Document and Entity Information (USD $)	12 Months Ended
Document and Entity Information (USD $)	Dec. 31, 2013	Feb. 20, 2014	Jun. 28, 2013
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	VNDA
Entity Registrant Name	Vanda Pharmaceuticals Inc.
Entity Central Index Key	0001347178
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,501,902
Entity Public Float			$ 194,000,000

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 64,764	$ 88,772
Marketable securities, current	65,586	31,631
Accounts receivable	2,031	1,168
Prepaid expenses and other current assets	2,703	3,967
Restricted cash, current	530	430
Total current assets	135,614	125,968
Property and equipment, net	2,198	2,348
Intangible asset, net	5,037	6,532
Restricted cash, non-current	500	600
Total assets	143,349	135,448
Current liabilities
Accounts payable	661	287
Accrued liabilities	5,180	5,187
Deferred rent, current	221
Deferred revenues, current	26,789	26,789
Total current liabilities	32,851	32,263
Deferred rent, non-current	2,888	3,005
Deferred revenues, non-current	63,486	90,275
Total liabilities	99,225	125,543
Commitments and contingencies (Notes 10 and 17)
Stockholders' equity
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized; 33,338,543 and 28,241,743 shares issued and outstanding at December 31, 2013 and 2012, respectively	33	28
Additional paid-in capital	355,432	300,974
Accumulated other comprehensive income	21	10
Accumulated deficit	(311,362)	(291,107)
Total stockholders' equity	44,124	9,905
Total liabilities and stockholders' equity	$ 143,349	$ 135,448

Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	33,338,543	28,241,743
Common stock, shares outstanding	33,338,543	28,241,743

Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenue:
Licensing agreement	$ 26,789	$ 26,789	$ 26,789
Royalty revenue	7,090	5,938	4,481
Total revenue	33,879	32,727	31,270
Operating expenses:
Cost of sales		129
Research and development	28,190	45,446	28,996
General and administrative	24,594	13,882	11,486
Intangible asset amortization	1,495	1,495	1,495
Total operating expenses	54,279	60,952	41,977
Loss from operations	(20,400)	(28,225)	(10,707)
Other income	145	561	461
Loss before tax benefit	(20,255)	(27,664)	(10,246)
Tax benefit			(444)
Net loss	$ (20,255)	$ (27,664)	$ (9,802)
Net loss per share:
Basic	$ (0.67)	$ (0.98)	$ (0.35)
Diluted	$ (0.67)	$ (0.98)	$ (0.35)
Weighted average shares used in calculations of net loss per share:
Basic	30,351,353	28,228,409	28,106,831
Diluted	30,351,353	28,228,409	28,106,831

Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net loss	$ (20,255)	$ (27,664)	$ (9,802)
Other comprehensive income (loss):
Change in net unrealized gain (loss) on marketable securities	11	(11)	19
Tax provision on other comprehensive income (loss)
Other comprehensive income (loss), net of tax	11	(11)	19
Comprehensive loss	$ (20,244)	$ (27,675)	$ (9,783)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef

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+ Details

Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance at Dec. 31, 2010	$ 37,731	$ 28	$ 291,342	$ 2	$ (253,641)
Beginning balance (in shares) at Dec. 31, 2010		28,041,379
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		75,647
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	25		25
Employee and non-employee stock-based compensation	5,501		5,501
Net loss	(9,802)				(9,802)
Other comprehensive income (loss), net of tax	19			19
Ending balance at Dec. 31, 2011	33,474	28	296,868	21	(263,443)
Ending balance (in shares) at Dec. 31, 2011		28,117,026
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		124,717
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	12		12
Employee and non-employee stock-based compensation	4,094		4,094
Net loss	(27,664)				(27,664)
Other comprehensive income (loss), net of tax	(11)			(11)
Ending balance at Dec. 31, 2012	9,905	28	300,974	10	(291,107)
Ending balance (in shares) at Dec. 31, 2012		28,241,743
Net proceeds from public offering of common stock (in shares)	4,680,000	4,680,000
Net proceeds from public offering of common stock	48,505	5	48,500
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		466,320
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	1,550		1,550
Shares withheld upon settlement of restricted stock units (in shares)	(49,520)	(49,520)
Shares withheld upon settlement of restricted stock units	(196)		(196)
Employee and non-employee stock-based compensation	4,604		4,604
Net loss	(20,255)				(20,255)
Other comprehensive income (loss), net of tax	11			11
Ending balance at Dec. 31, 2013	$ 44,124	$ 33	$ 355,432	$ 21	$ (311,362)
Ending balance (in shares) at Dec. 31, 2013		33,338,543

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities
Net loss	$ (20,255)	$ (27,664)	$ (9,802)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization of property and equipment	432	633	469
Employee and non-employee stock-based compensation	4,604	4,094	5,501
Amortization of discounts and premiums on marketable securities	155	560	900
Intangible asset amortization	1,495	1,495	1,495
Deferred tax expense (benefit)			1,821
Landlord contributions for tenant improvements		1,826
Changes in assets and liabilities:
Accounts receivable	(863)	450	(1,107)
Prepaid expenses and other current assets	1,264	(884)	(1,240)
Accounts payable	374	(709)	348
Accrued liabilities	(113)	1,806	1,836
Other liabilities	104	265	424
Deferred revenue	(26,789)	(26,789)	(26,789)
Accrued income taxes			(2,266)
Net cash used in operating activities	(39,592)	(44,917)	(28,410)
Cash flows from investing activities
Purchases of property and equipment	(176)	(2,017)	(275)
Purchases of marketable securities	(65,598)	(60,866)	(160,213)
Proceeds from sale of marketable securities		2,497	8,667
Maturities of marketable securities	31,499	106,140	226,170
Changes in restricted cash			(600)
Net cash provided by (used in) investing activities	(34,275)	45,754	73,749
Cash flows from financing activities
Net proceeds from public offering of common stock	48,505
Tax obligations paid in connection with settlement of restricted stock units	(196)
Proceeds from exercise of stock options	1,550	12	25
Net cash provided by financing activities	49,859	12	25
Net increase (decrease) in cash and cash equivalents	(24,008)	849	45,364
Cash and cash equivalents
Beginning of period	88,772	87,923	42,559
End of period	64,764	88,772	87,923
Non-cash investing activities
Purchases of property and equipment in accrued liabilities	$ 106		$ 221

Business Organization and Presentation

12 Months Ended

Dec. 31, 2013

Business Organization and Presentation

1. Business Organization and Presentation

Business organization

Vanda Pharmaceuticals Inc. (Vanda or the Company) is a biopharmaceutical company focused on the development and commercialization of products for the treatment of central nervous system disorders. Vanda commenced its operations in 2003. Vanda’s product portfolio includes HETLIOZ™ (tasimelteon), a product for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for which a New Drug Application (NDA) was approved by the U.S. Food and Drug Administration (FDA) in January 2014, Fanapt^®, a product for the treatment of schizophrenia, the oral formulation of which is currently being marketed and sold in the U.S. by Novartis Pharma AG (Novartis), and VLY-686, a small molecule neurokinin-1 receptor (NK-1R) antagonist.

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany accounts and transactions have been eliminated in consolidation.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

For purposes of the consolidated balance sheets and consolidated statements of cash flows, cash equivalents represent highly-liquid investments with a maturity date of three months or less at the date of purchase.

Marketable securities

The Company classifies all of its marketable securities as available-for-sale securities. The Company’s investment policy requires the selection of high-quality issuers, with bond ratings of AAA to A1+/P1. Available-for-sale securities are carried at fair market value, with unrealized gains and losses reported as a component of stockholders’ equity in accumulated other comprehensive income/loss. Interest and dividend income is recorded when earned and included in interest income. Premiums and discounts on marketable securities are amortized and accreted, respectively, to maturity and included in interest income. The Company uses the specific identification method in computing realized gains and losses on the sale of investments, which would be included in the consolidated statements of operations when generated. Marketable securities with a maturity of more than one year as of the balance sheet date and which the Company does not intend to sell within the next twelve months are classified as non-current. All other marketable securities are classified as current.

Inventory

The Company values its inventory at acquisition cost following the first-in first-out method. The Company reviews its inventory levels quarterly and writes down inventory that has become obsolete, has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are written off to cost of sales. Prior to FDA approval, manufacturing-related costs are included in research and development expenses.

Intangible asset

Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as expense. In the event a product has been approved by the FDA or an alternative future use exists for a product, patent and license costs are capitalized and amortized over the expected patent life of the related product. Milestone payments to the Company’s partners are recognized when it is deemed probable that the milestone event will occur.

As a result of the FDA’s approval of the NDA for Fanapt^® in May 2009, the Company met a milestone under its original sublicense agreement with Novartis which required the Company to make a payment of $12.0 million to Novartis. The $12.0 million is being amortized on a straight line basis over the remaining life of the U.S. patent for Fanapt^®, which the Company expects to last until November 2016 (see Subsequent Events footnote for further information). This includes the Hatch-Waxman extension that extends patent protection for drug compounds for a period of five years to compensate for time spent in development. Fanapt^® has qualified for the full five-year patent term Hatch-Waxman extension. This term is the Company’s best estimate of the life of the patent. The carrying value of the intangible asset is periodically reviewed to determine if the facts and circumstances suggest that a potential impairment may have occurred. The Company has had no impairment of its intangible asset.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. The costs of leasehold improvements funded by or reimbursed by the lessor are capitalized and amortized as leasehold improvements along with a corresponding deferred rent liability. Depreciation of property and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Amortization of leasehold improvements is provided on a straight-line basis over the shorter of their estimated useful life or the lease term. The costs of additions and improvements are capitalized, and repairs and maintenance costs are charged to operations in the period incurred. Upon retirement or disposition of property and equipment, the cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the statement of operations for that period.

Revenue recognition

The Company’s revenues are derived primarily from the amended and restated sublicense agreement with Novartis and include an upfront payment, product sales and future milestone and royalty payments. Revenue is considered both realizable and earned when the following four conditions are met: (i) persuasive evidence of an arrangement exists, (ii) the arrangement fee is fixed or determinable, (iii) delivery or performance has occurred, and (iv) collectability is reasonably assured. Pursuant to the amended and restated sublicense agreement, Novartis has the right to commercialize and develop Fanapt^® in the U.S. and Canada. Under the agreement, the Company received an upfront payment of $200.0 million in December of 2009. The Company and Novartis established a Joint Steering Committee (JSC) following the effective date of the amended and restated sublicense agreement. The Company concluded that the JSC constitutes a deliverable under the amended and restated sublicense agreement and that revenue related to the upfront payment will be recognized ratably over the term of the JSC; however, the delivery or performance has no term as the exact length of the JSC is undefined. As a result, the Company deems the performance period of the JSC to be the life of the U.S. patent of Fanapt^®, which the Company expects to last until November 2016 (see Subsequent Events footnote for further information). This includes the Hatch-Waxman extension that provides patent protection for drug compounds for a period of five years to compensate for time spent in development. Fanapt^® has qualified for the full five-year patent term Hatch-Waxman extension. This term is the Company’s best estimate of the life of the patent. Revenue related to the upfront payment will be recognized ratably from the date the amended and restated sublicense agreement became effective (November 2009) through the expected life of the U.S. patent for Fanapt^®. The Company recognizes revenue from Fanapt^® royalties and commercial and development milestones from Novartis when realizable and earned.

