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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): August 3, 2006
VANDA PHARMACEUTICALS INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-51863 03-0491827
(Commission File No.) (IRS Employer Identification No.)
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
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On August 3, 2006, Vanda Pharmaceuticals Inc. issued a press release
relating to its results of operations and financial condition for the quarter
ended June 30, 2006. 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
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------
99.1 Press release of Vanda Pharmaceuticals Inc. dated August 3, 2006.
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.
VANDA PHARMACEUTICALS INC.
By: /s/ STEVEN A. SHALLCROSS
-------------------------------------
Name: Steven A. Shallcross
Title: Senior Vice President,
Chief Financial Officer and Treasurer
Dated: August 3, 2006
Exhibit 99.1
VANDA PHARMACEUTICALS REPORTS SECOND QUARTER 2006 FINANCIAL RESULTS
COMPANY'S PHASE III TRIAL ENROLLMENT FOR ILOPERIDONE IS NEAR COMPLETION;
COMPANY'S PHASE III TRIAL FOR VEC-162 IS AHEAD OF SCHEDULE
ROCKVILLE, Md., Aug. 3 /PRNewswire-FirstCall/ -- 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
second quarter ended June 30, 2006.
Vanda reported research and development (R&D) expenses in the second
quarter of $19.1 million, compared to first quarter 2006 R&D expenses of $15.5
million and second quarter 2005 R&D expenses of $3.7 million. Total expenses for
the second quarter of 2006 were $22.1 million, compared to $18.4 million in the
first quarter of 2006 and $5.5 million in the second quarter of 2005. The
increase in expenses is primarily attributable to the combined costs of
administering the Company's current Phase III trial for its product candidate
iloperidone and the Company's current Phase III trial for its product candidate
VEC-162.
Net loss applicable to common stockholders was $21.4 million for the second
quarter of 2006, compared to a net loss of $18.1 million in the first quarter of
2006 and a net loss of $5.5 million in the second quarter of 2005. As of June
30, 2006, Vanda's cash, cash equivalents, and short-term investments totaled
$60.2 million.
"We are pleased to see that our two Phase III clinical trails continue to
enroll ahead of schedule and move closer to completion," stated Mihael
Polymeropoulos, M.D., President and CEO of Vanda. "Looking ahead, we are excited
and optimistic about reporting the results for both of these trials as early as
the first quarter of 2007, and if successful, our anticipated NDA filing for
iloperidone by the end of 2007."
OPERATIONAL HIGHLIGHTS
Iloperidone Phase III Trial
Vanda's ongoing Phase III clinical trial to evaluate its product candidate
iloperidone for the treatment of patients with schizophrenia is significantly
ahead of schedule and is nearing the completion of achieving its enrollment
target. The trial is a randomized, double-blind, placebo-controlled Phase III
trial of approximately 600 patients.
The study began in November 2005, and reached an enrollment of 567 patients
as of July 31, 2006. Vanda expects to report top-line results early in the first
quarter of 2007. If successful, Vanda expects to file a New Drug Application
(NDA) with the Food and Drug Administration (FDA) for iloperidone by the end of
2007.
VEC-162 Phase III Trial
In February 2006, the Company initiated a Phase III clinical trial to
evaluate the safety and efficacy of its product candidate VEC-162 for the
treatment of insomnia. The trial is a randomized, double-blind, placebo-
controlled transient insomnia trial in which we expect to enroll approximately
400 healthy volunteers at up to 20 investigator sites in the U.S. The trial will
measure sleep efficiency and time to fall asleep, as well as next-day
performance and mood.
Enrollment for the trial is ahead of schedule and reached an enrollment of
308 patients as of July 31, 2006. Vanda expects to report the top-line results
in the first quarter of 2007. The Company will need to conduct additional Phase
III trials to receive FDA approval of VEC-162 for the treatment of insomnia.
FINANCIAL DETAILS
* Operating Expenses. Second quarter research and development expenses,
primarily consisting of salaries, stock-based compensation, and
related expenses for personnel and capital resources used in the
Company's clinical trials and research initiatives, were $19.1
million, up from $15.5 million in the previous quarter and up from
$3.7 million in the second quarter of 2005. The increase in R&D
expenses in the second quarter relative to the first quarter of 2006
was primarily due to an increase in clinical trial expenses related to
the Company's two ongoing Phase III clinical trials.
General and administrative (G&A) expenses totaled $3.0 million in the
second quarter of 2006, up from $2.9 million in the first quarter of
2006, and up from $1.9 million in the second quarter of 2005. The
increase in G&A expenses in the second quarter of 2006 relative to the
first quarter of 2006 was primarily due to increased insurance expense
and professional fees.
