UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): October 30, 2008
VANDA
PHARMACEUTICALS INC.
(Exact
name of Registrant as specified in its charter)
Delaware
(State
or
other jurisdiction of incorporation)
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000-51863
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03-0491827
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(Commission
File No.)
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(IRS
Employer Identification No.)
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9605
Medical Center Drive
Suite 300
Rockville,
Maryland 20850
(Address
of principal executive offices and zip code)
Registrant’s
telephone number, including area code: (240)
599-4500
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Not
Applicable
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(Former
Name or Former Address, if Changed Since Last
Report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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On
October 30, 2008, Vanda Pharmaceuticals Inc. issued a press release relating
to
its results of operations and financial condition for the third quarter ended
September 30, 2008. The full text of this press release is furnished as
Exhibit 99.1 to this Current Report on Form 8-K.
The
information in Item 2.02 of this Form 8-K and the Exhibit attached
hereto shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference
in
any filing under the Securities Act of 1933 or the Exchange Act, except as
expressly set forth by specific reference in such a filing.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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99.1
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Press
release of Vanda Pharmaceuticals Inc. dated October 30,
2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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VANDA
PHARMACEUTICALS INC.
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||
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By:
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/s/
STEVEN
A. SHALLCROSS
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Name:
Steven A. Shallcross
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Title:
Senior Vice President, Chief Financial Officer and
Treasurer
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Dated:
October 30, 2008
For
Immediate Release
Company
Contact:
Steven
A.
Shallcross
Senior
Vice President & CFO
Vanda
Pharmaceuticals Inc. .
(240)
599-4500
steven.shallcross@vandapharma.com
Vanda
Pharmaceuticals Reports Third Quarter 2008 Results
ROCKVILLE,
MD. –
October
30, 2008 – Vanda Pharmaceuticals Inc. (NASDAQ: VNDA),
a
biopharmaceutical company focused on the development and commercialization
of
clinical-stage product candidates for central nervous system disorders, today
announced financial and operational results for the third quarter ended
September 30, 2008.
Vanda
reported research and development (R&D) expenses in the third quarter of
2008 of $3.8 million, compared to $5.5 million in the second quarter of 2008
and
$13.9 million in the third quarter of 2007. The decrease in R&D expenses in
the third quarter of 2008 relative to the second quarter of 2008 is primarily
attributable to lower costs in the Phase III tasimelteon (VEC-162) chronic
primary insomnia clinical trial for which Vanda announced top-line results
in
June of 2008. The decrease in R&D expenses in the third quarter of 2008
relative to the third quarter of 2007 is attributable to lower clinical trial
costs in 2008 compared to costs from trials conducted in 2007, and the $5.0
million milestone charge recorded in the third quarter of 2007 resulting from
the submission of the New Drug Application (NDA) for iloperidone.
Net
loss
was $10.9 million for the third quarter of 2008, compared to $13.5 million
for
the second quarter of 2008 and $21.9 million for the third quarter of 2007.
Net
loss per common share for the third quarter of 2008 was $0.41, compared to
$0.51
for the second quarter of 2008 and $0.82 for the third quarter of
2007.
As
of
September 30, 2008, Vanda’s cash, cash equivalents, and marketable securities
totaled approximately $51.7 million. As of September 30, 2008, Vanda had a
total
of approximately 26.7 million shares of common stock
outstanding.
OPERATIONAL
HIGHLIGHTS
On
September 10, 2008, Vanda met with the U.S. Food and Drug Administration (FDA)
to discuss the not-approvable action letter that the FDA issued to Vanda on
July
25, 2008 regarding iloperidone. The FDA asked Vanda to provide a complete
response to the not-approvable letter highlighting arguments made during the
meeting. Vanda expects to submit the complete response within the next few
weeks. The timing or outcome of any FDA review of the response is uncertain
at
this time.
Page
1 of 8
Vanda
has
suspended all commercial and development activities pending further review.
Vanda has also reduced its cash burn and is reviewing a number of options to
further reduce expenses and cash burn.
