0001628280-23-038029 | 10-Q | XBRL Viewer | Vanda Pharmaceuticals INC

Marketable Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

The following is a summary of the Company’s available-for-sale marketable securities as of September 30, 2023, which all have contractual maturities of less than two years:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
(in thousands)
U.S. Treasury and government agencies	$	209,419	$	1	$	(1,078)	$	208,342
Corporate debt	98,490		—		(160)		98,330

Total marketable securities	$	307,909	$	1	$	(1,238)	$	306,672

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2022, which all have contractual maturities of less than two years:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
(in thousands)
U.S. Treasury and government agencies	$	178,351	$	—	$	(1,181)	$	177,170
Corporate debt	155,017		14		(371)		154,660

Total marketable securities	$	333,368	$	14	$	(1,552)	$	331,830

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ (257)	$ 2,191	$ 3,091	$ 2,273
Discrete income tax expense	$ 200	$ 400	$ 2,100	$ 1,800

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Commitments and Contingencies - VQW-765 - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023
VQW-765
Commitments and Contingencies [Line Items]
Future percentage of royalty payments based net sales	mid-teens

Inventory - Components of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets
Work-in-process	$ 0	$ 23
Finished goods	1,006	1,171
Total inventory, current	1,006	1,194
Non-Current assets
Raw materials	935	1,043
Work-in-process	7,532	8,212
Finished goods	770	1,041
Total inventory, non-current	9,237	10,296
Total inventory	$ 10,243	$ 11,490

Inventory

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventory

Inventory consisted of the following as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Current assets
Work-in-process	$	—	$	23
Finished goods	1,006		1,171
Total inventory, current	$	1,006	$	1,194
Non-Current assets
Raw materials	$	935	$	1,043
Work-in-process	7,532		8,212
Finished goods	770		1,041
Total inventory, non-current	9,237		10,296
Total inventory	$	10,243	$	11,490

Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out method. The Company evaluates the risk of excess inventory and product expiry by evaluating current and future product demand relative to product shelf life. The Company builds demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance, patient usage, and generic competition. The Company’s inventory balance consisted of $7.2 million and $8.0 million of HETLIOZ® product and $3.0 million and $3.4 million of Fanapt® product as of September 30, 2023 and December 31, 2022, respectively.

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 3,167	$ 3,888	$ 10,767	$ 12,496
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	739	981	2,538	3,040
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 2,428	$ 2,907	$ 8,229	$ 9,456

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

There have been no material changes to the significant accounting policies previously disclosed in the Annual Report.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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. Management continually re-evaluates its

estimates, judgments and assumptions, and management’s evaluation could change. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

For purposes of the Condensed Consolidated Balance Sheets and Condensed 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. Cash and cash equivalents include investments in money market funds with commercial banks and financial institutions, and commercial paper of high-quality corporate issuers. Restricted cash relates primarily to amounts held as collateral for letters of credit for leases for office space at the Company’s Washington, D.C. headquarters.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total end of period cash, cash equivalents and restricted cash reported within the Condensed Consolidated Statements of Cash Flows:


(in thousands)	September 30, 2023		September 30, 2022
Cash and cash equivalents	$	183,186	$	49,397


Restricted cash included in non-current inventory and other	469		469
Total cash, cash equivalents and restricted cash	$	183,655	$	49,866

Revenue from Net Product Sales

The Company’s net product sales consist of sales of HETLIOZ® and Fanapt®. Net sales by product for the three and nine months ended September 30, 2023 and 2022 were as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
HETLIOZ® net product sales	$	17,500	$	41,335	$	79,095	$	119,554
Fanapt® net product sales	21,315		23,983		68,274		70,346
Total net product sales	$	38,815	$	65,318	$	147,369	$	189,900

