspects. I was wondering if you could, A, comment on the perspectives for the imsidolimab BLA to receive priority review once it has been submitted to the FDA. Secondly, if you could give us any sense of whether you have revised or more specific timing guidance to provide on the MDD study. Thank you.

Kevin Moran (SVP, CFO, and Treasurer)

I think your two questions were on the Imsidolimab priority review.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

I will address that. Go ahead, Kevin.

Kevin Moran (SVP, CFO, and Treasurer)

On the timing for the MDD study, Ram, what we've communicated at this point is that we expect results by the end of next year. Given that we've enrolled patients over the last few quarters, we'd like to see a bit more of a run rate before we provide an exact timing on what period we expect to see the results in. At this point, we've communicated results by the end of next year and hope to be able to share more as we get a few more quarters under our belt.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

That's right. Sites are coming up in the U.S., but also very recently, we got approval for initiation for a number of sites in Europe. Hopefully, that will accelerate recruitment. Regarding Imsidolimab, of course, it's a rare orphan disorder, and we expect a six-month priority review.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Thank you.

Kevin Moran (SVP, CFO, and Treasurer)

Thanks, Ram.

Operator (participant)

Your next question comes from the line of Olivia Brayer with Cantor. Olivia, please go ahead.

Olivia Brayer (Director and Senior Biotech Analyst)

Hi. Good afternoon, guys. Thank you for the questions. Can you talk a little bit about the guidance change this quarter? I mean, at the midpoint, it still implies growth for 4Q, but at the lower end of the range, you know it wouldn't necessarily. Maybe just thoughts around the pushes and pulls of that guidance change and what you're seeing so far into October that helped inform today's update. I've got a couple of questions on Bysanti.

Kevin Moran (SVP, CFO, and Treasurer)

Yep. Absolutely. Thanks, Olivia, for the question. A couple of pieces there. One thing that I commented on in my script was that underlying the guidance for this year is strong Fanapt revenue growth for the year, which is, I think, an underpinning of our guidance. The other thing that's a variable in that consideration is the HETLIOZ revenue, which we've commented on can be very variable from quarter to quarter, depending on the timing of our customers' purchases. What we see there is that the actual underlying demand for HETLIOZ is pretty consistent. As we've mentioned, we maintain the majority of the market share still at this point, even two and a half years post-generic launch. The actual buying patterns, which translate to the revenue patterns for HETLIOZ, can vary from quarter to quarter.

If we saw customers not need to buy as much in the fourth quarter, that could put us on the lower end of the revenue range. That's kind of the dynamic there. For Fanapt, what we've seen in the last two quarters is both revenue meaningful growth in both quarters and the underlying demand, which we're highly focused on from a quarter-to-quarter perspective, growing sequentially very strong. We saw 14% growth Q1 to Q2 and 11% growth Q2 to Q3 from a script perspective. We expect to see that continue to grow in Q4 to increase relative to Q3. Would be our expectation underlying that guidance.

Olivia Brayer (Director and Senior Biotech Analyst)

Okay. Got it. Super helpful, Kevin. Thank you. Is there anything you guys can tell us at this point around just the engagement that you're having with the FDA for your ongoing Bysanti review? Have they indicated wanting to see any additional information as part of your submission package? Anything you can tell us on when you might enter into label discussions for that asset? As a follow-up on the commercial side, as you look out to your PDUFA next year, what's the commercial strategy for actually convincing patients to switch from Fanapt over to this newer product? Is there a commercial hook or an incentive that would actually incentivize patients to make the switch before a generic version of Fanapt becomes available?

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Maybe I start off with the regulatory update, and I'll let Kevin comment on the commercial strategy. I think we have given an update that so far the interactions with the division have been quite positive in that there have been no issues raised on the efficacy and safety of the drug. That is progressing well. In terms of label negotiations, we don't comment if they have started or are about to start, but typically, those will precede the PDUFA date by a couple of months or so.