FINANCIAL
DETAILS
Operating
Expenses. Third quarter 2008 R&D expenses, primarily consisting of salaries
and related costs of R&D personnel, stock-based compensation, and the costs
of consultants, materials and supplies associated with clinical trials and
research initiatives, totaled $3.8 million, compared to $5.5 million in the
second quarter of 2008 and $13.9 million in the third quarter of 2007. The
decrease in R&D expenses in the third quarter of 2008 relative to the second
quarter of 2008 is primarily attributable to lower costs in the Phase III
tasimelteon chronic primary insomnia clinical trial for which Vanda reported
top-line results in June of 2008. The decrease in R&D expenses in the third
quarter of 2008 relative to the third quarter of 2007 is primarily attributable
to lower clinical trial costs in the third quarter of 2008 compared to the
costs
from trials conducted in the third quarter of 2007 and the $5.0 million
milestone charge recorded in the third quarter of 2007 resulting from the
submission of the NDA for iloperidone.
|
·
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General
and administrative (G&A) expenses totaled $7.4 million in the third
quarter of 2008, compared to $8.5 million in the second quarter of
2008
and $9.6 million in the third quarter of 2007. The decrease in G&A
expenses in the third quarter of 2008 relative to the second quarter
of
2008 is primarily due to lower iloperidone pre-commercial launch
expenses.
The decrease in G&A expenses in the third quarter of 2008 relative to
the third quarter of 2007 is primarily due to lower employee stock-based
compensation expense and lower iloperidone pre-commercial launch
expenses.
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·
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Employee
stock-based compensation expense recorded in the third quarter of
2008
totaled $3.6 million. Of these non-cash charges, $0.5 million was
recorded
as R&D expense and $3.1 million was recorded as G&A expense. In
the second quarter of 2008 and the third quarter of 2007, total
stock-based compensation was $4.0 million and $5.2 million, respectively.
The decrease in stock-based compensation in the third quarter of
2008
relative to the second quarter of 2008 and the third quarter of 2007
is
primarily due to the lower fair market value of options granted in
2008.
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·
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Net
loss for the third quarter of 2008 was $10.9 million, compared to
a net
loss of $13.5 million for the second quarter of 2008 and $21.9 million
for
the third quarter of 2007.
|
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·
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Net
loss per common share for the third quarter of 2008 was $0.41, compared
to
$0.51 for the second quarter of 2008 and $0.82 for the third quarter
of
2007.
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·
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Cash
and marketable securities decreased by $13.9 million during the third
quarter of 2008. Changes included $10.9 million of net losses, decreases
in accrued R&D expenses and accounts payable of $5.2 million, net
increases in prepaid expenses of $0.9 million, fixed asset purchases
of
$0.5 million offset by $3.7 million in non-cash depreciation,
amortization, and stock-based compensation expenses and net increases
in
other working capital of $0.1 million.
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·
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Vanda’s
cash, cash equivalents, and marketable securities as of September
30, 2008
totaled approximately $51.7 million, compared to approximately $93.2
million as of December 31, 2007.
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Page
2 of 8
FINANCIAL
GUIDANCE
Net
loss
for the year is expected to be approximately $56 million, or approximately
$2.10
per share. Non-cash charges for 2008, consisting primarily of stock-based
compensation expense and depreciation and amortization, are expected to total
approximately $16.5 million. The total cash balance at December 31, 2008 is
expected to be approximately $44 million.
Fourth
quarter cash expenditures, consisting primarily of administrative overhead,
personnel costs, costs to complete ongoing carcinogenicity studies, costs to
complete stability studies for iloperidone, regulatory consulting fees, and
commercial discontinuation costs, are expected to total approximately $7.5
million. To reduce expenses, Vanda has taken the following actions:
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·
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Reduced
headcount from 52 full-time employees as of June 30, 2008 to 44 full-time
employees as of October 30, 2008. In addition, Vanda has eliminated
four
full-time contract commercial
positions.
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·
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Discontinued
all commercial activities.
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·
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Suspended
all non-essential manufacturing and pre-clinical
activities.
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As
a
result of these initiatives, Vanda expects its operating cash burn to decrease
to approximated $3.6 million per quarter beginning in the first quarter of
2009.
These expenditures will consist primarily of administrative overhead, personnel
costs, costs to complete an ongoing carcinogenicity study and regulatory
consulting fees.
Vanda is
also evaluating its development pipeline and a number of options to further
reduce expenses and cash burn. Vanda will provide additional guidance as soon
as
its plans are more definitive.