The Company’s HETLIOZ® net product sales as reported for the three months ended March 31, 2023 reflected higher unit sales as compared to recent prior periods. The higher unit sales during the three months ended March 31, 2023 resulted in a significant increase of inventory stocking at specialty pharmacy customers at March 31, 2023 and September 30, 2023. HETLIOZ® net product sales during the three months ended September 30, 2023 reflect lower unit sales as a result of the reduction of the elevated inventory levels at specialty pharmacy customers, and as a result of the impact of continued generic competition. HETLIOZ® net product sales may continue to reflect lower unit sales as a result of continued reduction of the elevated inventory levels at specialty pharmacy customers. Further, HETLIOZ® net product sales will likely decline in future periods, potentially significantly, related to the at-risk launch of a generic version of HETLIOZ® in the U.S. Additionally, the Company constrained HETLIOZ® net product sales for the three and nine months ended September 30, 2023 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the three months ended September 30, 2023 related to changes in estimates on revenue constrained during the six months ended June 30, 2023 was not material. HETLIOZ® net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved.

Major Customers

HETLIOZ® is available in the U.S. for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. Fanapt® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. The Company invoices and records revenue when its customers, specialty pharmacies and wholesalers, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. There were six major customers that each accounted for more than 10% of total revenues and, as a group, represented 89% of total revenues for the nine months ended September 30, 2023. There were four major customers that each accounted for more than 10% of accounts receivable and, as a group, represented 90% of total accounts receivable at September 30, 2023. Receivables are carried at transaction price net of allowance for credit losses. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material impact on the Company’s condensed consolidated financial statements or related disclosures.

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 30, 2018	Jan. 31, 2014	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2018	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization			$ 380	$ 379	$ 1,137	$ 1,137
HETLIOZ®
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets		$ 8,000					$ 25,000
Cumulative worldwide sales milestone	$ 250,000
Fully amortized intangible assets			33,000		33,000			$ 33,000
Fully amortized intangible assets, amortization			15,572		15,572			14,435
Fanapt®
Finite-Lived Intangible Assets [Line Items]
Fully amortized intangible assets			27,900		27,900			27,900
Fully amortized intangible assets, amortization			$ 27,900		$ 27,900			$ 27,900

