Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Vanda Pharmaceuticals Inc. Earnings Conference Call. My name is Erika, and I'll be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Jim Kelly, Senior Vice President and Chief Financial Officer. Please proceed.

Thank you. Good morning, and thank you for joining us to discuss Vanda Pharmaceuticals' fourth quarter and full year 2011 performance. Our fourth quarter and full year 2011 results were released this morning 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 and a telephone replay of the call, which will be available through February 21, 2012. Joining me on today's call are Dr. Mihales Polymeropoulos, our President and CEO; Dr. John Feeney, our Senior Vice President and Chief Medical Officer; Bob Repella, our Senior Vice President and Chief Commercial Officer; and Gunther Birznieks, our Vice President of Business Development. Following my introductory remarks, Dr. Polymeropoulos will update you on our ongoing activities, then I will comment on our financial results for the fourth quarter and full year 2011 before opening 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. Words such as, but not limited to, believe, expect, anticipate, estimate, intend, plan, project, target, likely, will, would and could or the negative of these terms and similar expressions or words identify forward-looking statements. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. These risks are described in the Risk Factors in the MD&A of Financial Condition and Results of Operation sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and quarterly reports on Form 10-Q, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other SEC 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. Mihales Polymeropoulos.

Thank you, Jim. Good morning, and thank you very much for joining us. Over the last quarter, we have been making significant progress on our tasimelteon program. Tasimelteon is a circadian regulator which is being evaluated in clinical studies with the orphan indication, Non-24-Hour Sleep/Wake Disorder or Non-24, as well as for the treatment of major depressive disorder. Our goal is to assume a leadership position in the development of therapeutics that have a potential of resetting the body clock. Many of our bodily functions, including the sleep-wake cycle, metabolic processes, mood regulation, homeostasis cardiovascular regulation, to name a few, are governed by the body clock. While the master body clock is located in the brain structure known as suprachiasmatic nucleus, SCN, peripheral tissues are also known to have their own clock that follow the influence of the master body clock. While the molecule is believed to have the ability to reset the body clock, and therefore, it may have corrective therapeutic properties in disorders where the body clock is aberrant. The body clock is reset each day through the action of daily light exposure which sets in motion a number of molecular processes that result in a circadian period of exactly 24 hours in length. For many individuals, without daily exposure to light, the master body clock will run at a circadian period of longer than 24 hours, which is reflected in a population average of about 24.5 hours. Blind individuals with no light perception suffering from Non-24 cannot reset their body clock to a 24-hour day and therefore will drift at a rate of about 0.5 hour a day. As a result, blind individuals who have suffered from Non-24 are often severely misaligned with a standard 24-hour sleep-wake schedule. Although there is a narrow window in the rotation…

Thank you, Mihales. During the full year 2011, Vanda recorded a net loss of $9.8 million as compared to net income of $7.2 million for the full year 2010. On a diluted shares basis, this reflects a loss of $0.35 per share for the full year 2011 as compared to net income per share of $0.25 for the prior year. Turning to our quarterly results. Vanda recorded a net loss of $5.5 million for the fourth quarter 2011 compared to net income of $2.2 million during the same period in 2010. On a diluted shares basis, this reflects a loss for the current quarter of $0.20 per share as compared to net income of $0.08 per share for the fourth quarter of 2010. As of December 31, 2011, there were approximately 28.1 million shares of Vanda common stock outstanding. Total revenue for the fourth quarter of 2011 was $8.4 million compared to $7.8 million in the same period in 2010. In these periods, there were 3 sources of revenue. They are licensing revenue, royalty income and grant revenue. Fourth quarter of 2011 and 2010 revenue each included $6.8 million of licensing revenue related to the amortization of the upfront payment received from Novartis for U.S. and Canadian commercial rights to Fanapt. Fourth quarter 2011 revenues included $1.6 million in Fanapt royalties received from Novartis, as compared to approximately $500,000 for the fourth quarter of 2010. During each period, Vanda recognized a 10% royalty on Novartis net sales. For fourth quarter of 2010, revenue also included a $500,000 grant received under the IRS's Therapeutic Discovery Project Credit Program. Total operating expenses for the fourth quarter of 2011 were $14.3 million. Research and development cost of $10.6 million made up the majority of that spend for the fourth quarter of 2011. This compared to $3.8 million for R&D spend in the fourth quarter of 2010. The increase in R&D expenses over the prior year is a result of cost incurred in connection with the new and ongoing trials for tasimelteon in Non-24 and major depressive disorder. General and administrative expenses were $3.3 million for the fourth quarter of 2011, compared to $2.8 million in the fourth quarter of 2010. Vanda's cash, cash equivalent and marketable securities as of December 31, 2011 totaled $167.9 million, a decrease of $12.6 million since the end of the third quarter of 2011. 2012 financial guidance. Vanda will not be providing full year 2012 financial guidance at this time as the final total patient enrollment and timing of completion of the ongoing tasimelteon clinical studies will impact our 2012 operating expenses. However, we do expect our 2012 operating expenses to exceed those of 2011. We will evaluate our ability to provide additional guidance as the year progresses, possibly as early as the earnings call for the first quarter results. I will now turn the call back to Mihales.

