Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At time, I'd like to welcome Vanda Pharmaceuticals, Inc. Earnings Conference Call. [Operator Instructions] Thank you. I'd now like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Thank you, Jordan. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' Fourth Quarter and Full Year 2025 performance. Our fourth quarter and full year 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.

Thank you very much, Kevin. Good afternoon, everyone, and thank you for joining Vanda Pharmaceuticals Fourth Quarter and Full Year 2025 Financial Results Conference Call. 2025 was a year of strong commercial execution and significant regulatory and clinical advancements for Vanda. I will briefly address some of the key highlights. . Our lead product, Fanapt, drove impressive growth. Full year net product sales increased 24% to $117.3 million versus 2024, and supported by a 28% rise in total prescriptions and a remarkable 149% surge in new-to-brand prescriptions. This reflects accelerating momentum broader prescriber adoption and the impact of our target commercial investments, including direct-to-consumer campaigns that boosted brand awareness. Our full commercial franchise, Fanapt, HETLIOZ, HETLIO LQ and PONVORY generated total revenues of $216 million for the year, up 9% year-over-year, demonstrating solid performance across our marketed products. Clinical and regulatory milestone highlights, we achieved a major regulatory win with the FDA approval of [ Nereus ] tradipitant in late 2025, for the prevention of vomiting induced by motion. The first new oral pharmacologic option in this space in over 40 years. This approval offers a substantial market opportunity in motion signals. Most of sickness is a common condition with prevalence estimates indicating that approximately 25% to 30% of U.S. adults roughly 65 million to 78 million people experience symptoms during travel or motion in exposure. Tens of millions seek pharmacologic relief annually, yet current users are often limited by adverse events or inconsistent efficacy. [indiscernible] addresses this unmet need is well-tolerated, targeted neurokinineceptor antegrade and we're actively preparing for its commercial launch to bringing this common issue. Separately, we see strong adjunct potential for [ Nereus ] in the rapidly expanding GLP-1 agonist market. These therapies used for diabetes and obesity management have seen explosive growth with market projections…

Thank you, Mihael. I'll begin by summarizing our financial results for the full year 2025 before turning to discuss the fourth quarter of 2025. Total revenues for the full year 2025 were $216.1 million, a 9% increase compared to $198.8 million for the full year 2024. The increase was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch, partially offset by decreased HETLIOZ revenue as a result of generic competition. Let me break this down now by product. Fanapt net product sales were $117.3 million for the 24% increase compared to $94.3 million for the full year 2024. This increase in net product sales relative to the full year 2024 was attributable to an increase in volume. Fanapt total prescriptions, or TRx, as reported by Equibia Exponent for the full year 2025 increased by 28% compared to the full year 2024. Fanapt new patient starts for the full year 2025, as reflected by new-to-brand prescriptions, or NBRx, increased by 149% compared to the full year 2024. Turning to HETLIOZ. HETLIOZ net product sales were $71.4 million for the full year 2025, a 7% decrease compared to $76.7 million in the out of continued generic competition in the U.S. The decrease to net product sales relative to the full year 2024 was attributable to a decrease in volume and price net of deductions. Of note, for the full year 2025, HETLIOZ continued to retain the majority of market share despite generic competition now for over 3 years. And finally, turning to PONVORY. PONVORY product sales were $27.4 million for the full year 2025, a 2% decrease compared to $27.8 million for the full year 2024. Of note, an amount of variable consideration related upon PONVORY net product sales is subject to dispute of which approximately…

Thank you very much, Kevin. At this point, we'll be happy to address your questions. .

[Operator Instructions] Your first question comes from the line of Madison El-Saadi from B. Riley Securities.

Maybe I'll start with [indiscernible] pathway and the bioequivalent to Fanapt you've shown. I'm just curious if you could characterize any FDA communication on outstanding issues that came up during the review cycle, if there any requests related to CMC or labeling scope questions that you could discuss and then assuming approval, is there a day one commercial strategy you could walk us through? Just recognizing it's really about transition patients from Fanapt to [indiscernible]

Yes, sure. Thanks, Madison. So first of all, this is a NDA, and it is not a bioequivalents like a generic, while bioequivalence data are important. So think of it as a completely new drug application. In terms of the -- how the review is going -- of course, we don't give incrementals. But I would say, we remain optimistic for an on-time approval. Now your question on commercial plan. First of all, the commercialization, if approved later this month, will have to wait for some time in Q3 when commercial supplies will be ready. And between the sign and then we'll have more color we can give on the launch strategy of [indiscernible] and also the interplay with Fanapt.