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		55,900,855
Beginning balance at Dec. 31, 2021	$ 504,928	$ 56	$ 669,223	$ (175)	$ (164,176)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		585,857
Stock-based compensation expense	4,778		4,778
Net income (loss)	(6,430)				(6,430)
Other comprehensive income (loss), net of tax	(1,153)			(1,153)
Ending balance (in shares) at Mar. 31, 2022		56,486,712
Ending balance at Mar. 31, 2022	502,123	$ 56	674,001	(1,328)	(170,606)
Beginning balance (in shares) at Dec. 31, 2021		55,900,855
Beginning balance at Dec. 31, 2021	504,928	$ 56	669,223	(175)	(164,176)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(586)
Other comprehensive income (loss), net of tax	(1,310)
Ending balance (in shares) at Sep. 30, 2022		56,588,548
Ending balance at Sep. 30, 2022	515,657	$ 57	681,847	(1,485)	(164,762)
Beginning balance (in shares) at Mar. 31, 2022		56,486,712
Beginning balance at Mar. 31, 2022	502,123	$ 56	674,001	(1,328)	(170,606)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		65,750
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	125	$ 1	124
Stock-based compensation expense	3,830		3,830
Net income (loss)	2,574				2,574
Other comprehensive income (loss), net of tax	(103)			(103)
Ending balance (in shares) at Jun. 30, 2022		56,552,462
Ending balance at Jun. 30, 2022	508,549	$ 57	677,955	(1,431)	(168,032)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		36,086
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	4		4
Stock-based compensation expense	3,888		3,888
Net income (loss)	3,270				3,270
Other comprehensive income (loss), net of tax	(54)			(54)
Ending balance (in shares) at Sep. 30, 2022		56,588,548
Ending balance at Sep. 30, 2022	$ 515,657	$ 57	681,847	(1,485)	(164,762)
Beginning balance (in shares) at Dec. 31, 2022	56,783,764	56,783,764
Beginning balance at Dec. 31, 2022	$ 527,198	$ 57	686,235	(1,193)	(157,901)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		657,228
Stock-based compensation expense	4,351		4,351
Net income (loss)	3,252				3,252
Other comprehensive income (loss), net of tax	938			938
Ending balance (in shares) at Mar. 31, 2023		57,440,992
Ending balance at Mar. 31, 2023	$ 535,739	$ 57	690,586	(255)	(154,649)
Beginning balance (in shares) at Dec. 31, 2022	56,783,764	56,783,764
Beginning balance at Dec. 31, 2022	$ 527,198	$ 57	686,235	(1,193)	(157,901)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	4,909
Other comprehensive income (loss), net of tax	$ 226
Ending balance (in shares) at Sep. 30, 2023	57,529,499	57,529,499
Ending balance at Sep. 30, 2023	$ 543,100	$ 58	697,001	(967)	(152,992)
Beginning balance (in shares) at Mar. 31, 2023		57,440,992
Beginning balance at Mar. 31, 2023	535,739	$ 57	690,586	(255)	(154,649)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		55,921
Stock-based compensation expense	3,249		3,249
Net income (loss)	1,520				1,520
Other comprehensive income (loss), net of tax	(610)			(610)
Ending balance (in shares) at Jun. 30, 2023		57,496,913
Ending balance at Jun. 30, 2023	539,898	$ 57	693,835	(865)	(153,129)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from the exercise of stock options and settlement of restricted stock units (in shares)		32,586
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	0	$ 1	(1)
Stock-based compensation expense	3,167		3,167
Net income (loss)	137				137
Other comprehensive income (loss), net of tax	$ (102)			(102)
Ending balance (in shares) at Sep. 30, 2023	57,529,499	57,529,499
Ending balance at Sep. 30, 2023	$ 543,100	$ 58	$ 697,001	$ (967)	$ (152,992)

- Definition

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

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+ Details

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

+ References

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Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References

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+ Details

Stock-Based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of Shares
Beginning balance (in shares) \| shares	1,915,546
Granted (in shares) \| shares	868,243
Forfeited (in shares) \| shares	(119,680)
Vested (in shares) \| shares	(746,735)
Ending balance (in shares) \| shares	1,917,374
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) \| $ / shares	$ 14.41
Granted (in dollars per share) \| $ / shares	6.96
Forfeited (in dollars per share) \| $ / shares	12.92
Vested (in dollars per share) \| $ / shares	15.05
Ending balance (in dollars per share) \| $ / shares	$ 10.88

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

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

The Company’s assets classified in Level 1 and Level 2 as of September 30, 2023 and December 31, 2022 consist of cash equivalents and 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 Level 2 instruments is also 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 and corporate notes that use as their basis readily observable market parameters.

The Company held certain assets that are required to be measured at fair value on a recurring basis as of September 30, 2023, as follows:


			Fair Value Measurement as of September 30, 2023 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	208,342	$	208,342	$	—	$	—
Corporate debt	98,330		—		98,330		—

Total assets measured at fair value	$	306,672	$	208,342	$	98,330	$	—

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2022, as follows:


			Fair Value Measurement as of December 31, 2022 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	177,170	$	177,170	$	—	$	—
Corporate debt	154,660		—		154,660		—

Total assets measured at fair value	$	331,830	$	177,170	$	154,660	$	—

Total assets measured at fair value as of September 30, 2023 and December 31, 2022 include no cash equivalents.

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, accounts receivable, restricted cash, accounts payable and accrued liabilities, and product revenue allowances, the carrying values of which materially approximate their fair values.