Thank you, Jim. At this time, we'll be happy to address any of your questions.

[Operator Instructions] And our first question comes from the line of our Lauren McGilmore (sic) [Migliore] with Morningstar.

I know it's still at least a year away from potential approval, but could you give us a sense of the firm's initial thoughts with regard to commercialization structure? Is tasimelteon an asset the firm thinks that can market itself? And also, how many providers are out there for Non-24-Hour Disorder? And what type of sales force would be necessary to reach these patients?

So first of all, let me frame a little bit the question and our Chief Commercial Officer, Bob Repella, will be able to make some comments as well. As you know, the initial application that we expect will be for the orphan indication of Non-24. And as an orphan indication, it may require a completely rethought commercial strategy applicable to this indication. It is the intent of Vanda to commercialize the products ourselves for this indication. However, for the major depression indication, our reasoning is that if successful in the future and leading to an application and approval, that it is more likely for Vanda to concentrate on a specialty commercial strategy while the applicability of promoting the primary care may be pursued through our partners. Having said that, I'll turn it over to Bob to discuss further.

Sure. So I mean, when we look at tasimelteon for Non-24, we see the significant opportunity as it relates to an orphan indication. As Mihales mentioned, we're talking about 65,000 to 95,000 potential patients who have significant unmet medical need. And we anticipate that this could be the first product that would be a true circadian regulator, could reset the body clock and align these patients' body clock with the 24-hour day/night cycle. Right now, our focus here is on building awareness and educating patients, caregivers, health care professionals about Non-24 and the fact that it is truly a circadian regulation type of disorder. We're working with opinion leaders, advocacy organizations. We're also helping to support information dissemination by other platforms, like the Internet. And as we move through the prelaunch process, we'll make the determination as to the best way to commercialize the asset. We're looking at all different possibilities, whether a small sales force would be the right option and themselves as a potential possibility. And then of course, utilizing technology to ensure that we're reaching out to our target audience across all stakeholders to communicate effectively and ensure the patients that can benefit from this product for this disease will realize the therapy.

But just if you could give me a little bit of better sense as to what type of providers treat the disorder and how many of them are out there?

I think generally, we would characterize it as a pretty broad base of providers. So when you look at blind patients, they don't concentrate generally among any specific physician specialty. They do have visits to certain specialists more frequently than others, like sleep specialist and in some instances, psychiatry as well. But for the most part, they are seeing generalists, family practice doctors and internists, because they're also being managed for a variety of other conditions that go beyond their basic challenge with being blind.

And just to underscore that Non-24 is a very serious disorder, leading to a tremendous impairment with the patients. And our hope is that tasimelteon will provide not just a circadian resetting, but actually eventually be proven to improve the functioning of these patients. And providing such a benefit, we believe that will drive the commercial success and adaptation of the product.

Our next question comes from the line of Graig Suvannavejh with Jefferies.

I jumped on late, so my apologies if my questions are slightly repetitive. But could you just provide an update on how enrollment in that tasi trial is going and the timing on when we might be able to see data? And then the second question has to do with just your progress on x-U.S. initiatives with Fanapt.

So first of all, with the tasimelteon program, the 2 key efficacy studies are studies, SET and RESET. The SET study aims to identify 100 patients with the disorder, and the RESET study is the one that aims to identify 20 patients that are responding to the drug. In the 100-patient SET study, what we said earlier is that we have identified approximately 75 patients which are either already randomized or eligible to be randomized in the study. We believe that we can get close to the 100-patient mark by mid-year. And since this is approximately a 6-month study, top line results could be reported by year end. The RESET study is set by patients who also come from the main efficacy study. And since the aim is to identify about 20 patients, we also believe that the RESET study can actually enroll and report by end of year, 2012. All of this will be in time to allow us to file the NDA as has been reported previously by mid-2013. Just to remind everyone that the other study that is ongoing, the Phase II/III study with 500 patients with major depressive disorder is also ongoing. It is recruiting across 40 sites in the U.S. and it is expected to complete the report by the first half of 2013. The second part of your question had to do with the rest of the world Fanapt. What we discussed earlier, Graig, was that we're pursuing registration in a number of Latin American countries -- Argentina, Mexico, and also Israel -- through our partners in those countries. We have made the determination that the 2 applications in Singapore and Australia, we will no longer pursue after we have fully evaluated both the regulatory environment, also the size of the commercial opportunity, and…

[Operator Instructions]

Well, thank you very much. Let us conclude this conference call. We, of course, thank you for your interest in and support for Vanda and we look forward to speaking with you again soon. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. Everyone may now disconnect, and have a great day.