Concentrations of credit risk

Financial instruments which potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company places its cash, cash equivalents and marketable securities with highly-rated financial institutions. At December 31, 2013, the Company maintained all of its cash, cash equivalents and marketable securities in two financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and the Company believes there is minimal risk of losses on such balances.

Accrued liabilities

The Company’s management is required to estimate accrued liabilities as part of the process of preparing financial statements. The estimation of accrued liabilities involves identifying services that have been performed on the Company’s behalf, and then estimating the level of service performed and the associated cost incurred for such services as of each balance sheet date in the financial statements. Accrued liabilities include professional service fees, such as lawyers and accountants, contract service fees, such as those under contracts with clinical monitors, data management organizations and investigators in conjunction with clinical trials, fees to contract manufacturers in conjunction with the production of clinical materials, and fees for marketing and other commercialization activities. Pursuant to management’s assessment of the services that have been performed on clinical trials and other contracts, the Company recognizes these expenses as the services are provided. Such management assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment. In the event that the Company does not identify certain costs that have begun to be incurred or the Company under- or over-estimates the level of services performed or the costs of such services, the Company’s reported expenses for such period would be too low or too high.

Research and development expenses

Research and development expenses consist primarily of fees for services provided by third parties in connection with the clinical trials, costs of contract manufacturing services, milestone payments, costs of materials used in clinical trials and research and development, costs for regulatory consultants and filings, depreciation of capital resources used to develop products, related facilities costs, and salaries, other employee-related costs and stock-based compensation for research and development personnel. The Company expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments related to license agreements are capitalized. Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with the Company’s research and development efforts and has no alternative future use.

General and administrative expenses

General and administrative expenses consist of salaries, including employee stock-based compensation, facilities and third party expenses. General and administrative expenses are associated with the activities of the executive, finance, accounting, information technology, business development, marketing, legal, medical affairs and human resource functions.

Employee stock-based compensation

Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company generally recognizes the expense over the award’s vesting period.

The fair value of stock options granted is amortized using the accelerated attribution method. Under this method, also known as the graded-vesting method, compensation expense for stock options is amortized over the requisite service period for each separately vesting tranche as though the stock option award was in substance multiple awards, resulting in accelerated expense recognition over the vesting period. The fair value of restricted stock units (RSUs) awarded is amortized using the straight line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Total employee stock-based compensation expense recognized for the years ended December 31, 2013, 2012 and 2011, was comprised of the following:


	Year Ended December 31,
*(in thousands)*	2013		2012		2011
Research and development	$	1,727	$	1,356	$	2,450
General and administrative		2,750		2,718		3,036

Total employee stock-based compensation expense	$	4,477	$	4,074	$	5,486

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors. The weighted average expected term of stock options granted is based on the simplified method as the options meet the “plain vanilla” criteria required by authoritative guidance. Significant changes in the market price of the Company’s common stock in recent years have made historical data less reliable for the purpose of estimating future vesting, exercise, and employment behavior. The simplified method provided a more reasonable approach for estimating the weighted average expected term for options granted in 2013. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has not paid dividends to its stockholders since its inception (other than a dividend of preferred share purchase rights, which was declared in September 2008) and does not plan to pay dividends in the foreseeable future.

Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2013, 2012 and 2011 were as follows:


	Year Ended December 31,
	2013			2012			2011
Expected dividend yield		—	%		—	%		—	%
Weighted average expected volatility		65	%		68	%		71	%
Weighted average expected term (years)		6.03			6.03			6.03
Weighted average risk-free rate		1.59	%		0.94	%		1.45	%
Weighted average fair value	$	6.10		$	2.08		$	3.50

Income taxes

The Company accounts for income taxes in accordance with the authoritative guidance on accounting for income taxes, which requires companies to account for deferred income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The fact that the Company has historically generated net operating losses (NOLs) serves as strong evidence that it is more likely than not that deferred tax assets will not be realized in the future. Therefore, the Company has a full valuation allowance against all deferred tax assets as of December 31, 2013 and 2012, respectively. Tax rate changes are reflected in income during the period such changes are enacted. Changes in ownership may limit the amount of NOL carryforwards that can be utilized in the future to offset taxable income.

Segment information

The Company’s management has determined that the Company operates in one business segment which is the development and commercialization of pharmaceutical products.

Recent accounting pronouncements

On January 1, 2013, the Company adopted changes issued by the Financial Accounting Standards Board (FASB) for the reporting of amounts reclassified out of accumulated other comprehensive income. The changes require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. Adoption of these changes did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2013, the FASB issued Accounting Standard Update (ASU) 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This new standard requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. Under the new standard, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the unrecognized tax benefits. The new standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. The Company does not expect that this new standard will have a material impact on the Company’s condensed consolidated financial statements.

Certain risks and uncertainties

The Company’s products under development require approval from the FDA or other international regulatory agencies prior to commercial sales. There can be no assurance the products will receive the necessary clearance. If the Company is denied clearance or clearance is delayed, it may have a material adverse impact on the Company.

The Company’s products are concentrated in rapidly-changing, highly-competitive markets, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. Any failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer requirements or changes in regulatory requirements or industry standards or any significant delays in the development or introduction of products or services could have a material adverse effect on the Company’s business, operating results and future cash flows.

The Company depends on single source suppliers for critical raw materials for manufacturing, as well as other components required for the administration of its products. The loss of these suppliers could delay the clinical trials or prevent or delay commercialization of the products.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details

Earnings per Share

12 Months Ended

Dec. 31, 2013

Earnings per Share

3. Earnings per Share

Basic earnings per share (EPS) is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding, plus potential outstanding common stock for the period. Potential outstanding common stock includes stock options and shares underlying RSUs, but only to the extent that their inclusion is dilutive.

The following table presents the calculation of basic and diluted net loss per share of common stock for the years ended December 31, 2013, 2012, and 2011:


	Year Ended December 31,
*(in thousands, except for share and per share amounts)*	2013			2012			2011
Numerator:
Net loss	$	(20,255	)	$	(27,664	)	$	(9,802	)

Denominator:
Weighted average shares of common stock outstanding, basic		30,351,353			28,228,409			28,106,831
Stock options and restricted stock units related to the issuance of common stock		—			—			—

Weighted average shares of common stock outstanding, diluted		30,351,353			28,228,409			28,106,831

Net income (loss) per share:
Basic	$	(0.67	)	$	(0.98	)	$	(0.35	)
Diluted	$	(0.67	)	$	(0.98	)	$	(0.35	)
Anti-dilutive securities excluded from calculations of diluted net loss per share:
Options to purchase common stock and restricted stock units		4,444,912			5,219,183			4,559,432

The Company incurred a net loss for each of the years ended December 31, 2013, 2012 and 2011 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent.

- Definition

The entire disclosure for earnings per share.

+ References+ Details

Marketable Securities

12 Months Ended

Dec. 31, 2013

Marketable Securities

4. Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2013:


*(in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Current:
U.S. Treasury and government agencies	$	31,557	$	9	$	—		$	31,566
Corporate debt		34,008		18		(6	)		34,020

	$	65,565	$	27	$	(6	)	$	65,586

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2012:


*(in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Current:
U.S. Treasury and government agencies	$	14,439	$	3	$	—	$	14,442
Corporate debt		17,182		7		—		17,189

	$	31,621	$	10	$	—	$	31,631

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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+ Details

Property and Equipment

12 Months Ended

Dec. 31, 2013

Property and Equipment

6. Property and Equipment

The following is a summary of the Company’s property and equipment-at cost, as of December 31, 2013 and 2012:


	Estimated Useful Life (Years)		December 31,
*(in thousands)*	Estimated Useful Life (Years)		2013			2012
Computer equipment		3	$	983		$	768
Furniture and fixtures		7		580			572
Leasehold improvements		11		1,884			1,826

				3,447			3,166
Less—accumulated depreciation and amortization				(1,249	)		(818	)

			$	2,198		$	2,348

Depreciation and amortization expense for the years ended December 31, 2013, 2012 and 2011 was $0.4 million, $0.6 million and $0.5 million, respectively.

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

+ References+ Details

Intangible Asset

12 Months Ended

Dec. 31, 2013

Intangible Asset

7. Intangible Asset

The following is a summary of the Company’s intangible asset as of December 31, 2013:


	Estimated Useful Life (Years)		December 31, 2013
*(in thousands)*	Estimated Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Fanapt^®		8	$	12,000	$	6,963	$	5,037

The following is a summary of the Company’s intangible asset as of December 31, 2012:


	Estimated Useful Life (Years)		December 31, 2012
*(in thousands)*	Estimated Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Fanapt^®		8	$	12,000	$	5,468	$	6,532

In May 2009, the Company announced that the FDA had approved the NDA for Fanapt^®. As a result of the FDA’s approval of the NDA for Fanapt^®, the Company met a milestone under its original sublicense agreement with Novartis which required the Company to make a license payment of $12.0 million to Novartis. The $12.0 million is being amortized on a straight line basis over the remaining life of the U.S. patent for Fanapt^®, which as of December 31, 2013, the Company expected to last until May 2017. This includes the Hatch-Waxman extension that provides patent protection for drug compounds for a period of five years to compensate for time spent in development and a six-month pediatric term extension. Fanapt^® has qualified for the full five-year patent term Hatch-Waxman extension. However, in 2014, the Company became aware of events that led it to believe that Novartis would not complete the ongoing pediatric efficacy studies in a time that would enable it to receive the incremental six-month pediatric term extension. Therefore the estimated patent life was decreased in 2014 by six months to November 2016. This term is the Company’s best estimate of the life of the patent. All tables in this section reflect the May 2017 patent life (see Subsequent Events footnote for further information).

The intangible asset is being amortized over its estimated useful economic life using the straight line method. Amortization expense was $1.5 million for each of the years ended December 31, 2013, 2012 and 2011. The Company capitalized and began amortizing the asset immediately following the FDA approval of the NDA for Fanapt^®.