Kevin Moran (SVP, CFO, and Treasurer)

Yep. Olivia, on the commercial strategy, we haven't shared some key elements of our commercial strategy for Bysanti and the potential transition for Fanapt to Bysanti. What I would tell you is, as we've talked about in the past, the atypical antipsychotic class is both a highly promotionally sensitive class and also a high-switch class. Products that are actively promoted out there, as you know, will do significantly better than products that are not actively promoted. As part of that, with it being a high-switch class, if there are certain commercial tools that are available to prescribers, namely starter packs or titration packs in our case, or commercial copay programs, if those programs are available to patients that are starting, they'd be more likely to start on a product that offers those programs versus a product that doesn't.

I think both the nature of the class being highly promotionally sensitive and the potential support that could be available for patients will lead to meaningful success on Bysanti when we decide to pull that trigger.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

I will add, Olivia, that the longer commercial plan is the addition of indications, starting with the adjunct treatment of major depression, with actually a key differentiator of how Fanapt has been used so far with a once-a-day dosing, increasing the convenience and hopefully compliance.

Olivia Brayer (Director and Senior Biotech Analyst)

Okay, thank you both. Appreciate it.

Kevin Moran (SVP, CFO, and Treasurer)

Thanks, Olivia.

Operator (participant)

Your next question comes from the line of Andrew Chai with Jefferies. Andrew, please go ahead.

Matt Barcus (Senior Research Associate and Biotech Analyst)

Hey, good afternoon, and congrats on the quarter. This is Matt Barcus on for Andrew Chai. First off, for tradipitant and motion sickness, it could be approved on December 30th, and then HETLIOZ Jet Lag could be approved January 7th. What would your marketing strategy be for these, and what would the shape of the launch curve look like for these drugs?

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Yeah. Thank you. We're actually very excited for both of these potential approvals because they share in common the consumer-centric focus, both in HETLIOZ and Jet Lag and tradipitant for motion sickness. We're developing a quite elaborate strategy that will become very consumer-centric, focusing on concierge service for supplying the drug to both of them. Our recent experiences with direct-to-consumer campaigns, but also the elevation of brand awareness of the company, are going to be very important and have been strategically designed to be in place in advance of those launches. We expect, if both of them approved in that timeframe you mentioned, that we should be able to be in the market by the first half of 2026. In subsequent interactions, we can discuss a little more about the latest on the total addressable market for both indications.

I will highlight it is significant and expanded, both of increased travel, but also the unmet need in motion sickness that has not seen a new treatment in the last 45 years.

Matt Barcus (Senior Research Associate and Biotech Analyst)

Great. For your GLP vomiting study, can you describe that study? What does the positive efficacy data look like, and what would be the next steps for the program? Similarly, for Bysanti, should have Phase III data in 2026, what kind of measures efficacy separation do you hope to achieve in that study?

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Yeah. I will start with the last question. On MDD, like any other study, there is not a threshold of response. We're looking for a positive primary endpoint on the typical clinical scales that will be used. Of course, you know, subsequently, people are doing responder analysis, trying to identify a portion of patients responding to a certain effect. There is no threshold that is required. Of course, the study is powered to detect a significant minimal threshold of efficacy. Your other question was on the use of tradipitant in preventing the GI, specifically vomiting, side effects of Wegovy, semaglutide. We know that GLP-1 analogs have to be titrated slowly because of the very frequent nausea and vomiting side effects, which actually limits the efficacy, at least for a certain period of time.

For a number of patients, around 15% or so, may actually drop out of treatment and never see the benefit of GLP-1 analogs. This is a well-understood and very significant therapeutic issue. The study we've designed administers tradipitant for a few days prior to initiating a Wegovy injection, which is administered at a much higher dose than the recommended titration dose. Titration dose begins at 0.25 milligrams and escalates in four-week increments. The dose we're using in the study is one milligram. Patients are randomized to receive either Wegovy or placebo. What we do is we follow these people and measure the efficacy with the number of vomiting episodes and other secondary endpoints like nausea, duration of nausea, etc. As I said, this study has completed now. The sites and data are being monitored and data cleared, and we hope soon to be able to analyze the top-line results.

Matt Barcus (Senior Research Associate and Biotech Analyst)

Understood. Thanks.

Operator (participant)

That concludes our question and answer session. I will now turn the call back over to Vanda Management for closing remarks.

Mihael Polymeropoulos (Founder, Chairman, CEO, and President)

Thank you very much for joining this call. We'll see you at a later time.

Operator (participant)

This concludes today's call. You may now disconnect.