Your next question comes from the line of Raghuram Selvaraju Vera from HCW.

I was wondering if you could comment on what you expect the commercial infrastructure size and scope to be for imsidolimab assuming timely approval?

Thank you very much. So as you know, GPP is quite rare that most likely would be addressed with a small sales force visiting dermatologists and any advocacy organizations around this disorder. And there is a better awareness than it used to be since the 2021 approval of specolimab from Berger Ingelheim. So we believe that a dedicated small specialty sales force will be the key commercial asset that is needed.

Okay. Great. Is there any additional detail you can provide to us regarding promotional activities in support of Fanapt and [indiscernible] particularly as this pertains to any direct-to-consumer campaigns you may have planned over the course of 2026.

Yes. At this time, we don't have a Visante campaign plan, the direct to consumer campaigns that Kevin alluded to, is consisting of a brand awareness of Vanda overall through sponsorships and direct-to-consumer campaign on product that is Fanapt and PONVORY. We expect that to continue in similar cadence like the past year. And with the commercial launch of [indiscernible ] we expect to have a dedicated campaign for that, but no concrete plans at this time. .

And then with respect to Nereus and tradipitant as a whole, can you maybe offer us some additional contextual information on the following 3 aspects. Firstly, I'm not sure whether I may have missed this earlier. But can you just confirm to us when you expect Nereus to be commercially available the recently approved indication. Secondly, if you have any additional feedback or context to provide at this time regarding the regulatory outlook for tradipitant in [indiscernible] and then lastly, if you can give us a sense of what you expect the time line to be completion of enrollment in the envisaged Phase III trial assessing tradipitant and attenuation or prevention of nausea and vomiting associated with GLP-1 receptor agonist drugs.

Of course. On commercial availability, we're working in preparing now commercial materials. And we expect available commercial materials, either by late Q2 or beginning of Q3. In terms of the regulatory path in gastroparesis, we are now preparing for a hearing at the FDA. That was in the balance for a little while, but now we have resumed and we expect to hear from the FDA in the near future, whether or not they're going to grant a hearing, and we'll take it from there. In terms of the US study for GLP-1 analog, remind everyone, we had a very strong Phase II study in prevention of vomiting and we are now in the process of initiating a Phase III study, which we believe could produce results by late Q3, Q4 for this new Phase III study.

And then very -- one last quick 1 for me. Regarding the iloperidone LAI. You mentioned, I think, in the prepared remarks and the press release. that the Phase III program for iloperidone LAI is currently enrolling patients. Do you anticipate completing enrollment in that Phase III program before the end of this year?

Yes, it is enrolling. However, we're not satisfied much with the speed. And that is primarily because of the delays in launching this study in Europe. And it's not delays the company can control it is more resistance in conducting placebo-controlled studies in Europe and other considerations. So that is definitely slowed down. the rate of recruitment we have now, it is encouraging that things are picking up and moving in the U.S. alone. But I would say I don't have good visibility where they will be able to reach the recruitment goals by year-end.

Your next question comes from the line of Olivia Brayer from Cantor Fitzgerald.

This is Sam on for Olivia. A quick one from me. I may have missed this during the call, but could you provide some more color on the Fanapt GTN impacts given the increase in volume and the difference between that and the sales increase year-over-year?

Yes. Thanks, Sam. Yes, so what we saw on a year-over-year basis, and I think what you're highlighting is that the script growth outpaced the overall revenue growth and wh1at we've seen on a year-over-year basis is a relatively small reduction in net price, and that's due to a couple of gross-to-net items, some of which we highlighted during last year's earnings call which was primarily related to the introduction of the Medicare benefit redesign as part of the IR -- so that began at the beginning of this year. So that was a gross to net differential between 2025 and 2024. And then additionally, in the Q3 call, we commented on that we've seen an increased gross to net item and unfavorable gross item related to commercial co-pay support which, to some extent, should be expected as with the bipolar indication, you would expect to see a higher proportion of commercial patients relative to port would then increases in terms of gross to net items. So that's the bridge kind of between the TRx growth and the revenue growth where there was a relatively small difference between the 2 percentage wise.

And is that expected to stabilize? Or is there a possibility that it could keep increasing moving forward?