- 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

Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible AssetsHETLIOZ®. In January 2014, the Company announced that the FDA had approved the New Drug Application (NDA) for HETLIOZ®. As a result of this approval, the Company met a milestone under its license agreement with Bristol-Myers Squibb (BMS) that required the Company to make a license payment of $8.0 million to BMS. In April 2018, the Company met its final milestone under its license agreement with BMS when cumulative worldwide sales of HETLIOZ® reached $250.0 million. As a result of the achievement of this milestone, the Company made a payment to BMS of $25.0 million in 2018. These milestone payments were determined to be additional consideration for the acquisition of HETLIOZ® and capitalized as an intangible asset and are being amortized on a straight-line basis over the estimated economic useful life of the related product patents.

The following is a summary of the Company’s intangible assets as of September 30, 2023:


		September 30, 2023
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	15,572	$	17,428

The following is a summary of the Company’s intangible assets as of December 31, 2022:


		December 31, 2022
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	14,435	$	18,565

As of September 30, 2023 and December 31, 2022, the Company also had $27.9 million of fully amortized intangible assets related to Fanapt®.

Intangible assets are amortized over their estimated useful economic life using the straight-line method. Amortization expense was $0.4 million for each of the three months ended September 30, 2023 and 2022. Amortization expense was $1.1 million for each of the nine months ended September 30, 2023 and 2022. The following is a summary of the future intangible asset amortization schedule as of September 30, 2023:


(in thousands)	Total		2023		2024		2025		2026		2027		Thereafter
HETLIOZ®	$	17,428	$	366	$	1,463	$	1,463	$	1,463	$	1,463	$	11,210

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Stockholders’ equity:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	57,529,499	56,783,764
Common stock, shares outstanding (in shares)	57,529,499	56,783,764

Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Basic and Diluted Net Income Per Share of Common Stock

The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended				Nine Months Ended
(in thousands, except for share and per share amounts)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Numerator:
Net income (loss)	$	137	$	3,270	$	4,909	$	(586)
Denominator:
Weighted average shares outstanding, basic	57,519,031		56,574,503		57,329,969		56,397,805
Effect of dilutive securities	76,313		394,530		182,256		—
Weighted average shares outstanding, diluted	57,595,344		56,969,033		57,512,225		56,397,805
Net income (loss) per share, basic and diluted:
Basic	$	0.00	$	0.06	$	0.09	$	(0.01)
Diluted	$	0.00	$	0.06	$	0.09	$	(0.01)
Antidilutive securities excluded from calculations of diluted net income (loss) per share	6,724,127		5,238,283		6,526,562		5,199,487

Summary of Significant Accounting Policies - Net Product Sales (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue from External Customer [Line Items]
Net product sales	$ 38,815	$ 65,318	$ 147,369	$ 189,900
HETLIOZ® net product sales
Revenue from External Customer [Line Items]
Net product sales	17,500	41,335	79,095	119,554
Fanapt® net product sales
Revenue from External Customer [Line Items]
Net product sales	$ 21,315	$ 23,983	$ 68,274	$ 70,346

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities
Net income (loss)	$ 4,909,000	$ (586,000)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property and equipment	715,000	933,000
Stock-based compensation	10,767,000	12,496,000
Amortization of premiums and accretion of discounts on marketable securities	(7,053,000)	(1,160,000)
Loss on sale of marketable securities	655,000	0
Intangible asset amortization	1,137,000	1,137,000
Deferred income taxes	6,198,000	713,000
Other non-cash adjustments, net	2,772,000	1,612,000
Changes in operating assets and liabilities:
Accounts receivable	4,129,000	2,982,000
Prepaid expenses and other assets	1,333,000	(9,583,000)
Inventory	(344,000)	(3,349,000)
Accounts payable and other liabilities	(14,315,000)	15,070,000
Product revenue allowances	5,630,000	2,303,000
Net cash provided by operating activities	16,533,000	22,568,000
Cash flows from investing activities
Purchases of property and equipment	(130,000)	(416,000)
Purchases of marketable securities	(457,628,000)	(344,949,000)
Sales and maturities of marketable securities	489,485,000	319,862,000
Net cash provided by (used in) investing activities	31,727,000	(25,503,000)
Cash flows from financing activities
Proceeds from exercise of stock options	0	129,000
Net cash provided by financing activities	0	129,000
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(103,000)	82,000
Net change in cash, cash equivalents and restricted cash	48,157,000	(2,724,000)
Cash, cash equivalents and restricted cash
Beginning of period	135,498,000	52,590,000
End of period	$ 183,655,000	$ 49,866,000

Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Accumulated Other Comprehensive Loss

The accumulated balances related to each component of other comprehensive loss, net of taxes, were as follows as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Foreign currency translation	$	(13)	$	(7)
Unrealized loss on marketable securities	(954)		(1,186)
Accumulated other comprehensive loss	$	(967)	$	(1,193)

Business Organization and Presentation (Details)	9 Months Ended
Business Organization and Presentation (Details)	Sep. 30, 2023 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1
Number of reportable segments	1

Summary of Significant Accounting Policies - Major Customers (Details) - Major Customers	9 Months Ended
	Sep. 30, 2023 customer
Customer Concentration Risk \| Sales Revenue, Net
Summary Of Significant Accounting Policies [Line Items]
Number of major customers that each accounted for more than 10% of total revenues	6
Concentration risk, percentage	89.00%
Credit Concentration Risk \| Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage	90.00%
Number of major customers that each accounted for more than 10% of total accounts receivable	4

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 02, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-34186
Entity Registrant Name	VANDA PHARMACEUTICALS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	03-0491827
Entity Address, Address Line One	2200 Pennsylvania Avenue NW
Entity Address, Address Line Two	Suite 300E
Entity Address, City or Town	Washington
Entity Address, State or Province	DC
Entity Address, Postal Zip Code	20037
City Area Code	202
Local Phone Number	734-3400
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	VNDA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		57,531,999
Entity Central Index Key	0001347178
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Summary of Available-for-Sale Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of September 30, 2023, which all have contractual maturities of less than two years:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
(in thousands)
U.S. Treasury and government agencies	$	209,419	$	1	$	(1,078)	$	208,342
Corporate debt	98,490		—		(160)		98,330

Total marketable securities	$	307,909	$	1	$	(1,238)	$	306,672

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2022, which all have contractual maturities of less than two years:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
(in thousands)
U.S. Treasury and government agencies	$	178,351	$	—	$	(1,181)	$	177,170
Corporate debt	155,017		14		(371)		154,660

Total marketable securities	$	333,368	$	14	$	(1,552)	$	331,830

Inventory - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory [Line Items]
Inventory	$ 10,243	$ 11,490
HETLIOZ®
Inventory [Line Items]
Inventory	7,200	8,000
Fanapt®
Inventory [Line Items]
Inventory	$ 3,000	$ 3,400

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

As of September 30, 2023, there were 6,963,943 shares subject to outstanding options and restricted stock units (RSUs) under the 2006 Equity Incentive Plan (2006 Plan) and the Amended and Restated 2016 Equity Incentive Plan (2016 Plan, and together with the 2006 Plan, Plans). The 2006 Plan expired by its terms in April 2016, and the Company adopted the 2016 Plan. Outstanding options under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan. In June 2016, the Company’s stockholders approved the 2016 Plan. The 2016 Plan has been amended a number of times since to increase the number of shares reserved for issuance, among other administrative changes. Each of the amendments to the 2016 Plan was approved by the Company’s stockholders. There is a total of 13,790,000 shares of common stock authorized for issuance under the 2016 Plan, 4,529,226 shares of which remained available for future grant as of September 30, 2023.

Stock Options

The Company has granted option awards under the Plans 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. Service option awards granted to employees and new directors upon their election vest and become exercisable over four years, with the first 25% of the shares subject to service option awards vesting on the first anniversary of the grant date and the remaining 75% of the shares subject to the service option awards in 36 equal monthly installments thereafter. Subsequent annual service option awards granted to directors vest and become exercisable in full on the first anniversary of the grant date. Service option awards granted to executive officers and certain other employees provide for partial acceleration of vesting if the executive officer or employee is subject to an involuntary termination, and full acceleration of vesting if the executive officer or employee is subject to an involuntary termination within 24 months after a change in control of the Company. Service option awards granted to directors provide for accelerated vesting if there is a change in control of the Company or if the director’s service terminates as a result of the director’s death or total and permanent disability.