The following is a summary of the future intangible asset amortization schedule as of December 31, 2013:


*(in thousands)*	Total		2014		2015		2016		2017
Intangible asset	$	5,037	$	1,495	$	1,495	$	1,495	$	552

Accrued Liabilities

12 Months Ended

Dec. 31, 2013

Accrued Liabilities

8. Accrued Liabilities

The following is a summary of the Company’s accrued liabilities as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013		2012
Accrued research and development expenses	$	2,324	$	3,900
Accrued consulting and other professional fees		2,015		386
Employee benefits		176		127
Accrued lease exit liability (refer to footnote 10)		59		453
Other accrued liabilities		606		321

Total accrued liabilities	$	5,180	$	5,187

Deferred Revenue

12 Months Ended

Dec. 31, 2013

Deferred Revenue

9. Deferred Revenue

The following is a summary of changes in total deferred revenue for the years ended December 31, 2013, 2012 and 2011:


*(in thousands)*	Balance at Beginning of Year		Reductions from Licensing Revenue Recognized		Balance at End of Year
Year ended:
December 31, 2013	$	117,064	$	26,789	$	90,275
December 31, 2012		143,853		26,789		117,064
December 31, 2011		170,642		26,789		143,853

The Company entered into an amended and restated sublicense agreement with Novartis in October 2009, pursuant to which Novartis has the right to commercialize and develop Fanapt^® in the U.S. and Canada. Under the amended and restated sublicense agreement, the Company received an upfront payment of $200.0 million in December 2009. The Company and Novartis established a Joint Steering Committee (JSC) following the effective date of the amended and restated sublicense agreement. The Company concluded that the JSC constitutes a deliverable under the amended and restated sublicense agreement and that revenue related to the upfront payment will be recognized ratably over the term of the JSC; however, the delivery or performance has no term as the exact length of the JSC is undefined. As a result, the Company deems the performance period of the JSC to be the life of the U.S. patent of Fanapt^®, which as of December 31, 2013, the Company expected to last until May 2017. This includes the Hatch-Waxman extension that provides patent protection for drug compounds for a period of five years to compensate for time spent in development and a six-month pediatric term extension. Fanapt^® has qualified for the full five-year patent term Hatch-Waxman extension. However, in 2014, the Company became aware of events that led it to believe that Novartis would not complete the ongoing pediatric efficacy studies in a time that would enable it to receive the incremental six-month pediatric term extension. Therefore the estimated patent life was decreased in 2014 by six months to November 2016. This term is the Company’s best estimate of the life of the patent. All tables in this section reflect the May 2017 patent life (see Subsequent Events footnote for further information). Revenue related to the upfront payment will be recognized ratably from the date the amended and restated sublicense agreement became effective (November 2009) through the expected life of the U.S. patent for Fanapt^®. For each of the years ended December 31, 2013, 2012 and 2011, the Company recognized revenue of $26.8 million for the license agreement.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies

10. Commitments and Contingencies

Operating leases

The following is a summary of the minimum annual future payments under operating leases as of December 31, 2013:


	Cash payments due by period
*(in thousands)*	Total		2014		2015		2016		2017		2018		After 2018
Operating leases	$	10,750	$	1,111	$	1,079	$	1,106	$	1,133	$	1,162	$	5,159

The minimum annual future payments for operating leases consists of the lease for office space for the Company’s headquarters located in Washington, D.C., which expires in 2023 and the lease exit liability for the Company’s former headquarters located in Rockville, Maryland, up to the lease termination date of June 30, 2013.

In 2011, the Company entered into an office lease with Square 54 Office Owner LLC (the Landlord) for Vanda’s current headquarters, consisting of 21,400 square feet at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. (the Lease). Under the Lease, rent payments were abated for the first 12 months. The Landlord provided the Company with a cash contribution of $1.9 million for tenant improvements that was reflected in the consolidated financial statements as an increase to capitalized leasehold improvements and an increase to deferred rent for the year ended December 31, 2012. Subject to the prior rights of other tenants in the building, the Company has the right to renew the Lease for five years following the expiration of its original term. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. The Lease may be terminated early by the Company or the Landlord upon certain conditions.

As a result of the Company’s relocation from its former headquarters office space in Rockville, Maryland, to Washington, D.C., the Company provided notice in the fourth quarter of 2011 to the landlord that it was terminating the Rockville lease effective June 30, 2013. As a result, the Company recognized an expense of $0.7 million in the year ended December 31, 2011 related to a lease termination penalty. Of this amount, $0.6 million was included as research and development expense and $0.1 million was included as general and administrative expense in the consolidated statement of operations for the year ended December 31, 2011. In the first quarter of 2012, the Company ceased using the Rockville, Maryland, location and, as a result, recognized additional rent expense of $0.8 million. This $0.8 million consisted of a lease exit liability of $1.3 million for the remaining lease payments, net of reversal of the deferred rent liability of $0.5 million related to the Rockville lease. Of the $0.8 million, $0.6 million is included as research and development expense and $0.2 million is included as general and administrative expense in the consolidated statement of operations for the year ended December 31, 2012.

The following is a summary of the Company’s lease exit activity:


*(in thousands)*	Balance at Beginning of Period		Costs Incurred and Charged to Expense			Costs Paid or Otherwise Settled		Balance at End of Period
Year ended December 31, 2013	$	453	$	(10	)	$	384	$	59
Year ended December 31, 2012		740		1,220			1,507		453
Year ended December 31, 2011		—		740			—		740

Rent expense under operating leases, including lease exit costs, was $1.1 million, $2.0 million and $2.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Consulting fees

The Company has engaged a regulatory consultant to assist the Company’s efforts to prepare, file and obtain FDA approval of an NDA for HETLIOZ™. As a result of the FDA acceptance of the NDA filing for HETLIOZ™ for the treatment of Non-24, the Company made a milestone payment of $0.5 million to the regulatory consultant during the year ended December 31, 2013. The payment was included as research and development expense in the consolidated statement of operations for the year ended December 31, 2013. As a result of the FDA approval of the NDA for HETLIOZ^™ in January 2014, the Company is obligated to make a milestone payment of $2.0 million in the first quarter of 2014. In addition to consulting fees and milestone payments, the Company is obligated to reimburse the consultant for ordinary and necessary business expenses incurred in connection with the engagement. The Company may terminate the engagement at any time upon prior notice; however, subject to certain conditions, the Company would remain obligated to make the milestone payment if the milestone is achieved following such termination.

Guarantees and indemnifications

The Company has entered into a number of standard intellectual property indemnification agreements in the ordinary course of its business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual from the date of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Since inception, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain conditions.

License agreements

The Company’s rights to develop and commercialize its products are subject to the terms and conditions of licenses granted to the Company by other pharmaceutical companies.

HETLIOZ™. In February 2004, the Company entered into a license agreement with Bristol-Myers Squibb (BMS) under which the Company received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize HETLIOZ™. In partial consideration for the license, the Company paid BMS an initial license fee of $0.5 million. Pursuant to the license agreement, the Company would be obligated to make future milestone payments to BMS of up to $37.0 million in the aggregate. The Company made a milestone payment to BMS of $1.0 million under the license agreement in 2006 relating to the initiation of its first Phase III clinical trial for HETLIOZ™. As a result of the FDA acceptance of the Company’s NDA for HETLIOZ™ for the treatment of Non-24 in July 2013, the Company incurred a $3.0 million milestone obligation under the license agreement with BMS, which is included in research and development expense in the consolidated statement of operations for the year ended 2013. As a result of the FDA approval of the NDA for HETLIOZ^™ in January 2014, the Company is obligated to make a milestone payment of $8.0 million in the first quarter of 2014. The Company will be obligated to make future milestone payments to BMS of up to $25.0 million in the event that sales of HETLIOZ™ reach a certain agreed upon sales threshold. Additionally, the Company would be obligated to make royalty payments based on net sales of HETLIOZ™ which, as a percentage of net sales, are in the low teens. The Company is also obligated under the license agreement to pay BMS a percentage of any sublicense fees, upfront payments and milestone and other payments (excluding royalties) that the Company receives from a third party in connection with any sublicensing arrangement, at a rate which is in the mid-twenties. The Company has agreed with BMS in the license agreement for HETLIOZ™ to use commercially reasonable efforts to develop and commercialize HETLIOZ™ and to meet certain milestones in initiating and completing certain clinical work.

The license agreement was amended in April 2013 to add a process that would allow BMS to waive the right to develop and commercialize HETLIOZ™ in those countries not covered by a development and commercialization agreement. Subsequent to the execution of the April 2013 amendment, BMS provided the Company with formal written notice that it irrevocably waived the option to exercise the right to reacquire any or all rights to any product (as defined in the license agreement) containing HETLIOZ™, or to develop or commercialize any such product, in the countries not covered by a development and commercialization agreement.

Either party may terminate the HETLIOZ™ license agreement under certain circumstances, including a material breach of the agreement by the other. In the event the Company terminates the license, or if BMS terminates the license due to the Company’s breach, all rights licensed and developed by the Company under the license agreement will revert or otherwise be licensed back to BMS on an exclusive basis.

Fanapt^®. The Company acquired exclusive worldwide rights to patents and patent applications for Fanapt^® (iloperidone) in 2004 through a sublicense agreement with Novartis. A predecessor company of Sanofi, Hoechst Marion Roussel, Inc. (HMRI), discovered Fanapt^® and completed early clinical work on the product. In 1996, following a review of its product portfolio, HMRI licensed its rights to the Fanapt^® patents and patent applications to Titan Pharmaceuticals, Inc. (Titan) on an exclusive basis. In 1997, soon after it had acquired its rights, Titan sublicensed its rights to Fanapt^® on an exclusive basis to Novartis. In June 2004, the Company acquired exclusive worldwide rights to these patents and patent applications, as well as certain Novartis patents and patent applications to develop and commercialize Fanapt^®, through a sublicense agreement with Novartis. In partial consideration for this sublicense, the Company paid Novartis an initial license fee of $0.5 million and was obligated to make future milestone payments to Novartis of less than $100.0 million in the aggregate (the majority of which were tied to sales milestones), as well as royalty payments to Novartis at a rate which, as a percentage of net sales, was in the mid-twenties. As a result of the FDA’s approval of the NDA for Fanapt^® in May 2009, the Company met an additional milestone under the sublicense agreement, which required the Company to make a payment of $12.0 million to Novartis.

In October 2009, Vanda entered into an amended and restated sublicense agreement with Novartis, which amended and restated the June 2004 sublicense agreement. Pursuant to the amended and restated sublicense agreement, Novartis has exclusive commercialization rights to all formulations of Fanapt^® in the U.S. and Canada. Novartis began selling Fanapt^® in the U.S. during the first quarter of 2010. Novartis is responsible for the further clinical development activities in the U.S. and Canada. The Company does not expect Novartis to commercialize Fanapt^® in Canada. Pursuant to the amended and restated sublicense agreement, Vanda received an upfront payment of $200.0 million and is eligible for additional payments totaling up to $265.0 million upon Novartis’ achievement of certain commercial and development milestones for Fanapt^® in the U.S. and Canada. Based on the current sales performance of Fanapt^® in the U.S., Vanda expects that some or all of these commercial and development milestones will not be achieved by Novartis. Vanda also receives royalties, which, as a percentage of net sales, are in the low double-digits, on net sales of Fanapt^® in the U.S. and Canada. Vanda retains exclusive rights to Fanapt^® outside the U.S. and Canada and Vanda has exclusive rights to use any of Novartis’ data for Fanapt^® for developing and commercializing Fanapt^® outside the U.S. and Canada. At Novartis’ option, Vanda will enter into good faith discussions with Novartis relating to the co-commercialization of Fanapt^® outside of the U.S. and Canada or, alternatively, Novartis will receive a royalty on net sales of Fanapt^® outside of the U.S. and Canada. Novartis has chosen not to co-commercialize Fanapt^® with Vanda in Europe and certain other countries and will instead receive a royalty on net sales in those countries. These include, but are not limited to, the countries in the European Union as well as Switzerland, Norway, Liechtenstein and Iceland. Vanda has entered into agreements with the following partners for the commercialization of Fanapt^® in the countries set forth below:


Country		Partner
Mexico		Probiomed S.A. de C.V.
Israel		Megapharm Ltd.

