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 2, 2007
 
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:
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 

Item 2.02.              Results of Operations and Financial Condition. 
 
On August 2, 2007, Vanda Pharmaceuticals Inc. issued a press release relating to its results of operations and financial condition for the second quarter ended June 30, 2007. 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 2, 2007.
 
 
 

 

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 2, 2007
 
 
 

 
 

vanda logo

For Immediate Release

Company Contact:
Steven A. Shallcross
Senior Vice President & CFO
Vanda Pharmaceuticals Inc.
(240) 599-4500
sshallcross@vandapharma.com

Vanda Pharmaceuticals Reports Second Quarter 2007 Results
 
ROCKVILLE, MD. - August 2, 2007 - 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, 2007.

Vanda reported research and development (R&D) expenses in the second quarter of 2007 of $10.2 million, compared to first quarter of 2007 R&D expenses of $10.6 million and second quarter of 2006 R&D expenses of $19.1 million. The decrease in R&D expenses in the second quarter of 2007 relative to the first quarter of 2007 is primarily attributable to lower clinical trial costs associated with the completion of the long-term open label portion of the Phase III trial for iloperidone. The decrease in R&D expenses in the second quarter of 2007 relative to the second quarter of 2006 was primarily due to lower clinical trial expenses for the company’s iloperidone and VEC-162 Phase III trials that were primarily completed in 2006. Total expenses for the second quarter of 2007 were $17.6 million, compared to $16.8 million in the first quarter of 2007 and $22.1 million in the second quarter of 2006.

Net loss applicable to common stockholders was $16.0 million for the second quarter of 2007, compared to $15.4 million in the first quarter of 2007 and $21.4 million in the second quarter of 2006. Net loss per share applicable to common stockholders for the second quarter of 2007 was $0.60, compared to $0.61 in the first quarter of 2007, and $1.11 in the second quarter of 2006.

As of June 30, 2007, Vanda’s cash, cash equivalents, and marketable securities totaled $119.7 million. As of June 30, 2007, the company had a total of approximately 26.6 million shares of common stock outstanding.

OPERATIONAL HIGHLIGHTS

Iloperidone
 
Vanda remains on track to file its New Drug Application (NDA) for iloperidone in schizophrenia by the end of this year. Development work continues on the 4-week injectable formulation of iloperidone. Vanda is also preparing to present Phase III safety and efficacy results for iloperidone, as well as related pharmacogenetics findings, at the American Society of Human Genetics conference in October and the American College of Neuropsychopharmacology conference in December.
 
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VEC-162 
 
Vanda continues preparatory work on the next Phase III clinical trial, to evaluate the safety and efficacy of VEC-162 in chronic primary insomnia. The trial is expected to be a randomized, double-blind, and placebo-controlled study, and will enroll approximately 400 patients. The trial will measure time to fall asleep and sleep maintenance, as well as next-day performance and mood. Patient dosing for the trial will begin in the fourth quarter of 2007.

VSF-173
 
On April 25, 2007, Vanda announced the initiation of a Phase II clinical trial for VSF-173 in excessive sleepiness. The trial is a randomized, double-blind, and placebo-controlled study to investigate the efficacy and safety of three oral doses of VSF-173 in treating induced excessive sleepiness in approximately 60 healthy volunteers. The primary endpoint of the study is the difference from placebo on the Maintenance of Wakefulness Test (MWT), a standard measure of sleepiness. As trial enrollment is now ahead of schedule, the company expects to announce top-line results for the trial in the fourth quarter of 2007.

FINANCIAL DETAILS

·
Operating Expenses. Second quarter 2007 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 the company’s clinical trials and research initiatives, were $10.2 million, down from $10.6 million in the previous quarter and down from $19.1 million in the second quarter of 2006. The decrease in R&D expenses in the second quarter of 2007 relative to the first quarter of 2007 was primarily due to lower clinical trial costs related to the completion of the long-term open label portion of the Phase III trial for iloperidone. The decrease in R&D expenses in the second quarter of 2007 relative to the second quarter of 2006 was primarily due to lower clinical trial expenses for the company’s iloperidone and VEC-162 Phase III trials that were primarily completed in 2006.

General and administrative (G&A) expenses totaled $7.4 million in the second quarter of 2007, up from $6.2 million in the first quarter of 2007, and up from $3.0 million in the second quarter of 2006. The increase in G&A expenses in the second quarter of 2007 relative to both the first quarter of 2007 and the second quarter of 2006 was primarily due to increased stock-based compensation charges, salaries and related costs of non-R&D personnel, marketing, insurance, and facility expenses.

Employee stock-based compensation expense recorded in the second quarter of 2007 was $5.1 million, or $0.19 per share. Of the total $5.1 million, $1.1 million was recorded in R&D expenses and $4.0 million was recorded in G&A expenses. In the first quarter of 2007 and the second quarter of 2006, total stock-based compensation was $4.0 million and $1.5 million, respectively.