ABOUT
VANDA PHARMACEUTICALS INC.:
Vanda
Pharmaceuticals Inc. is a biopharmaceutical company focused on the development
and commercialization of clinical-stage product candidates for central nervous
system disorders. For more on Vanda Pharmaceuticals Inc., please visit
http://www.vandapharma.com.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various
statements in this release are “forward-looking statements” under the securities
laws. Words such as, but not limited to, “believe,” “expect,”
“anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,”
“would,” and “could,” and similar expressions or words, identify forward-looking
statements. Forward-looking statements are based upon current expectations
that involve risks, changes in circumstances, assumptions and
uncertainties. Vanda is at an early stage of development and may not ever
have any products that generate significant revenue. Important factors
that could cause actual results to differ materially from those reflected in
the
company’s forward-looking statements include, among others: delays in the
completion of Vanda’s clinical trials; a failure of Vanda’s product candidates
to be demonstrably safe and effective; Vanda’s failure to obtain regulatory
approval for its products or to comply with ongoing regulatory requirements;
a
lack of acceptance of Vanda’s product candidates in the marketplace, or a
failure to become or remain profitable; Vanda’s inability to obtain the capital
necessary to fund its research and development activities; Vanda’s failure to
identify or obtain rights to new product candidates; Vanda’s failure to develop
or obtain sales, marketing and distribution resources and expertise or to
otherwise manage its growth; a loss of any of Vanda’s key scientists or
management personnel; losses incurred from product liability claims made against
Vanda; a loss of rights to develop and commercialize Vanda’s products under its
license and sublicense agreements and other factors that are described in the
“Risk Factors” section (Part II, Item 1A) of Vanda’s quarterly report on
Form 10-Q for the quarter ended June 30, 2008 (File No. 000-51863). In
addition to the risks described above and in Part II, Item 1A of Vanda’s
quarterly report on Form 10-Q, other unknown or unpredictable factors also
could
affect Vanda’s results. There can be no assurance that the actual results
or developments anticipated by Vanda will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects on,
Vanda. Therefore, no assurance can be given that the outcomes stated in
such forward-looking statements and estimates will be achieved.
Page
3 of 8
All
written and verbal forward-looking statements attributable to Vanda or any
person acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to herein. Vanda cautions
investors not to rely too heavily on the forward-looking statements Vanda makes
or that are made on its behalf. The information in this release is
provided only as of the date of this release, and Vanda undertakes no
obligation, and specifically declines any obligation, to update or revise
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
####
Page
4 of 8
VANDA
PHARMACEUTICALS INC.
(A
Development Stage Enterprise)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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September 30,
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September 30,
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||||||||||
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2008
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2007
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2008
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2007
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||||||||||
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Revenues
from services
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$
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-
|
$
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-
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$
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-
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$
|
-
|
|||||
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Operating
expenses:
|
|||||||||||||
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Research
and development
|
3,792,424
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13,874,248
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20,375,998
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34,660,132
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|||||||||
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General
and administrative
|
7,400,263
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9,647,646
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24,814,462
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23,330,570
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|||||||||
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Total
operating expenses
|
11,192,687
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23,521,894
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45,190,460
|
57,990,702
|
|||||||||
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Loss
from operations
|
(11,192,687
|
)
|
(23,521,894
|
)
|
(45,190,460
|
)
|
(57,990,702
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)
|
|||||
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Interest
income
|
323,476
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1,514,708
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1,630,238
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4,608,143
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|||||||||
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Other
income
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-
|
71,345
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-
|
71,345
|
|||||||||
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Total
other income, net
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323,476
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1,586,053
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1,630,238
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4,679,488
|
|||||||||
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Loss
before tax provision
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(10,869,211
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)
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(21,935,841
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)
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(43,560,222
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)
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(53,311,214
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)
|
|||||
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Tax
provision
|
-
|
7,660
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-
|
10,070
|
|||||||||
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Net
loss
|
$
|
(10,869,211
|
)
|
$
|
(21,943,501
|
)
|
$
|
(43,560,222
|
)
|
$
|
(53,321,284
|
)
|
|
|
Basic
and diluted net loss per share attributable to common
stockholders
|
$
|
(0.41
|
)
|
$
|
(0.82
|
)
|
$
|
(1.63
|
)
|
$
|
(2.03
|
)
|
|
|
Shares
used in calculation of basic and diluted net loss per share attributable
to common stockholders
|
26,650,534
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26,612,853
|
26,649,439
|
26,223,151
|
|||||||||
Page
5 of 8
VANDA
PHARMACEUTICALS INC.