In August 2012, the Israeli Ministry of Health granted market approval for Fanapt^® for the treatment of schizophrenia. In November 2012, Vanda was notified that Fanapt^® had been granted market approval in Argentina for the treatment of schizophrenia. In October 2013, the Mexican Federal Commission for Protection Against Sanitary Risks (COFEPRIS) granted market approval for Fanapt^® for the treatment of schizophrenia.

VLY-686. In April 2012, the Company entered into a license agreement with Eli Lilly and Company (Lilly) pursuant to which the Company acquired an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize an NK-1R antagonist, VLY-686, for all human indications. The patent describing VLY-686 as a new chemical entity expires in April 2023, except in the U.S., where it expires in June 2024 absent any applicable patent term adjustments.

Pursuant to the license agreement, the Company paid Lilly an initial license fee of $1.0 million and will be responsible for all development costs. The initial license fee was recognized as research and development expense in the consolidated statement of operations for the year ended December 31, 2012. Lilly is also eligible to receive additional payments based upon achievement of specified development and commercialization milestones as well as tiered-royalties on net sales at percentage rates up to the low double digits. These milestones include $4.0 million for pre-NDA approval milestones and up to $95.0 million for future regulatory approval and sales milestones. Vanda is obligated to use its commercially reasonable efforts to develop and commercialize VLY-686.

Either party may terminate the license agreement under certain circumstances, including a material breach of the license agreement by the other. In the event that Vanda terminates the license agreement, or if Lilly terminates due to Vanda’s breach or for certain other reasons set forth in the license agreement, all rights licensed and developed by Vanda under the license agreement will revert or otherwise be licensed back to Lilly on an exclusive basis, subject to payment by Lilly to the Company of a royalty on net sales of products that contain VLY-686.

Future milestone payments. No amounts were recorded as liabilities nor were any future contractual obligations relating to the license agreements included in the consolidated financial statements as of December 31, 2013 because the criteria for recording the future milestone payments have not yet been met. These criteria include the successful outcome of future clinical trials, regulatory filings, favorable FDA regulatory approvals, growth in product sales and other factors.

Research and development and marketing agreements

In the course of its business, the Company regularly enters into agreements with clinical organizations to provide services relating to clinical development and clinical manufacturing activities under fee service arrangements. The Company’s current agreements for clinical services may be terminated on at most 60 days’ notice without incurring additional charges, other than charges for work completed but not paid for through the effective date of termination and other costs incurred by the Company’s contractors in closing out work in progress as of the effective date of termination.

- Definition

The entire disclosure for commitments and contingencies.

+ References+ Details

Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes

11. Income Taxes

As of December 31, 2013 and 2012, the Company has provided a valuation allowance for the full amount of its net deferred tax asset since realization of any future benefit from deductible temporary differences and NOLs could not be sufficiently assured.

The following is a summary of the Company’s current and deferred income tax provision (benefit) for years ended December 31, 2013, 2012 and 2011:


	Year Ended December 31,
*(in thousands)*	2013		2012		2011
Current income tax expense (benefit):
Federal	$	—	$	—	$	(1,114	)
State		—		—		(1,151	)
Deferred income tax expense (benefit):
Federal		—		—		1,821
State		—		—		—

Total income tax expense (benefit)	$	—	$	—	$	(444	)

The following is a reconciliation between the Company’s statutory tax rate and effective tax rate for the years ended December 31, 2013, 2012 and 2011:


	Year Ended December 31,
	2013			2012			2011
Federal tax at statutory rate		(34.0	)%		(34.0	)%		(34.0	)%
State taxes		(4.0	)%		(3.3	)%		(5.3	)%
Change in valuation allowance		43.9	%		70.3	%		101.1	%
Research and development credit		(1.1	)%		0.8	%		(4.6	)%
Orphan drug credit		(22.7	)%		(30.3	)%		(60.4	)%
Stock options		—	%		1.4	%		(0.2	)%
Section 162(m) limitation		1.2	%		—	%		—	%
Tax rate change		(0.3	)%		(7.0	)%		—	%
Change in Maryland NOL		18.5	%		—	%		—	%
Other non-deductible items		(1.5	)%		2.1	%		(0.9	)%

Effective tax rate		—	%		—	%		(4.3	)%

During the year ended December 31, 2011, the Company received approval for a change in accounting method from the Internal Revenue Service (the “IRS”). The Company originally treated certain expenses as start-up expenditures under Section 195 of the Internal Revenue Code of 1986, as amended (the “IRC”) and requested a change in this accounting method to re-characterize the expenditures as trade or business expenses under IRC Section 162. As a result the Company was able to deduct $53.8 million, which resulted in the Company not needing to utilize NOL carryforwards and research and development credits in the year ended December 31, 2010. In the year ended December 31, 2011, the Company reflected a benefit in the statement of operations in the amount of $0.4 million. The benefit recognized in the year ended December 31, 2011 was from the reduction in income tax expense for the year ended December 31, 2010, due to the change in accounting method. As a result the Company has reestablished NOL carryforwards and credits in its deferred tax assets that are fully offset by a tax valuation allowance.

The following is a summary of the components of the Company’s deferred tax assets, net, and the related valuation allowance as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	48,206		$	38,840
Stock-based compensation		17,626			17,348
Deferred revenue		36,670			47,509
Accrued and deferred expenses		566			522
Research and development and orphan drug credit carryforwards		38,597			31,302
Depreciation and amortization, net		110			28

Total deferred tax assets		141,775			135,549
Deferred tax liabilities:
Licensing agreements		(616	)		(2,273	)
Unrealized gain on available for sale securities		(9	)		(4	)

Total deferred tax liabilities		(625	)		(2,277	)
Deferred tax assets		141,150			133,272
Valuation allowance		(141,150	)		(133,272	)

Net deferred tax assets	$	—		$	—

The fact that the Company has historically generated NOLs serves as strong evidence that it is more likely than not that deferred tax assets will not be realized in the future. Therefore, the Company has a full valuation allowance against all deferred tax assets as of December 31, 2013 and 2012. The net increase in the tax valuation allowance was $7.9 million, $19.4 million and $10.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

As of December 31, 2013, the Company had federal NOL carryforwards of $130.6 million, state NOL carryforwards of $140.2 million, which include $1.3 million of excess windfall benefits generated from stock options. The Company also has research and development credits of $6.4 million and orphan drug carryforward credits of $32.2 million. These NOL carryforwards and credits will begin to expire in 2028 and 2024, respectively.

Because the Company has generated NOLs from inception through December, 31, 2013, all income tax returns filed by the Company are open to examination by tax jurisdictions. As of December 31, 2013, the Company’s income tax returns have not been under examination by any federal or state tax jurisdictions.

The Company’s tax attributes, including NOLs and credits, are subject to any ownership changes as defined under IRC Section 382. A change in ownership could affect the Company’s ability to use its NOLs and credit carryforwards. An ownership change did occur as of December 31, 2008. However, the Company had sufficient Built-In-Gain to offset the IRC Section 382 limitation as well as any remaining NOL carryforwards generated as of the ownership change. As of December 31, 2013, the Company does not believe that an additional ownership change has occurred. Any future ownership changes may cause the Company’s existing tax attributes to have additional limitations.

As of December 31, 2013 and 2012, the Company had no uncertain tax positions.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References+ Details

Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Measurements

12. Fair Value Measurements

Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

•

Level 1 — defined as observable inputs such as quoted prices in active markets

•

Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable

•

Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions

Marketable securities classified in Level 1 and Level 2 at December 31, 2013 and 2012 are available-for-sale marketable securities. The valuation of Level 1 instruments is determined using a market approach, and is based upon unadjusted quoted prices for identical assets in active markets. The valuation of investments classified in Level 2 also is determined using a market approach based upon quoted prices for similar assets in active markets, or other inputs that are observable for substantially the full term of the financial instrument. Level 2 securities include certificates of deposit, commercial paper, corporate notes and U.S. government agency notes that use as their basis readily observable market parameters.

As of December 31, 2013, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows:


	Fair Value Measurements at Reporting Date Using
*(in thousands)*	December 31, 2013		Quoted Prices in Active markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description:
Available-for-sale securities	$	65,586	$	31,566	$	34,020	$	—

As of December 31, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows:


	Fair Value Measurements at Reporting Date Using
*(in thousands)*	December 31, 2012		Quoted Prices in Active markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description:
Available-for-sale securities	$	31,631	$	14,442	$	17,189	$	—

The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, the carrying value of which materially approximate their fair values. During the years ended December 31, 2013 and 2012, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details

Restricted Cash

12 Months Ended

Dec. 31, 2013

Restricted Cash

13. Restricted Cash

The following is a summary of the Company’s restricted cash used to collateralize various letters of credit as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013		2012
Current:
Rockville, Maryland office lease	$	430	$	430
Maryland Board of Pharmacy license		100		—

Total current	$	530	$	430

Non-current:
Washington, D.C. office lease	$	500	$	500
Maryland Board of Pharmacy license		—		100

Total non-current	$	500	$	600

- Definition

The entire disclosure for cash and cash equivalent footnotes, which may include the types of deposits and money market instruments, applicable carrying amounts, restricted amounts and compensating balance arrangements. Cash and equivalents include: (1) currency on hand (2) demand deposits with banks or financial institutions (3) other kinds of accounts that have the general characteristics of demand deposits (4) short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments maturing within three months from the date of acquisition qualify.

+ References+ Details

Equity Incentive Plans

12 Months Ended

Dec. 31, 2013

Equity Incentive Plans

15. Equity Incentive Plans

As of December 31, 2013, the Company had two equity incentive plans, the Second Amended and Restated Management Equity Plan (the 2004 Plan) and the 2006 Equity Incentive Plan (the 2006 Plan) that were adopted in December 2004 and April 2006, respectively. An aggregate of 670,744 shares were subject to outstanding options granted under the 2004 Plan as of December 31, 2013, and no additional options will be granted under this plan. As of December 31, 2013, there were 8,995,930 shares of the Company’s common stock reserved for issuance under the 2006 Plan, of which 6,417,308 shares were subject to outstanding options and RSUs granted to employees and non-employees and 1,029,399 shares remained available for future grant. On January 1 of each year, the number of shares reserved under the 2006 Plan is automatically increased by 4% of the total number of shares of common stock that are outstanding at that time, or, if less, by 1,500,000 shares (or such lesser number as may be approved by the Company’s board of directors). As of January 1, 2014, the number of shares of common stock that may be issued under the 2006 Plan was automatically increased by 1,333,542 shares, representing 4% of the total number of shares of common stock outstanding on January 1, 2014, increasing the number of shares of common stock available for issuance under the Plan to 10,329,472 shares.