·
Net loss applicable to common stockholders for the second quarter of 2007 was $16.0 million. This compares to a net loss of $15.4 million in the first quarter of 2007, and $21.4 million in the second quarter of 2006.

·
Net loss per share applicable to common stockholders for the second quarter of 2007 was $0.60, compared to $0.61 in the first quarter of 2007 and $1.11 in the second quarter of 2006.
 
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·
Cash and marketable securities decreased by $10.3 million during the second quarter. Changes included $16.0 million of operating losses, increases in prepaid expenses of $1.5 million for insurance, clinical trial and marketing expenses, and $0.2 million in fixed asset additions and other changes in working capital. These items were further offset by increases in accrued R&D expenses and accounts payable of $2.0 million, and $5.4 million of non-cash depreciation, amortization, and stock-based compensation expenses.

·
The balance sheet at the end of the second quarter of 2007 reflected $119.7 million of unrestricted cash, cash equivalents and marketable securities, compared to $130.0 million as of March 31, 2007, and $31.9 million as of December 31, 2006.

FINANCIAL GUIDANCE 

As previously discussed, full year 2007 financial results are expected to show total cash used in company operations to be approximately $80 million to $90 million. The total cash balance at December 31, 2007 is expected to be between $55 million and $65 million, and does not include any proceeds from collaborations or partnerships that the company may enter into in 2007. Vanda anticipates that its current funds will be sufficient to complete the work necessary to file an NDA for iloperidone by the end of 2007, to continue the pre-launch commercial activities for iloperidone, to expend funds on the extended-release injectable formulation of iloperidone, to initiate at least one additional VEC-162 Phase III trial for chronic sleep disorders in the second half of 2007, to conduct a VSF-173 Phase II trial for excessive sleepiness and to continue additional R&D activities into mid-2008.

Net loss for the year is expected to be between $110 million to $120 million, or approximately $4.18 to $4.56 per share. Non-cash charges for 2007, consisting primarily of stock-based compensation expense and depreciation and amortization, are expected to be approximately $20 million. Per share figures were computed on a weighted average basis of 26,321,527 shares of common stock outstanding at the end of the year.

CONFERENCE CALL
 
The company has scheduled a conference call for today, Thursday, August 2, 2007 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 1-866-362-4829 (domestic) and 1-617-597-5346 (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 Thursday, August 2, 2007, at 12:30 PM ET and will be accessible until Thursday, August 9, 2007, 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 35380190.

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 software. The call will also be archived on the Vanda Web site for a period of 30 days, through September 1, 2007.

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 has recently completed its Phase III program in schizophrenia. Vanda's second product candidate, VEC-162, is a compound for the treatment of sleep and mood disorders which is currently in Phase III for sleep disorders. Vanda's third product candidate, VSF-173, is a compound for the treatment of excessive sleepiness that is currently in a Phase II trial. For more on Vanda Pharmaceuticals Inc., please visit http://www.vandapharma.com.

Page 3


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, “look forward to,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “should,” 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, a failure of the company 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 (Part II, Item 1A) of Vanda’s report on Form 10-Q for the quarter ended March 31, 2007 (File No. 000-51863). 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.


####

Page 4

 

VANDA PHARMACEUTICALS INC.
(A Development Stage Enterprise)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
   
Three Months Ended
 
Six Months Ended
 
   
June 30,
 
June 30,
 
June 30,
 
June 30,
 
   
2007
 
2006
 
2007
 
2006
 
                           
Revenues from services
 
$
-
 
$
-
 
$
-
 
$
-
 
                           
Operating expenses:
                         
Research and development 
   
10,193,825
   
19,099,850
   
20,785,884
   
34,588,404
 
General and administrative 
   
7,449,375
   
2,980,642
   
13,682,924
   
5,905,590
 
Total operating expenses
   
17,643,200
   
22,080,492
   
34,468,808
   
40,493,994
 
                           
Loss from operations
   
(17,643,200
)
 
(22,080,492
)
 
(34,468,808
)
 
(40,493,994
)
                           
Interest income
   
1,659,781
   
709,033
   
3,093,435
   
1,002,893
 
Interest expense
   
-
   
(1,625
)
 
-
   
(4,433
)
Total other income, net
   
1,659,781
   
707,408
   
3,093,435
   
998,460
 
                           
Loss before tax provision
   
(15,983,419
)
 
(21,373,084
)
 
(31,375,373
)
 
(39,495,534
)
                           
Tax provision 
   
1,604
   
-
   
2,410
   
-
 
                           
Net loss applicable to common
                         
stockholders 
 
$
(15,985,023
)
$
(21,373,084
)
$
(31,377,783
)
$
(39,495,534
)
                           