Stock-based compensation recorded in the second quarter of 2006 was
$1.5 million for employees under SFAS 123(R). Of the total $1.5
million, $0.1 million was recorded in R&D expenses and $1.4 million
was recorded in G&A expenses. In the first quarter of 2006 and the
second quarter of 2005, total stock-based compensation was $1.5
million and $1.4 million, respectively.
* Net loss applicable to common stockholders for the second quarter of
2006 was $21.4 million. This compares to a net loss of $18.1 million
in the first quarter of 2006 and $5.5 million in the second quarter of
2005.
* Cash and marketable securities increased by $40.1 million during the
second quarter. Changes were primarily composed of $21.4 million of
operating losses and $0.5 million in fixed asset additions and other
items, offset by net cash proceeds of $53.3 million from the issuance
of common stock in the Company's initial public offering, increases in
accrued R&D expenses and accounts payable of $5.9 million, decreases
in prepaid expenses and deposits of $1.1 million and $1.6 million of
non- cash depreciation, amortization, and stock-based compensation
expenses.
* The balance sheet at June 30, 2006 reflected $60.2 million of
unrestricted cash, cash equivalents and marketable securities,
compared to $20.1 million as of March 31, 2006, and $31.2 million as
of December 31, 2005.
FINANCIAL GUIDANCE
As previously discussed last quarter full year 2006 financial results are
expected to show total cash used from the Company's operations to be
approximately $60 million to $65 million. Total cash balance at December 31,
2006 is expected to be in the range of $20 million to $25 million, without
taking into account the receipt of any proceeds from collaborations or
partnerships that the Company may enter into in 2006. Vanda anticipates that its
current funds will be sufficient to complete and report the results from its
ongoing iloperidone and VEC-162 Phase III clinical trials that are expected to
be completed in the first quarter of 2007, and to continue additional
development and clinical activities for its product candidates.
Net loss for the year is expected to be between $70 million to $75 million,
or approximately $4.38 to $4.69 per diluted common share. Non-cash charges for
2006, consisting primarily of stock-based compensation expenses and depreciation
and amortization, are expected to be approximately $8 million. Per share figures
were computed on a weighted average basis of 15,986,501 common shares
outstanding at the end of the year.
CONFERENCE CALL
The Company has scheduled a conference call for today, Thursday, August 3,
2006 at 10:30 AM ET. During the call, Mihael Polymeropoulos, M.D., President and
CEO, and Steven Shallcross, Sr. Vice President and CFO, will discuss quarterly
results and other corporate activities. Investors can call 1-800-688-0836
(domestic) and 1-617-614-4072 (international) prior to the 10:30 AM start time
and ask for the Vanda Pharmaceuticals conference call hosted by Dr.
Polymeropoulos. A replay of the call will be available on Thursday, August 3,
2006, beginning at 12:30 PM ET and will be accessible until Thursday, August 10,
2006, at 5:00 PM ET. The replay call-in number is 1-888-286-8010 for domestic
callers and 1-617-801-6888 for international callers. The access number is
93900921.
The conference call will be broadcast simultaneously on the Company's Web
site, http://www.vandapharma.com. Investors should click on the Investor
Relations tab and are advised to go to the Web site at least 15 minutes early to
register, download, and install any necessary audio software. The call will also
be archived on the Vanda Web site for a period of 30 days, through September 1,
2006.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements regarding Vanda's plans for its product candidates. 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. Such 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 Vanda's forward-looking statements include, among
others, a failure of Vanda's product candidates to be demonstrably safe and
effective, a failure to obtain regulatory approval for the company's 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, a loss of any of the company's key
scientists or management personnel, and other factors that are described in the
"Risk Factors" section of Vanda's report on Form 10- Q for its first quarter
ended March 31, 2006. No forward-looking statements can be guaranteed and actual
results may differ materially from such statements. The information in this
release is provided only as of the date of this release, and Vanda undertakes no
obligation to update any forward- looking statements contained in this release
on account of new information, future events, or otherwise, except as required
by law.
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. The Company has three product candidates in
clinical development. Vanda's lead product candidate, iloperidone, is a compound
for the treatment of schizophrenia and bipolar disorder and is in a Phase III
clinical trial for schizophrenia. Vanda's second product candidate, VEC-162, is
a compound for the treatment of insomnia and depression which is currently in a
Phase III clinical trial for insomnia. Vanda's third product candidate, VSF-173,
is a compound for the treatment of excessive sleepiness and is ready for a Phase
II clinical trial. For more on Vanda Pharmaceuticals Inc., please visit
http://www.vandapharma.com.