The Company has granted option awards with service conditions (service option awards) that are subject to terms and conditions established by the compensation committee of the board of directors. Service option awards have 10-year contractual terms and all service option awards granted prior to December 31, 2006, service option awards granted to new employees, and certain service option awards granted to existing employees vest and become exercisable on the first anniversary of the grant date with respect to the 25% of the shares subject to service option awards. The remaining 75% of the shares subject to the service option awards vest and become exercisable monthly in equal installments thereafter over three years. Certain service option awards granted to existing employees after December 31, 2006 vest and become exercisable monthly in equal installments over four years. The initial service option awards granted to directors upon their election vest and become exercisable in equal monthly installments over a period of four years, while the subsequent annual service option awards granted to directors vest and become exercisable in equal monthly installments over a period of one year. Certain service option awards to executives and directors provide for accelerated vesting if there is a change in control of the Company. Certain service option awards to employees and executives provide for accelerated vesting if the respective employee’s or executive’s service is terminated by the Company for any reason other than cause or permanent disability. As of December 31, 2013, $7.3 million of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of 2.0 years. No option awards are classified as a liability as of December 31, 2013.

The following is a summary of option activity for the 2004 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Exercise Price at Grant Date		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		680,754		$	1.77		4.77	$	5,232
Exercised		(3,609	)		0.33				22

Outstanding at December 31, 2011		677,145			1.78		3.78		2,016
Exercised		(5,000	)		0.33				14

Outstanding at December 31, 2012		672,145			1.79		2.78		1,512
Expired		(115	)		4.73
Exercised		(1,286	)		3.67

Outstanding at December 31, 2013		670,744			1.79		1.78		7,124

Exercisable at December 31, 2013		670,744			1.79		1.78		7,124

There are no options expected to vest as of December 31, 2013 under the 2004 Plan, given that the Company stopped issuing options from this plan in 2006.

The following is a summary of option activity for the 2006 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Exercise Price at Grant Date		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		3,324,790		$	14.07		8.01	$	3,426
Granted		982,000			5.55
Forfeited		(26,764	)		9.24
Expired		(15,369	)		13.51
Exercised		(9,976	)		2.38				37

Outstanding at December 31, 2011		4,254,681			12.16		7.65		396
Granted		846,000			3.42
Forfeited		(149,091	)		7.50
Expired		(76,103	)		10.68
Exercised		(10,000	)		1.02				22

Outstanding at December 31, 2012		4,865,487			10.83		7.15		634
Granted		1,245,500			10.18
Forfeited		(54,226	)		6.14
Expired		(259,295	)		10.65
Exercised		(263,848	)		5.86				1,545

Outstanding at December 31, 2013		5,533,618			10.98		6.93		21,264

Exercisable at December 31, 2013		3,411,214			12.90		5.58		11,673

Expected to vest at December 31, 2013		2,025,061			7.83		9.07		9,291

Proceeds from the exercise of stock options amounted to $1.6 million, $0.01 million and $0.03 million for the years ended December 31, 2013, 2012 and 2011, respectively.

An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs with service conditions (service RSUs) that vest in four equal annual installments provided that the employee remains employed with the Company. As of December 31, 2013, $5.4 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 2.2 years. No service RSUs are classified as a liability as of December 31, 2013.

The following is a summary of RSU activity for the 2006 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2010		359,563		$	9.75
Granted		283,000			5.39
Vested		(2,500	)		0.80
Vested and unissued		(109,717	)		9.74
Forfeited		(8,000	)		9.57

Unvested at December 31, 2011		522,346			7.43
Granted		245,000			3.28
Forfeited		(61,970	)		7.64

Unvested at December 31, 2012		705,376			5.91
Granted		400,500			10.29
Forfeited		(21,000	)		6.41
Vested		(201,186	)		6.71

Unvested at December 31, 2013		883,690			7.70

The vesting date fair value for the 201,186 shares underlying RSUs that vested during the year ended December 31, 2013 was $1.3 million. In order for certain employees to satisfy the minimum statutory employee tax withholding requirements related to the issuance of common stock underlying certain RSUs that vested and settled during the year ended December 31, 2013, the Company withheld 49,520 shares of common stock and paid employee payroll withholding taxes of $0.2 million relating to the vesting and settlement of the RSUs.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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Subsequent Events

12 Months Ended

Dec. 31, 2013

Subsequent Events

18. Subsequent Events

On January 31, 2014, the FDA approved Vanda’s NDA for HETLIOZ™ for the treatment of Non-24. As a result of achieving this regulatory milestone, the Company incurred additional milestone obligations, including an $8.0 million cash milestone obligation under its license agreement with BMS that will be capitalized and amortized as an intangible asset and a $2.0 million cash milestone obligation under a regulatory consulting agreement that will be charged to research and development expense. These amounts are not reflected in the balance sheet or statement of operations as of December 31, 2013.

In 2014, the Company became aware of events that led it to believe that Novartis would not complete the ongoing pediatric efficacy studies in a time that would enable it to receive the incremental six-month pediatric term extension. This will result in a six-month reduction to the estimated patent life of Fanapt^® from May 2017 to November 2016. The Company previously expected to recognize amortization expenses of $1.5 million in each of the years from 2014 to 2016 and $0.6 million in 2017. The Company now expects to recognize $1.7 million in each of 2014 and 2015 and $1.6 million in 2016. Additionally, the Company previously expected to recognize deferred revenue of $26.8 million in each of the years from 2014 to 2016 and $9.9 million in 2017. The Company will now recognize deferred revenue of $30.7 million, $31.1 million and $28.5 million in the years 2014, 2015, and 2016, respectively.

Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Data (unaudited)

19. Quarterly Financial Data (unaudited)


*(in thousands, except for per share amounts)*	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2013
Revenue	$	8,068		$	8,319		$	8,709		$	8,783
Loss from operations		(4,219	)		(3,109	)		(5,405	)		(7,667	)
Net loss		(4,173	)		(3,079	)		(5,380	)		(7,623	)
Net loss per share:
Basic	$	(0.15	)	$	(0.11	)	$	(0.17	)	$	(0.23	)
Diluted	$	(0.15	)	$	(0.11	)	$	(0.17	)	$	(0.23	)
2012
Revenue	$	8,141		$	8,378		$	8,288		$	7,920
Loss from operations		(8,317	)		(8,085	)		(5,395	)		(6,428	)
Net loss		(7,962	)		(8,007	)		(5,326	)		(6,369	)
Net loss per share:
Basic	$	(0.28	)	$	(0.28	)	$	(0.19	)	$	(0.23	)
Diluted	$	(0.28	)	$	(0.28	)	$	(0.19	)	$	(0.23	)

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

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Business Organization and Presentation (Policies)

12 Months Ended

Dec. 31, 2013

Business organization

Business organization

Basis of presentation

Basis of presentation

Use of estimates

Use of estimates

Cash and cash equivalents

Cash and cash equivalents

Marketable securities

Marketable securities

Inventory

Inventory

Intangible asset

Intangible asset

Property and equipment

Property and equipment

Revenue recognition

Revenue recognition

Concentrations of credit risk

Concentrations of credit risk

Accrued liabilities

Accrued liabilities

Research and development expenses

Research and development expenses

General and administrative expenses

General and administrative expenses

Employee stock-based compensation

Employee stock-based compensation

Total employee stock-based compensation expense recognized for the years ended December 31, 2013, 2012 and 2011, was comprised of the following:


	Year Ended December 31,
*(in thousands)*	2013		2012		2011
Research and development	$	1,727	$	1,356	$	2,450
General and administrative		2,750		2,718		3,036

Total employee stock-based compensation expense	$	4,477	$	4,074	$	5,486

Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2013, 2012 and 2011 were as follows:


	Year Ended December 31,
	2013			2012			2011
Expected dividend yield		—	%		—	%		—	%
Weighted average expected volatility		65	%		68	%		71	%
Weighted average expected term (years)		6.03			6.03			6.03
Weighted average risk-free rate		1.59	%		0.94	%		1.45	%
Weighted average fair value	$	6.10		$	2.08		$	3.50

Income taxes

Income taxes

Segment information

Segment information

The Company’s management has determined that the Company operates in one business segment which is the development and commercialization of pharmaceutical products.

Recent accounting pronouncements

Recent accounting pronouncements

Certain risks and uncertainties

Certain risks and uncertainties

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Total Employee Stock-Based Compensation Expense

Total employee stock-based compensation expense recognized for the years ended December 31, 2013, 2012 and 2011, was comprised of the following:


	Year Ended December 31,
*(in thousands)*	2013		2012		2011
Research and development	$	1,727	$	1,356	$	2,450
General and administrative		2,750		2,718		3,036

Total employee stock-based compensation expense	$	4,477	$	4,074	$	5,486

Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted

Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2013, 2012 and 2011 were as follows:


	Year Ended December 31,
	2013			2012			2011
Expected dividend yield		—	%		—	%		—	%
Weighted average expected volatility		65	%		68	%		71	%
Weighted average expected term (years)		6.03			6.03			6.03
Weighted average risk-free rate		1.59	%		0.94	%		1.45	%
Weighted average fair value	$	6.10		$	2.08		$	3.50

Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2013

Basic and Diluted Net Loss Per Share of Common Stock

The following table presents the calculation of basic and diluted net loss per share of common stock for the years ended December 31, 2013, 2012, and 2011:


	Year Ended December 31,
*(in thousands, except for share and per share amounts)*	2013			2012			2011
Numerator:
Net loss	$	(20,255	)	$	(27,664	)	$	(9,802	)

Denominator:
Weighted average shares of common stock outstanding, basic		30,351,353			28,228,409			28,106,831
Stock options and restricted stock units related to the issuance of common stock		—			—			—

Weighted average shares of common stock outstanding, diluted		30,351,353			28,228,409			28,106,831

Net income (loss) per share:
Basic	$	(0.67	)	$	(0.98	)	$	(0.35	)
Diluted	$	(0.67	)	$	(0.98	)	$	(0.35	)
Anti-dilutive securities excluded from calculations of diluted net loss per share:
Options to purchase common stock and restricted stock units		4,444,912			5,219,183			4,559,432

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Available-for-Sale Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2013:


*(in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Current:
U.S. Treasury and government agencies	$	31,557	$	9	$	—		$	31,566
Corporate debt		34,008		18		(6	)		34,020

	$	65,565	$	27	$	(6	)	$	65,586

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2012:


*(in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Current:
U.S. Treasury and government agencies	$	14,439	$	3	$	—	$	14,442
Corporate debt		17,182		7		—		17,189