Basic and diluted net loss per
                         
share applicable to common 
                         
stockholders  
 
$
(0.60
)
$
(1.11
)
$
(1.21
)
$
(4.11
)
                           
Shares used in calculation of
                         
basic and diluted net loss 
                         
per share applicable to  
                         
common stockholders 
   
26,567,160
   
19,183,660
   
25,978,437
   
9,616,347
 

Page 5

 
VANDA PHARMACEUTICALS INC.
(A Development Stage Enterprise)
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
       
June 30,
2007
 
December 31,
2006
 
               
ASSETS
             
Current assets:
           
Cash and cash equivalents 
       
$
47,630,957
 
$
30,928,895
 
Marketable securities 
         
72,031,191
   
941,981
 
Prepaid expenses, deposits and other current assets 
         
3,305,553
   
1,949,466
 
Total current assets
         
122,967,701
   
33,820,342
 
                     
Property and equipment, net
         
1,770,566
   
1,859,704
 
Deposits
         
150,000
   
150,000
 
Restricted cash
         
430,230
   
430,230
 
Total assets
       
$
125,318,497
 
$
36,260,276
 
                     
LIABILITIES AND STOCKHOLDERS' EQUITY
                   
Current liabilities:
                   
Accounts payable 
       
$
2,600,433
 
$
2,783,249
 
Accrued expenses 
         
6,290,164
   
6,322,808
 
Deferred grant revenue 
         
141,229
   
-
 
Total current liabilities
         
9,031,826
   
9,106,057
 
                   
Long-term liabilities:
                   
Deferred rent  
         
253,736
   
238,413
 
Deferred grant revenue 
         
-
   
129,950
 
Other long-term liabilities 
         
-
   
28,984
 
Total liabilities
         
9,285,562
   
9,503,404
 
                     
Stockholders' equity:
                   
Common stock 
         
26,610
   
22,129
 
Additional paid-in capital 
         
247,232,208
   
126,578,588
 
Accumulated other comprehensive loss 
         
(7,524
)
 
(3,269
)
Deficit accumulated during the development stage 
         
(131,218,359
)
 
(99,840,576
)
Total stockholders' equity
         
116,032,935
   
26,756,872
 
                     
Total liabilities and stockholders' equity
       
$
125,318,497
 
$
36,260,276
 
 
Page 6


VANDA PHARMACEUTICALS INC.
(A Development Stage Enterprise)
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
   
Six Months Ended
 
   
June 30,
 
June 30,
 
 
 
2007
 
2006
 
Cash flows from operating activities:
          
Net loss
 
$
(31,377,783
)
 
(39,495,534
)
Adjustments to reconcile net income to net cash used
             
in operating activities:
             
Depreciation and amortization
   
293,660
   
247,860
 
Employee and non-employee stock-based compensation
   
9,323,664
   
3,017,878
 
Loss on disposal of assets
   
-
   
29,528
 
Accretion of discount on investments
   
(859,296
)
 
(188,447
)
Changes in assets and liabilities:
             
Prepaid expenses and other current assets 
   
(1,354,085
)
 
132,458
 
Deposits 
   
-
   
660,000
 
Accounts payable 
   
(183,682
)
 
2,723,025
 
Accrued expenses 
   
(33,290
)
 
9,135,082
 
Other liabilities 
   
(13,661
)
 
142,711
 
Net cash used in operating activities
   
(24,204,473
)
 
(23,595,439
)
               
Cash flows from investing activities:
             
Purchases of property and equipment
   
(202,683
)
 
(871,225
)
Purchases of marketable securities
   
(93,239,541
)
 
(96,197,639
)
Proceeds from sales of marketable securities
   
-
   
82,137,888
 
Maturities of marketable securities
   
23,025,000
   
10,670,000
 
Net cash used in investing activities
   
(70,417,224
)
 
(4,260,976
)
               
Cash flows from financing activities:
             
Principal payments on obligations under capital lease
   
-
   
(704
)
Principal payments on note payable
   
-
   
(92,888
)
Proceeds from exercise of stock options and warrants
   
79,587
   
48,885
 
Proceeds from issuance of common stock, net of
             
issuance costs
   
111,254,850
   
53,329,951
 
Net cash provided by financing activities
   
111,334,437
   
53,285,244
 
               
Effect of foreign currency translation
   
(10,678
)
 
(2,023
)
               
Net increase in cash and cash equivalents
   
16,702,062
   
25,426,806
 
               
Cash and cash equivalents, beginning of period
   
30,928,895
   
21,012,815
 
               
Cash and cash equivalents, end of period
 
$
47,630,957
 
$
46,439,621
 
 
SOURCE Vanda Pharmaceuticals Inc.
08/2/2007

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.

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