Well, so the Medicare piece has a phase in on there was a 1% fee in 2025 that increases to 2% this year. But in general, we would expect the gross to net to be consistent, absent there being some significant change in the underlying business or payer dynamics. The one thing that I would flag for you that we've highlighted previously, especially with the [indiscernible] PDUFA date right in front of us, is that the gross to net dynamics on [indiscernible] are significantly different and favorable relative to Fanapt. And that's because Vasanti will get a new Medicaid URA calculation, a reset there. And so as you might remember, 30% to 40% of our Fanapt business is Medicaid. And currently, that contributes negative revenue, meaning the gross to net adjustment exceeds the gross revenue for us. It's actually a negative revenue contribution. And with Vasanti, you'll get a complete reset on that so that you'll be subject to the statutory 23.1% discount, but none of the other adjustments that come with having a product on the market over time. . And so whereas our gross to net, we've previously communicated is in the neighborhood of 50% on Fanapt. We'd expect it to be more like in the mid-30s on Vasanti.

Your final question comes from the line of Andrew Tsai from Jefferies.

One more on the guidance [indiscernible] this year, $150 million to $170 million at the midpoint. Seems like that could be 35% to 40% year-over-year growth. And I believe you mentioned in the prepared remarks, maybe volume grows by 10%, give or take, at the midpoint. So is it -- do we imply that net price will be growing by 30%, if so, why? And then secondly, how much of that guidance range for 2026 seems cannibalization from the [indiscernible] launch in Q3 .

Yes. So Andrew, first, on the first point there, so our revenue guidance range, the $150 million to $170 million, right? So midpoint of $160 million. I think what you're referencing is I, in the prepared remarks, commented that the lower end of the range would have mid- to high single-digit TRx growth and then the higher end of the range would have low double digit to mid-teens. Yes. So Andrew, first, on the first point there. engine a I think what you're referencing is in the prepared remarks commented that the lower end of the range would have mid- to high single-digit TRx growth and then the higher end of the range would have low double digit to mid-teens. That's sequential quarter growth, so quarterly growth of those numbers. So the revenue getting to $160 million would be almost entirely TRx driven, volume driven. With Medicaid and now the Medicare redesign as part of IRA, price increases are somewhat capped if your business is not significantly driven by commercial markets. And so yes, that revenue growth is almost entirely volume-driven. And then on your second question, on [indiscernible], again, we are very excited about the PDUFA date coming up very quickly here. But as Mihael mentioned, it will be in the back half of the year by the time that a launch would occur and there's $0 of revenue contribution in the revenue guidance that we've provided.

Okay. And secondly, Nereus, how are you thinking about remind us list price, net price how fast can sales grow in the first 4 quarters when you launch also in Q3?

Yes. Thanks, Andrew. So we haven't communicated a price on Nereus yet. But what we have noted is that in terms of some data points drawn in the market, the NK1 class, which you typically see there is that for a dose of one of the other NK1s that's approved in the market, those can range from between $200 to as high as $600 a dose. And what we also have commented on is that for the available treatments in the market for -- that are used for motion sickness, namely Dramamine or scopolamine patches, we expect our price to have a premium relative to those prices. . So hopefully, those are some data points that can kind of help frame the kind of pricing dynamic there. And then as Mihael mentioned, with the launch likely happening in late Q2 or early Q3, we didn't provide guidance at this time, but the numbers Mihael quoted in his prepared remarks around the prevalence of motion sickness and the proportion of those people seeking treatment. And so we're excited about the possibilities there, although we haven't provided specific guidance. .

Very good. And then last one for me. study Phase III, where I think you said the data could be ready second half of this year. Is there going to be the same trial design in the Phase II? And are you expecting to see the same 50% relative reduction in vomiting? And then Secondly, my understanding is the trial is using a high upfront dose of WEGOVI. And so are there precedents of drugs that were approved the reference drug also use a relatively high upfront dose sale?

On the first question, Andrew. Yes, the design is going to be very similar to the prior study. And we will use, again, as the challenge a 1 milligram again we gave naive patient. I understood your second question, would you mind clarifying?

Sure. Rather than titrating [indiscernible] over the course of weeks, your trial lines have been using a high 1 mg upfront dose. [indiscernible] is that have FDA buy in? Or is there some kind of precedent around that kind of unique trial design kind of thing.

Well, it is a logical design. If the drug works at a higher challenge than you expect it to work in the lower sales. And the selling patients are facing is usually with rapid titration in higher doses. You are correct if you are implying that we've got the guidance now on the label is to start low and go slow, you start with 0.25 milligrams, and you only reach the 1 milligram dose we're using at week 9. So while it is true that the titration is different. We don't expect that the drug will work.

That concludes the question-and-answer session. I'd now like to turn the call back over to Vanda management for closing remarks.

Thank you very much all for joining us. We will see you at the next call. .

That concludes today's meeting. You may now disconnect.