	$	31,621	$	10	$	—	$	31,631

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References+ Details

Prepaid Expenses and Other Current Assets (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Prepaid Expenses, and Other Current Assets

The following is a summary of the Company’s prepaid expenses and other current assets as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013		2012
Prepaid insurance	$	167	$	155
Other prepaid expenses and vendor advances		2,408		3,536
Accrued interest income		128		276

Total prepaid expenses and other current assets	$	2,703	$	3,967

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Property and Equipment-at Cost

The following is a summary of the Company’s property and equipment-at cost, as of December 31, 2013 and 2012:


	Estimated Useful Life (Years)		December 31,
*(in thousands)*	Estimated Useful Life (Years)		2013			2012
Computer equipment		3	$	983		$	768
Furniture and fixtures		7		580			572
Leasehold improvements		11		1,884			1,826

				3,447			3,166
Less—accumulated depreciation and amortization				(1,249	)		(818	)

			$	2,198		$	2,348

Intangible Asset (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Intangible Asset

The following is a summary of the Company’s intangible asset as of December 31, 2013:


	Estimated Useful Life (Years)		December 31, 2013
*(in thousands)*	Estimated Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Fanapt^®		8	$	12,000	$	6,963	$	5,037

The following is a summary of the Company’s intangible asset as of December 31, 2012:


	Estimated Useful Life (Years)		December 31, 2012
*(in thousands)*	Estimated Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Fanapt^®		8	$	12,000	$	5,468	$	6,532

Summary of Future Intangible Asset Amortization

The following is a summary of the future intangible asset amortization schedule as of December 31, 2013:


*(in thousands)*	Total		2014		2015		2016		2017
Intangible asset	$	5,037	$	1,495	$	1,495	$	1,495	$	552

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Minimum Annual Future Payments under Operating Leases

The following is a summary of the minimum annual future payments under operating leases as of December 31, 2013:


	Cash payments due by period
*(in thousands)*	Total		2014		2015		2016		2017		2018		After 2018
Operating leases	$	10,750	$	1,111	$	1,079	$	1,106	$	1,133	$	1,162	$	5,159

Summary of Lease Exit Activity

The following is a summary of the Company’s lease exit activity:


*(in thousands)*	Balance at Beginning of Period		Costs Incurred and Charged to Expense			Costs Paid or Otherwise Settled		Balance at End of Period
Year ended December 31, 2013	$	453	$	(10	)	$	384	$	59
Year ended December 31, 2012		740		1,220			1,507		453
Year ended December 31, 2011		—		740			—		740

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Current and Deferred Income Tax Provision (Benefit)

The following is a summary of the Company’s current and deferred income tax provision (benefit) for years ended December 31, 2013, 2012 and 2011:


	Year Ended December 31,
*(in thousands)*	2013		2012		2011
Current income tax expense (benefit):
Federal	$	—	$	—	$	(1,114	)
State		—		—		(1,151	)
Deferred income tax expense (benefit):
Federal		—		—		1,821
State		—		—		—

Total income tax expense (benefit)	$	—	$	—	$	(444	)

Reconciliation Between Statutory Tax Rate and Effective Tax Rate

The following is a reconciliation between the Company’s statutory tax rate and effective tax rate for the years ended December 31, 2013, 2012 and 2011:


	Year Ended December 31,
	2013			2012			2011
Federal tax at statutory rate		(34.0	)%		(34.0	)%		(34.0	)%
State taxes		(4.0	)%		(3.3	)%		(5.3	)%
Change in valuation allowance		43.9	%		70.3	%		101.1	%
Research and development credit		(1.1	)%		0.8	%		(4.6	)%
Orphan drug credit		(22.7	)%		(30.3	)%		(60.4	)%
Stock options		—	%		1.4	%		(0.2	)%
Section 162(m) limitation		1.2	%		—	%		—	%
Tax rate change		(0.3	)%		(7.0	)%		—	%
Change in Maryland NOL		18.5	%		—	%		—	%
Other non-deductible items		(1.5	)%		2.1	%		(0.9	)%

Effective tax rate		—	%		—	%		(4.3	)%

Components of Deferred Tax Assets, Net, and Related Valuation Allowance

The following is a summary of the components of the Company’s deferred tax assets, net, and the related valuation allowance as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	48,206		$	38,840
Stock-based compensation		17,626			17,348
Deferred revenue		36,670			47,509
Accrued and deferred expenses		566			522
Research and development and orphan drug credit carryforwards		38,597			31,302
Depreciation and amortization, net		110			28

Total deferred tax assets		141,775			135,549
Deferred tax liabilities:
Licensing agreements		(616	)		(2,273	)
Unrealized gain on available for sale securities		(9	)		(4	)

Total deferred tax liabilities		(625	)		(2,277	)
Deferred tax assets		141,150			133,272
Valuation allowance		(141,150	)		(133,272	)

Net deferred tax assets	$	—		$	—

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Assets Measured at Fair Value on Recurring Basis

As of December 31, 2013, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows:


	Fair Value Measurements at Reporting Date Using
*(in thousands)*	December 31, 2013		Quoted Prices in Active markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description:
Available-for-sale securities	$	65,586	$	31,566	$	34,020	$	—

As of December 31, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis, as follows:


	Fair Value Measurements at Reporting Date Using
*(in thousands)*	December 31, 2012		Quoted Prices in Active markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description:
Available-for-sale securities	$	31,631	$	14,442	$	17,189	$	—

Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Restricted Cash Used to Collateralize Various Letters of Credit

The following is a summary of the Company’s restricted cash used to collateralize various letters of credit as of December 31, 2013 and 2012:


	December 31,
*(in thousands)*	2013		2012
Current:
Rockville, Maryland office lease	$	430	$	430
Maryland Board of Pharmacy license		100		—

Total current	$	530	$	430

Non-current:
Washington, D.C. office lease	$	500	$	500
Maryland Board of Pharmacy license		—		100

Total non-current	$	500	$	600

Equity Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2013

Summary of RSU Activity for 2006 Plan

The following is a summary of RSU activity for the 2006 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2010		359,563		$	9.75
Granted		283,000			5.39
Vested		(2,500	)		0.80
Vested and unissued		(109,717	)		9.74
Forfeited		(8,000	)		9.57

Unvested at December 31, 2011		522,346			7.43
Granted		245,000			3.28
Forfeited		(61,970	)		7.64

Unvested at December 31, 2012		705,376			5.91
Granted		400,500			10.29
Forfeited		(21,000	)		6.41
Vested		(201,186	)		6.71

Unvested at December 31, 2013		883,690			7.70

2004 Plan

Summary of Option Activity Plan

The following is a summary of option activity for the 2004 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Exercise Price at Grant Date		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		680,754		$	1.77		4.77	$	5,232
Exercised		(3,609	)		0.33				22

Outstanding at December 31, 2011		677,145			1.78		3.78		2,016
Exercised		(5,000	)		0.33				14

Outstanding at December 31, 2012		672,145			1.79		2.78		1,512
Expired		(115	)		4.73
Exercised		(1,286	)		3.67

Outstanding at December 31, 2013		670,744			1.79		1.78		7,124

Exercisable at December 31, 2013		670,744			1.79		1.78		7,124

2006 Plan

Summary of Option Activity Plan

The following is a summary of option activity for the 2006 Plan for the years ended December 31, 2013, 2012, and 2011:


*(in thousands, except for share and per share amounts)*	Number of Shares			Weighted Average Exercise Price at Grant Date		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		3,324,790		$	14.07		8.01	$	3,426
Granted		982,000			5.55
Forfeited		(26,764	)		9.24
Expired		(15,369	)		13.51
Exercised		(9,976	)		2.38				37

Outstanding at December 31, 2011		4,254,681			12.16		7.65		396
Granted		846,000			3.42
Forfeited		(149,091	)		7.50
Expired		(76,103	)		10.68
Exercised		(10,000	)		1.02				22

Outstanding at December 31, 2012		4,865,487			10.83		7.15		634
Granted		1,245,500			10.18
Forfeited		(54,226	)		6.14
Expired		(259,295	)		10.65
Exercised		(263,848	)		5.86				1,545

Outstanding at December 31, 2013		5,533,618			10.98		6.93		21,264

Exercisable at December 31, 2013		3,411,214			12.90		5.58		11,673

Expected to vest at December 31, 2013		2,025,061			7.83		9.07		9,291

Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Data


*(in thousands, except for per share amounts)*	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2013
Revenue	$	8,068		$	8,319		$	8,709		$	8,783
Loss from operations		(4,219	)		(3,109	)		(5,405	)		(7,667	)
Net loss		(4,173	)		(3,079	)		(5,380	)		(7,623	)
Net loss per share:
Basic	$	(0.15	)	$	(0.11	)	$	(0.17	)	$	(0.23	)
Diluted	$	(0.15	)	$	(0.11	)	$	(0.17	)	$	(0.23	)
2012
Revenue	$	8,141		$	8,378		$	8,288		$	7,920
Loss from operations		(8,317	)		(8,085	)		(5,395	)		(6,428	)
Net loss		(7,962	)		(8,007	)		(5,326	)		(6,369	)
Net loss per share:
Basic	$	(0.28	)	$	(0.28	)	$	(0.19	)	$	(0.23	)
Diluted	$	(0.28	)	$	(0.28	)	$	(0.19	)	$	(0.23	)

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended
	May 31, 2009	Dec. 31, 2013 Segment	Dec. 31, 2009
Summary Of Significant Accounting Policies [Line Items]
Payment for original sublicense agreement	$ 12.0
Hatch-Waxman Extension		5 years
Upfront payment received under Fanapt sublicense agreement from Novartis			$ 200.0
Number of business segment		1

Total Employee Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation expense	$ 4,477	$ 4,074	$ 5,486
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation expense	1,727	1,356	2,450
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation expense	$ 2,750	$ 2,718	$ 3,036

Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share Based Payment Award Stock Options Valuation Assumptions [Line Items]
Expected dividend yield
Weighted average expected volatility	65.00%	68.00%	71.00%
Weighted average expected term (years)	6 years 11 days	6 years 11 days	6 years 11 days
Weighted average risk-free rate	1.59%	0.94%	1.45%
Weighted average fair value	$ 6.10	$ 2.08	$ 3.50

Basic and Diluted Net Loss Per Share of Common Stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Numerator:
Net loss	$ (7,623)	$ (5,380)	$ (3,079)	$ (4,173)	$ (6,369)	$ (5,326)	$ (8,007)	$ (7,962)	$ (20,255)	$ (27,664)	$ (9,802)
Denominator:
Weighted average shares of common stock outstanding, basic									30,351,353	28,228,409	28,106,831
Stock options and restricted stock units related to the issuance of common stock
Weighted average shares of common stock outstanding, diluted									30,351,353	28,228,409	28,106,831
Net income (loss) per share:
Basic	$ (0.23)	$ (0.17)	$ (0.11)	$ (0.15)	$ (0.23)	$ (0.19)	$ (0.28)	$ (0.28)	$ (0.67)	$ (0.98)	$ (0.35)
Diluted	$ (0.23)	$ (0.17)	$ (0.11)	$ (0.15)	$ (0.23)	$ (0.19)	$ (0.28)	$ (0.28)	$ (0.67)	$ (0.98)	$ (0.35)
Anti-dilutive securities excluded from calculations of diluted net loss per share:
Options to purchase common stock and restricted stock units									4,444,912	5,219,183	4,559,432

Summary of Available-For-Sale Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	$ 65,586	$ 31,631
Current Investment
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	65,565	31,621
Gross Unrealized Gains	27	10
Gross Unrealized Losses	(6)
Fair Market Value	65,586	31,631
Current Investment \| U.S. Treasury and government agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	31,557	14,439
Gross Unrealized Gains	9	3
Fair Market Value	31,566	14,442
Current Investment \| Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,008	17,182
Gross Unrealized Gains	18	7
Gross Unrealized Losses	(6)
Fair Market Value	$ 34,020	$ 17,189

Summary of Prepaid Expenses and Other Current Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Prepaid Expenses And Other Current Assets [Line Items]
Prepaid insurance	$ 167	$ 155
Other prepaid expenses and vendor advances	2,408	3,536
Accrued interest income	128	276
Total prepaid expenses and other current assets	$ 2,703	$ 3,967

- Definition

Amount of asset related to consideration paid in advance for insurance that provides economic benefits within a future period of one year or the normal operating cycle, if longer.