VANDA PHARMACEUTICALS INC
(A Development Stage Company)
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
---------------------------------
June 30, 2006 June 30, 2005
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Revenue $ - $ -
- -
Operating Expenses:
Research and development 19,099,850 3,671,523
General and administrative 2,980,642 1,862,407
Total expenses 22,080,492 5,533,930
Loss from operations (22,080,492) (5,533,930)
Interest income 709,033 71,548
Interest expense (1,625) (5,768)
Other income (expense) - -
Total other income 707,408 65,780
Net loss before tax expense (21,373,084) (5,468,150)
Tax expense - -
Net loss $ (21,373,084) $ (5,468,150)
Basic and diluted net loss per share
applicable to common stockholders $ (1.11) $ (667.66)
Shares used in calculation of basic
and diluted net loss per share 19,183,660 8,190
VANDA PHARMACEUTICALS INC
(A Development Stage Company)
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended
---------------------------------
June 30, 2006 June 30, 2005
-------------- --------------
Revenue $ - $ -
- -
Operating Expenses:
Research and development 34,588,404 7,549,324
General and administrative 5,905,590 3,922,245
Total expenses 40,493,994 11,471,569
Loss from operations (40,493,994) (11,471,569)
Interest income 1,002,893 151,504
Interest expense (4,433) (15,563)
Other income (expense) - 93
Total other income 998,460 136,034
Net loss before tax expense (39,495,534) (11,335,535)
Tax expense - -
Net loss $ (39,495,534) $ (11,335,535)
Basic and diluted net loss per share
applicable to common stockholders $ (4.11) $ (2,022.40)
Shares used in calculation of basic
and diluted net loss per share 9,616,347 5,605
VANDA PHARMACEUTICALS INC
(A Development Stage Company)
BALANCE SHEETS (Unaudited)
June 30, December 31,
2006 2005
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 46,439,621 $ 21,012,815
Short-term investments 13,731,498 10,141,189
Prepaid expenses & other current
assets 2,086,608 2,217,960
Total current assets 62,257,727 33,371,964
Property and equipment, net 1,900,330 1,110,576
Deposits 180,000 840,000
Restricted cash 430,230 430,230
Total assets $ 64,768,287 $ 35,752,770
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,062,970 $ 2,254,897
Accrued expenses 11,777,020 2,528,091
Current portion of long-term debt 48,928 142,461
Deferred grant revenue 136,501 129,950
Deferred rent and other current
liabilities - 8,131
Total current liabilities 17,025,419 5,063,530
Deferred rent and other long term
liabilities 175,274 24,433
Total liabilities 17,200,693 5,087,963
Stockholders' equity:
Common stock, par value 21,907 99
Preferred stock - 61,795,187
Capital in excess of par value 123,386,631 23,982,981
Accumulated other comprehensive loss (16,002) (17,609)
Deferred compensation - (18,766,443)
Deficit accumulated during the
development stage (75,824,942) (36,329,408)
Total stockholders' deficit 47,567,594 30,664,807
Total liabilities and
stockholders' equity $ 64,768,287 $ 35,752,770
VANDA PHARMACEUTICALS INC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended
---------------------------------
June 30, 2006 June 30, 2005
-------------- --------------
Cash flows from operating activities:
Net loss $ (39,495,534) $ (11,335,535)
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 264,017 210,228
Stock-based compensation 3,017,878 3,307,284
Loss on disposal of assets 29,528 -
Accretion of discount on investments (188,447) (15,362)
Changes in assets and liabilities:
Prepaid expenses and other
current assets 132,458 (96,482)
Deposits 660,000 -
Accounts payable 2,723,025 107,048
Accrued expenses 9,135,082 405,878
Deferred grant revenue - 130,924
Other liabilities 142,711 804
Net cash used in operating
activities (23,579,282) (7,285,213)
Cash flows from investing activities:
Purchases of property and equipment (871,225) (57,930)
Purchases of short-term investments (14,075,908) (1,734,200)
Maturities of short-term investments 10,670,000 1,400,000
Net cash used in investing
activities (4,277,133) (392,130)
Cash flows from financing activities:
Principal payments on obligations
under capital lease (704) (50,921)
Principal payments on note payable (92,888) (84,187)
Proceeds from exercise of stock
options and warrants 48,886 6,355
Proceeds from issuance of common stock 53,329,951 -
Net cash provided by (used in)
financing activities 53,285,245 (128,753)
Effect of foreign currency translation (2,024) (6,614)
Net increase (decrease) in cash and
cash equivalents 25,426,806 (7,812,710)
Cash and cash equivalents, beginning of
period 21,012,815 16,259,770
Cash and cash equivalents, end of
period $ 46,439,621 $ 8,447,060
SOURCE Vanda Pharmaceuticals Inc.
-0- 08/03/2006
/CONTACT: Steven A. Shallcross, Senior Vice President, Chief Financial
Officer and Treasurer of Vanda Pharmaceuticals Inc., +1-240-599-4500,
steven.shallcross@vandapharma.com/
/Web site: http://www.vandapharma.com /