Thank you for standing by, and welcome to the Q2 2022 Vanda Pharmaceuticals, Inc. Earnings Call. Thank you. I would now like to turn the conference over to Kevin Moran, Vanda's Senior Vice President, Chief Financial Officer and Treasurer. Mr. Moran, please go ahead.

Thank you very much, Jack. Good afternoon and thank you for joining us to discuss Vanda Pharmaceuticals second quarter 2022 performance. Our second quarter 2022 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. Additionally, we have Tim Williams, our General Counsel, and Gunther Birznieks, our Senior Vice President of Business Development and R&D Committee Member. 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, change 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 annual report on Form 10-K for the fiscal year ended December 31, 2021, 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.

Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's second quarter 2022 results. We will proceed with Kevin discussing operational highlights and financial results for the quarter. Following that, we will open the line for questions. And I will now turn the call back to Kevin.

Thank you very much, Mihael. I'm excited to discuss the progress we've made on commercial and clinical development initiatives over the past several months, and to provide updates on upcoming milestones that we believe will deliver significant momentum for the business leading into 2023. Looking first at commercial performance, we continue to advance our strategy and remain committed to strong financial execution. For several quarters, we have discussed payer challenges for HETLIOZ, with denial for sighted patients with Non-24 remaining an issue. We are focused on progressing efforts with Medicare and Medicaid, and we have outlined successes with state Medicaid programs specifically in previous quarters. To date, more than 15 states have revised or agreed to revise their Medicaid prior authorization criteria to broaden access to HETLIOZ for patients with Non-24 and nighttime sleep disturbances in Smith-Magenis Syndrome, which is encouraging. On the Medicare side, we are seeing some progress as well. In July 2022, a sighted Non-24 patient secured a key victory in a coverage dispute with a Medicare Part D plan, which had a coverage policy restricting HETLIOZ coverage for Non-24 on the basis of vision status. Following appeal, an administrative law judge held that federal law bars a Medicare Part D plan from limiting HETLIOZ coverage to only those Non-24 patients that are blind. Following this decision, we intend to advocate with other Part D plans to strike down similar policies and improve access to HETLIOZ for Non-24 patients, blind and sighted. Improving access and coverage of our products for patients remains a top priority, and we look forward to providing additional updates over the coming quarters. Turning to SMS for the indication of nighttime sleep disturbances. We continue to work closely with the advocacy organization PRISMS to engage with and support the education of the SMS…

Chris Howerton with Jefferies. Your line is open.

Great. Well, thanks for taking the questions. I guess, the big one I would have would be what evidence supports the strategy for HETLIOZ in insomnia? And then as it relates to that, how would this -- how would you anticipate a potential approval in insomnia impacting the pricing for HETLIOZ? And then outside of HETLIOZ, in terms of development of tradipitant for gastroparesis, curious if the discussion of the non-human toxicology studies such as the Dog studies were discussed in the pre-NDA meeting and what specifically was decided with respect to a safety database and an approval in that setting? Thank you.

Thank you very much, Chris, for the questions. I will start off with the question of insomnia. And your question had to do on what evidence supports the indication. And second, if approved, what could be the pricing strategy. On the first part, the -- as you know, Tasimelteon has been approved for a chronic indication of Non-24. And of course, more recently, for Smith-Magenis Syndrome. We have shown that Tasimelteon has a significant and large defect on improving sleep in two types of studies. One type of studies is the transient insomnia model based on phase events. There are three studies, a smaller one and two large studies with 5-hour and 8-hour phase events where we're showing a first very significant effect improving key parameters. And the second study is a study, a 4 week duration study in patients with chronic insomnia characterized by difficulties with sleep function. Again, there Tasimelteon was shown to be effective both in the beginning period. This was defined as Stage 1 and 9 as well as 4 weeks later, in significantly improving persistent sleep, or sleep as compared to placebo. The combination of this evidence plus the significant experience for now almost over 8 years, chronically using Tasimelteon for Non-24, we believe supports the indication of treating chronic insomnia with sleep disturbances, likely a support for the short-term indication, given that we have the 4 week study data, but also an opportunity for insomnia disorder with a specification of changes in the sleep schedule, and specifically phase events. So we will be preparing this for submission is a supplemental NDA and we will continue the discussions with the FDA as we prepare that finally, I will turn to your question on gastroparesis and I believe specifically you asked on and I will come…

Yes. No, very, very much appreciated, Mihael. I do have a follow-up and with respect to the plan for submission for insomnia, could you give us maybe an overview of what a timeline might be expected and have you or do you plan to meet with the FDA regarding this submission before you actually do so?

We have already met with the FDA and we'll continue the discussions. The -- as I said, there are potentially two indications, one being the short-term treatment of insomnia -- chronic insomnia characterized by disturbances of sleep onset. And the second one, what is in the DSM 5 other insomnia disorder characterized by change in sleep schedule. So these discussions will continue. This is a different mechanism of action and the FDA has approved, but I remind everyone that the indication of first short-term treatment insomnia characterized by sleep disturbances is exactly what the indication reads for NBN. So there's nothing new there. And we do expect there will be some significant discussions with the FDA as we proceed. In terms of timing, of course, this supplemental NDA and unlike NDA said, require putting together the entire package, preclinical safety, manufacturing, all of this information is there. And therefore, we believe it's a bit more straightforward. And therefore, it will take less amount of time to prepare, I cannot commit right now to timing as we want to continue these discussions with the agency.

Okay, no, that's fantastic. And I guess, if I may just ask one more question. I don't know if it would be directed to you Mihael or Kevin. But with respect to some of the changes that you have observed in Medicare Part D coverage? Did that impact your financial guidance? Or like how did that weigh into your thinking for the revenues for this year?

Yes, I'll start off by briefly saying that this is an emerging story. The highlight that Kevin gave for a single sighted patient who actually won the administrative law judge here, exemplary that there is energy taught by the patient, but also adjudicators to do the right thing. Stick to the FDA label, and improved access for patients. But it is all at the beginning. And you remember that, starting back in December, and you remember that, starting back in December and more this year, we had actually several successes, with state Medicaid agencies actually revising the criteria to allow access to site in patients, but I will let Kevin discuss the impact.

Yes, thanks, Mihael. And Chris, just as a reminder for our guidance on HETLIOZ, it was $150 million to $180 million. And what we had spoken to on that was the lower end of the range assumes that we continue to see payer challenges that resulted in a decline in patients on therapy and the upper end of the range reflected, improvement in those dynamics and return to growth on patients on therapy. Obviously, we've affirmed guidance as of our Q2 release, and appear to be kind of trending towards somewhere in the middle of those two stories. And as Mihael mentioned, this is recent news that we're continuing to evaluate. And we'll see what the impact will be as we go forward and look to have that, that guidance taken into account by other Medicare plans for patients seeking treatment. So breaking kind of news on that, that you want to continue to monitor and evaluate.

Yes, Okay. No, that's very helpful. Thank you, Kevin. Okay, well, I think those are all my questions for the time being. I really appreciate you taking them.

Thank you very much, Chris.

There are no further questions at this time. I would like to turn the call back over to Vanda management for closing remarks.

Thank you. Thank you very much for joining us today. We look forward to speaking with you again soon.

This concludes the Q2 2022 Vanda Pharmaceuticals Inc. earnings call. We thank you for your participation. You may now disconnect.