+ References+ Details

Summary of Property and Equipment-at Cost (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,447	$ 3,166
Less-accumulated depreciation and amortization	(1,249)	(818)
Property and equipment, net	2,198	2,348
Computer equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Property and equipment, gross	983	768
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	7 years
Property and equipment, gross	580	572
Leasehold improvements
Property, Plant and Equipment [Line Items]
Leasehold improvements	11 years
Property and equipment, gross	$ 1,884	$ 1,826

Summary of Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	8 years	8 years
Gross Carrying Amount	$ 12,000	$ 12,000
Accumulated Amortization	6,963	5,468
Net Carrying Amount	$ 5,037	$ 6,532

Intangible Asset - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2009 Fanapt
Finite-Lived Intangible Assets [Line Items]
Payment for original sublicense agreement				$ 12,000,000
Amortization of intangible asset	$ 1,495,000	$ 1,495,000	$ 1,495,000

Schedule of Future Intangible Asset Amortization (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule Of Estimated Future Amortization Expense [Line Items]
Net Carrying Amount	$ 5,037	$ 6,532
2014	1,495
2015	1,495
2016	1,495
2017	$ 552

Summary of Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accrued Liabilities [Line Items]
Accrued research and development expenses	$ 2,324	$ 3,900
Accrued consulting and other professional fees	2,015	386
Employee benefits	176	127
Accrued lease exit liability (refer to footnote 10)	59	453	740
Other accrued liabilities	606	321
Total accrued liabilities	$ 5,180	$ 5,187

- Definition

Carrying value as of the balance sheet date of obligations incurred through that date and payable for professional fees, such as for legal and accounting services received. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

+ References+ Details

- Definition

Carrying value as of the balance sheet date of obligations incurred through that date and payable arising from transactions not otherwise specified in the taxonomy. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

+ References+ Details

Summary of Changes in Total Deferred Revenue (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Deferred Revenue Arrangement [Line Items]
Balance at Beginning of Period	$ 117,064	$ 143,853	$ 170,642
Reduction from Licensing Revenue Recognized	26,789	26,789	26,789
Balance at End of Period	$ 90,275	$ 117,064	$ 143,853

Deferred Revenue - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2009 Fanapt
Deferred Revenue Arrangement [Line Items]
Upfront payment received				$ 200,000,000
Licensing agreement	$ 26,789,000	$ 26,789,000	$ 26,789,000
Hatch-Waxman Extension	5 years
Hatch-Waxman Pediatric Extension	6 months

Summary of Minimum Annual Future Payments Under Operating Leases (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Operating Leased Assets [Line Items]
Operating leases, Cash payments due by period, Total	$ 10,750
Operating leases, Cash payments due by period, 2014	1,111
Operating leases, Cash payments due by period, 2015	1,079
Operating leases, Cash payments due by period, 2016	1,106
Operating leases, Cash payments due by period, 2017	1,133
Operating leases, Cash payments due by period, 2018	1,162
Operating leases, Cash payments due by period, After 2018	$ 5,159

Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011 sqft
Operating leases
Total area of Vanda's current headquarters in sq ft			21,400
Allowance for tenant improvements		$ 1.9
Lease termination penalty expense, Rockville			(0.7)
Rent expense	1.1	2.0	2.1
Washington DC Lease
Operating leases
Lease expiration date	Jun. 30, 2013
Office space in Washington, D.C., operating lease termination year	2023
Renewal term of Lease agreement for Vanda's current headquarters			5 years
Rockville Lease
Operating leases
Rent expense		0.8
Lease exit liability component		1.3
Reversal of deferred rent liability component		(0.5)
Rockville Lease \| Research and development
Operating leases
Lease termination penalty expense, Rockville			0.6
Rent expense		0.6
Rockville Lease \| General and Administrative Expense
Operating leases
Lease termination penalty expense, Rockville			0.1
Rent expense		$ 0.2

Summary of Lease Exit Activity (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restructuring Reserve Disclosures [Abstract]
Balance at Beginning of Period	$ 453	$ 740
Costs Incurred and Charged to Expense	(10)	1,220	740
Costs Paid or Otherwise Settled	384	1,507
Balance at End of Period	$ 59	$ 453	$ 740

- Definition

Amount of expenses associated with exit or disposal activities pursuant to an authorized plan. Excludes expenses related to a discontinued operation or an asset retirement obligation.

+ References+ Details

Commitments and Contingencies (Textual 1 - Consulting Agreement) - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Consulting Fees
HETLIOZ milestone payment made to consultant based on FDA acceptance of NDA	$ 28,190,000	$ 45,446,000	$ 28,996,000
Consulting Agreement
Consulting Fees
HETLIOZ milestone payment made to consultant based on FDA acceptance of NDA	500,000
Future obligation to make HETLIOZ milestone payment based on FDA approval of NDA	$ 2,000,000

- Definition

The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use.

+ References+ Details

Commitments and Contingencies (Textual 2 - HETLIOZ) - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended
	Jul. 31, 2013	Dec. 31, 2004	Dec. 31, 2013 License Agreement	Dec. 31, 2004 Hetlioz Maximum	Dec. 31, 2004 Hetlioz License Agreement
HETLIOZ
Milestone payment under license agreement	$ 3.0	$ 0.5	$ 1.0
Possible future milestone payments				37.0	8.0
Possible future milestone payment in the event HETLIOZ reaches a certain agreed upon sales threshold		$ 25.0
Future percentage of royalty payments based net sales of HETLIOZ		Low teens
Percentage of future sublicense fees payable to BMS		Mid-twenties

Commitments and Contingencies (Textual 3 - Fanapt) - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended
	Jul. 31, 2013	Dec. 31, 2004	Dec. 31, 2009 Fanapt	Dec. 31, 2004 Fanapt	Dec. 31, 2004 Fanapt Maximum
Fanapt
Milestone payment under license agreement	$ 3.0	$ 0.5	$ 12.0	$ 0.5
Possible future Fanapt maximum milestone payments to Novartis					100.0
Future royalty payments to Novartis based on sales		Low teens		Mid-twenties
Upfront payment received			200.0
Potential future maximum milestone payments from Novartis			$ 265.0

Commitments and Contingencies (Textual 4 - VLY 686) - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended
	Jul. 31, 2013	Dec. 31, 2004	Dec. 31, 2012 VLY 686	Dec. 31, 2012 VLY 686 License Agreement
VLY-686
Milestone payment under license agreement	$ 3.0	$ 0.5	$ 1.0
Possible future royalties to Lilly on net sales		Low teens	Low double digits
Possible future payments to Lilly based on achievement of VLY - 686 pre-NDA approval milestones			$ 4.0	$ 95.0

Summary of Current and Deferred Income Tax Provision (Benefit) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current income tax expense (benefit):
Federal			$ (1,114)
State			(1,151)
Deferred income tax expense (benefit):
Federal			1,821
State
Total income tax expense (benefit)			$ (444)

- Definition

Amount of current federal tax expense (benefit) pertaining to income (loss) from continuing operations.

+ References+ Details

- Definition

Amount of current state and local tax expense (benefit) pertaining to income (loss) from continuing operations.

+ References+ Details

- Definition

Amount of deferred federal income tax expense (benefit) pertaining to income (loss) from continuing operations.

+ References+ Details

- Definition

Amount of deferred state and local tax expense (benefit) pertaining to income (loss) from continuing operations.

+ References+ Details

Reconciliation Between Statutory Tax Rate and Effective Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Rate Reconciliation [Line Items]
Federal tax at statutory rate	(34.00%)	(34.00%)	(34.00%)
State taxes	(4.00%)	(3.30%)	(5.30%)
Change in valuation allowance	43.90%	70.30%	101.10%
Research and development credit	(1.10%)	0.80%	(4.60%)
Orphan drug credit	(22.70%)	(30.30%)	(60.40%)
Stock options		1.40%	(0.20%)
Section 162(m) limitation	1.20%
Tax rate change	(0.30%)	(7.00%)
Other non-deductible items	(1.50%)	2.10%	(0.90%)
Effective tax rate			(4.30%)
Maryland
Income Tax Rate Reconciliation [Line Items]
Change in valuation allowance	18.50%

Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
Income Taxes - Additional Information (Detail) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Line Items]
Deductible expenses resulting from change in tax accounting method approved by IRS			$ 53,800,000
Tax benefit recorded			(444,000)
Increase (decrease) in tax valuation allowance, net	7,900,000	19,400,000	10,300,000
Net operating loss carryforwards beginning expiration year	2028
Carryforward credits beginning expiration year	2024
Federal
Income Taxes [Line Items]
Operating loss carryforwards, net	130,600,000
State
Income Taxes [Line Items]
Operating loss carryforwards, net	140,200,000
Operating loss carryforwards, excess windfall benefits generated from stock options	1,300,000
Research and development
Income Taxes [Line Items]
Tax credits carryforwards	6,400,000
Orphan Drug
Income Taxes [Line Items]
Tax credits carryforwards	$ 32,200,000

Components of Deferred Tax Assets, Net and Related Valuation Allowance (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Net operating loss carryforwards	$ 48,206	$ 38,840
Stock-based compensation	17,626	17,348
Deferred revenue	36,670	47,509
Accrued and deferred expenses	566	522
Research and development and orphan drug credit carryforwards	38,597	31,302
Depreciation and amortization, net	110	28
Total deferred tax assets	141,775	135,549
Deferred tax liabilities:
Licensing agreements	(616)	(2,273)
Unrealized gain on available for sale securities	(9)	(4)
Total deferred tax liabilities	(625)	(2,277)
Deferred tax assets	141,150	133,272
Valuation allowance	(141,150)	(133,272)
Net deferred tax assets

Assets Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 65,586	$ 31,631
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	31,566	14,442
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 34,020	$ 17,189

Summary of Restricted Cash Used to Collateralize Various Letters of Credit (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash, current	$ 530	$ 430	$ 430
Restricted cash, non-current	500	600	600
Office Lease \| Rockville, Maryland
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash, current	430		430
Office Lease \| Washington, D.C.
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash, non-current	500		500
Board of Pharmacy license \| Maryland
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash, current	100
Restricted cash, non-current			$ 100

- Definition

The carrying amounts of cash and cash equivalent items which are restricted as to withdrawal or usage. Restrictions may include legally restricted deposits held as compensating balances against short-term borrowing arrangements, contracts entered into with others, or entity statements of intention with regard to particular deposits; however, time deposits and short-term certificates of deposit are not generally included in legally restricted deposits. Excludes compensating balance arrangements that are not agreements which legally restrict the use of cash amounts shown on the balance sheet. For a classified balance sheet represents the current portion only (the noncurrent portion has a separate concept); there is a separate and distinct element for unclassified presentations.