(A
Development Stage Enterprise)
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
September 30, 2008
|
December 31, 2007
|
||||||
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ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
41,438,719
|
$
|
41,929,533
|
|||
|
Marketable
securities
|
10,224,854
|
43,243,960
|
|||||
|
Prepaid
expenses, deposits and other current assets
|
2,942,703
|
1,781,881
|
|||||
|
Total
current assets
|
54,606,276
|
86,955,374
|
|||||
|
Marketable
securities, long-term
|
-
|
7,979,331
|
|||||
|
Property
and equipment, net
|
1,885,775
|
1,345,845
|
|||||
|
Deposits
|
150,000
|
150,000
|
|||||
|
Restricted
cash
|
430,230
|
430,230
|
|||||
|
Total
assets
|
$
|
57,072,281
|
$
|
96,860,780
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
899,035
|
$
|
2,988,069
|
|||
|
Accrued
expenses
|
3,082,442
|
9,789,738
|
|||||
|
Total
current liabilities
|
3,981,477
|
12,777,807
|
|||||
|
Long-term
liabilities:
|
|||||||
|
Deferred
rent
|
496,774
|
354,042
|
|||||
|
Total
liabilities
|
4,478,251
|
13,131,849
|
|||||
|
Stockholders'
equity:
|
|||||||
|
Common
stock
|
26,653
|
26,653
|
|||||
|
Additional
paid-in capital
|
270,279,679
|
257,600,368
|
|||||
|
Accumulated
other comprehensive income (loss)
|
(241,814
|
)
|
12,176
|
||||
|
Deficit
accumulated during the development stage
|
(217,470,488
|
)
|
(173,910,266
|
)
|
|||
|
Total
stockholders' equity
|
52,594,030
|
83,728,931
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
57,072,281
|
$
|
96,860,780
|
|||
Page
6 of 8
VANDA
PHARMACEUTICALS INC.
(A
Development Stage Enterprise)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
Nine Months Ended
|
|||||||
|
September 30,
|
September 30,
|
||||||
|
2008
|
2007
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
loss
|
$
|
(43,560,222
|
)
|
$
|
(53,321,284
|
)
|
|
|
Adjustments
to reconcile net income to net cash used in operating activities:
|
|||||||
|
Depreciation
and amortization
|
403,141
|
446,806
|
|||||
|
Stock-based
compensation
|
12,679,311
|
14,480,108
|
|||||
|
Loss
on disposal of assets
|
(173
|
)
|
27,017
|
||||
|
Accretion
of discount on investments
|
(212,664
|
)
|
(1,315,609
|
)
|
|||
|
Changes
in assets and liabilities:
|
|||||||
|
Prepaid
expenses and other current assets
|
(1,160,103
|
)
|
(1,414,371
|
)
|
|||
|
Accounts
payable
|
(2,089,044
|
)
|
660,697
|
||||
|
Accrued
expenses
|
(6,708,552
|
)
|
5,544,227
|
||||
|
Deferred
grant revenue
|
-
|
(140,599
|
)
|
||||
|
Other
liabilities
|
142,732
|
13,258
|
|||||
|
Net
cash used in operating activities
|
(40,505,574
|
)
|
(35,019,750
|
)
|
|||
|
Cash
flows from investing activities:
|
|||||||
|
Purchases
of property and equipment
|
(943,659
|
)
|
(249,728
|
)
|
|||
|
Proceeds
from sales of property and equipment
|
-
|
119,054
|
|||||
|
Purchases
of marketable securities
|
(11,491,577
|
)
|
(107,570,370
|
)
|
|||
|
Proceeds
from sales of marketable securities
|
10,373,251
|
-
|
|||||
|
Maturities
of marketable securities
|
42,060,000
|
60,395,000
|
|||||
|
Net
cash provided by (used in) investing activities
|
39,998,015
|
(47,306,044
|
)
|
||||
|
Cash
flows from financing activities:
|
|||||||
|
Proceeds
from exercise of stock options and warrants
|
-
|
103,176
|
|||||
|
Proceeds
from issuance of common stock, net of issuance costs
|
-
|
111,254,850
|
|||||
|
Net
cash provided by financing activities
|
-
|
111,358,026
|
|||||
|
Effect
of foreign currency translation
|
16,745
|
(6,654
|
)
|
||||
|
Net
increase (decrease) in cash and cash equivalents
|
(490,814
|
)
|
29,025,578
|
||||
|
Cash
and cash equivalents, beginning of period
|
41,929,533
|
30,928,895
|
|||||
|
Cash
and cash equivalents, end of period
|
$
|
41,438,719
|
$
|
59,954,473
|
|||
Page
7 of 8
SOURCE
Vanda Pharmaceuticals Inc.
10/30/2008
CONTACT:
Steven A. Shallcross, Senior Vice President, Chief Financial Officer of Vanda
Pharmaceuticals Inc., +1-240-599-4500
Web
site:
http://www.vandapharma.com
(VNDA)
CO:
Vanda
Pharmaceuticals Inc.
Page
8 of 8