+ References+ Details

Public Offering of Common Stock - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Stockholders Equity Note [Line Items]
Public common stock offering, shares	4,680,000
Common stock offering price, per share	$ 11.14
Net cash proceeds from public common stock offering	$ 48,505

Equity Incentive Plans (Textual 1 - Equity Incentive Plan) - Additional Information (Detail)											12 Months Ended
	Dec. 31, 2013 EquityPlan	Dec. 31, 2013 2004 Plan	Dec. 31, 2012 2004 Plan	Dec. 31, 2011 2004 Plan	Dec. 31, 2010 2004 Plan	Dec. 31, 2013 2006 Plan	Dec. 31, 2012 2006 Plan	Dec. 31, 2011 2006 Plan	Dec. 31, 2010 2006 Plan	Dec. 31, 2013 2006 Plan Outstanding options and RSUs granted (RSUs)	Dec. 31, 2013 2006 Plan January 1, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity incentive plans	2
Outstanding options granted		670,744	672,145	677,145	680,754	5,533,618	4,865,487	4,254,681	3,324,790
Common stock reserved for issuance						8,995,930					10,329,472
Shares subject to outstanding options and RSUs										6,417,308
Shares available for future grant										1,029,399
Increase each January 1 in the number of shares reserved under 2006 Plan as a percentage of common stock outstanding											4.00%
Minimum increase each January 1 in the number of shares reserved											1,500,000
Increase in number of shares reserved and available for future grant											1,333,542

Equity Incentive Plans (Textual 2 Stock Option) - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation option awards contractual term	10 years
Portion of initial stock options granted to employees that vests on employee's first anniversary	25.00%
Portion of initial stock options granted to employees that vests ratably over three years after completion of first year of service	75.00%
Option awards vesting period, after completion of one year of service	3 years
Vesting period	4 years
Vesting period for initial stock options granted to directors	4 years
Vesting period for subsequent stock options granted to directors	1 year
Proceeds from the exercise of stock options	$ 1,550,000	$ 12,000	$ 25,000
2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected to vest at December 31, 2013	0
Service option awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 7,300,000
Unrecognized compensation expenses, weighted average period	2 years

Summary of Option Activity for 2004 Plan (Detail) (2004 Plan, USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
2004 Plan
Number of Shares
Beginning balance	672,145	677,145	680,754
Expired	(115)
Exercised	(1,286)	(5,000)	(3,609)
Ending balance	670,744	672,145	677,145	680,754
Exercisable	670,744
Weighted Average Exercise Price at Grant Date
Beginning balance	$ 1.79	$ 1.78	$ 1.77
Expired	$ 4.73
Exercised	$ 3.67	$ 0.33	$ 0.33
Ending balance	$ 1.79	$ 1.79	$ 1.78	$ 1.77
Exercisable	$ 1.79
Weighted Average Remaining Term (Years)
Weighted Average Remaining Term	1 year 9 months 11 days	2 years 9 months 11 days	3 years 9 months 11 days	4 years 9 months 7 days
Exercisable	1 year 9 months 11 days
Aggregate Intrinsic Value
Beginning balance	$ 1,512	$ 2,016	$ 5,232
Exercised		14	22
Ending balance	7,124	1,512	2,016	5,232
Exercisable	$ 7,124

Summary of Option Activity for 2006 Plan (Detail) (2006 Plan, USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
2006 Plan
Number of Shares
Beginning balance	4,865,487	4,254,681	3,324,790
Granted	1,245,500	846,000	982,000
Forfeited	(54,226)	(149,091)	(26,764)
Expired	(259,295)	(76,103)	(15,369)
Exercised	(263,848)	(10,000)	(9,976)
Ending balance	5,533,618	4,865,487	4,254,681	3,324,790
Exercisable	3,411,214
Expected to vest at December 31, 2013	2,025,061
Weighted Average Exercise Price at Grant Date
Beginning balance	$ 10.83	$ 12.16	$ 14.07
Granted	$ 10.18	$ 3.42	$ 5.55
Forfeited	$ 6.14	$ 7.50	$ 9.24
Expired	$ 10.65	$ 10.68	$ 13.51
Exercised	$ 5.86	$ 1.02	$ 2.38
Ending balance	$ 10.98	$ 10.83	$ 12.16	$ 14.07
Exercisable	$ 12.90
Expected to vest at December 31, 2013	$ 7.83
Weighted Average Remaining Term (Years)
Weighted Average Remaining Term	6 years 11 months 5 days	7 years 1 month 24 days	7 years 7 months 24 days	8 years 4 days
Exercisable	5 years 6 months 29 days
Expected to vest at December 31, 2013	9 years 26 days
Aggregate Intrinsic Value
Beginning balance	$ 634	$ 396	$ 3,426
Exercised	1,545	22	37
Ending balance	21,264	634	396	3,426
Exercisable	11,673
Expected to vest at December 31, 2013	$ 9,291

Equity Incentive Plans (Textual 3 RSU) - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of RSU awards in equal installments	4 years
Fair value of common stock vested	$ 1,300,000
Common shares received in payment of payroll taxes (shares)	49,520
Tax obligations paid in connection with settlement of restricted stock units	196,000
2006 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of common stock vested, shares	201,186	2,500
Service Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs related to unvested awards, weighted average period	2 years 2 months 12 days
Unrecognized compensation expenses related to unvested RSUs	$ 5,400,000

Summary of RSU Activity for 2006 Plan (Detail) (2006 Plan, USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
2006 Plan
Number of Shares Unvested
Beginning balance	705,376	522,346	359,563
Granted	400,500	245,000	283,000
Vested	(201,186)		(2,500)
Vested and unissued			(109,717)
Forfeited	(21,000)	(61,970)	(8,000)
Ending balance	883,690	705,376	522,346
Weighted Average Price/Share Unvested
Beginning balance	$ 5.91	$ 7.43	$ 9.75
Granted	$ 10.29	$ 3.28	$ 5.39
Vested	$ 6.71		$ 0.80
Vested and unissued			$ 9.74
Forfeited	$ 6.41	$ 7.64	$ 9.57
Ending balance	$ 7.70	$ 5.91	$ 7.43

Employee Benefit Plan - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Benefit Plan [Line Items]
Defined contribution plan employer matching percent	50.00%
Defined contribution plan maximum employee contribution percent	6.00%
Defined contribution plan vesting period	4 years
Defined contribution plan matching amount	$ 0.2	$ 0.1	$ 0.1

Subsequent Events - Additional Information (Detail) (USD $)	1 Months Ended	12 Months Ended							12 Months Ended				0 Months Ended
	May 31, 2009	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2016 Scenario, Forecast	Dec. 31, 2015 Scenario, Forecast	Dec. 31, 2014 Scenario, Forecast	Dec. 31, 2013 Scenario, Forecast	Dec. 31, 2017 Previously Expected To Recognize	Dec. 31, 2016 Previously Expected To Recognize	Dec. 31, 2015 Previously Expected To Recognize	Dec. 31, 2014 Previously Expected To Recognize	Jan. 31, 2014 Subsequent Event	Jan. 31, 2014 Subsequent Event Consulting Fees
Subsequent Event [Line Items]
Milestone payments under license argreement	$ 12,000,000												$ 8,000,000
Milestone payments under regulatory consulting agreement		28,190,000	45,446,000	28,996,000										2,000,000
2014		1,495,000						1,700,000
2015		1,495,000						1,700,000
2016		1,495,000						1,600,000
2017		552,000
Deferred Revenue		$ 26,789,000	$ 26,789,000	$ 26,789,000	$ 28,500,000	$ 31,100,000	$ 30,700,000		$ 9,900,000	$ 26,800,000	$ 26,800,000	$ 26,800,000

- Definition

+ References+ Details

Quarterly Financial Data (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quarterly Financial Data [Line Items]
Revenue	$ 8,783	$ 8,709	$ 8,319	$ 8,068	$ 7,920	$ 8,288	$ 8,378	$ 8,141	$ 33,879	$ 32,727	$ 31,270
Loss from operations	(7,667)	(5,405)	(3,109)	(4,219)	(6,428)	(5,395)	(8,085)	(8,317)	(20,400)	(28,225)	(10,707)
Net loss	$ (7,623)	$ (5,380)	$ (3,079)	$ (4,173)	$ (6,369)	$ (5,326)	$ (8,007)	$ (7,962)	$ (20,255)	$ (27,664)	$ (9,802)
Net loss per share:
Basic	$ (0.23)	$ (0.17)	$ (0.11)	$ (0.15)	$ (0.23)	$ (0.19)	$ (0.28)	$ (0.28)	$ (0.67)	$ (0.98)	$ (0.35)
Diluted	$ (0.23)	$ (0.17)	$ (0.11)	$ (0.15)	$ (0.23)	$ (0.19)	$ (0.28)	$ (0.28)	$ (0.67)	$ (0.98)	$ (0.35)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Commitments and Contingencies (Textual 5 - Future Milestone Payments) - Additional Information (Detail) (USD $)	Dec. 31, 2013
Future milestone payments
Liabilities recorded, future license payments	$ 0
Liabilities recorded, contractual obligations relating to the license agreements	$ 0

Public Offering of Common Stock	12 Months Ended
Public Offering of Common Stock	Dec. 31, 2013
Public Offering of Common Stock	14. Public Offering of Common Stock In August 2013, the Company completed a public offering of 4,680,000 shares of common stock at a price to the public of $11.14 per share. Net cash proceeds from the public offering were $48.5 million, after deducting the underwriting discounts and commissions and offering expenses.

Commitments and Contingencies (Textual 6 - Agreements) - Additional Information (Detail) (Maximum)	12 Months Ended
	Dec. 31, 2013
Maximum
Agreements
Clinical services agreement notice period for termination	60 days