As of September 30, 2023, $7.1 million of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of 1.2 years. No option awards are classified as a liability as of September 30, 2023.

A summary of option activity under the Plans for the nine months ended September 30, 2023 follows:


(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, 2022	4,232,210	$	14.19	5.81	$	—
Granted	944,776	6.92

Expired	(130,417)	12.38

Outstanding at September 30, 2023	5,046,569	12.88		5.94	—
Exercisable at September 30, 2023	3,436,844	14.26		4.60	—
Vested and expected to vest at September 30, 2023	4,837,998	13.08		5.81	—

The weighted average grant date fair value of options granted was $3.53 and $5.18 per share for the nine months ended September 30, 2023 and 2022, respectively. There were no proceeds from the exercise of stock options for the nine months ended September 30, 2023. Proceeds from the exercise of stock options amounted to $0.1 million for the nine months ended September 30, 2022.

Restricted Stock Units

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 under the Plans with service conditions (service RSUs) that are subject to terms and conditions established by the compensation committee of the board of directors. Service RSUs granted to employees and new directors upon their election vest in four equal annual installments. Subsequent annual service RSUs granted to directors vest on the first anniversary of the date of grant. Service RSUs granted to executive officers and certain other employees provide for accelerated vesting if the executive officer or employee is subject to an involuntary termination within 24 months after a change in control. Service RSUs granted to directors provide for accelerated vesting if there is a change in control of the Company.

As of September 30, 2023, $16.1 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 1.5 years. No RSUs are classified as a liability as of September 30, 2023.

A summary of RSU activity for the Plans for the nine months ended September 30, 2023 is as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	1,915,546	$	14.41
Granted	868,243	6.96
Forfeited	(119,680)	12.92
Vested	(746,735)	15.05
Unvested at September 30, 2023	1,917,374	10.88

The grant date fair value for the 746,735 shares underlying RSUs that vested during the nine months ended September 30, 2023 was $11.2 million.

Stock-Based Compensation Expense

Stock-based compensation expense recognized for the three and nine months ended September 30, 2023 and 2022 was comprised of the following:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Research and development	$	739	$	981	$	2,538	$	3,040
Selling, general and administrative	2,428		2,907		8,229		9,456
Total stock-based compensation expense	$	3,167	$	3,888	$	10,767	$	12,496

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 expected terms are determined based on a combination of

historical exercise data and hypothetical exercise data for unexercised stock options. 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 never paid cash dividends to its stockholders 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 nine months ended September 30, 2023 and 2022 were as follows:


	Nine Months Ended
	September 30, 2023		September 30, 2022
Expected dividend yield	0	%	0	%
Weighted average expected volatility	47	%	46	%
Weighted average expected term (years)	6.16		6.05
Weighted average risk-free rate	3.89	%	2.03	%

Earnings per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

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, as calculated using the treasury stock method.

The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended				Nine Months Ended
(in thousands, except for share and per share amounts)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Numerator:
Net income (loss)	$	137	$	3,270	$	4,909	$	(586)
Denominator:
Weighted average shares outstanding, basic	57,519,031		56,574,503		57,329,969		56,397,805
Effect of dilutive securities	76,313		394,530		182,256		—
Weighted average shares outstanding, diluted	57,595,344		56,969,033		57,512,225		56,397,805
Net income (loss) per share, basic and diluted:
Basic	$	0.00	$	0.06	$	0.09	$	(0.01)
Diluted	$	0.00	$	0.06	$	0.09	$	(0.01)
Antidilutive securities excluded from calculations of diluted net income (loss) per share	6,724,127		5,238,283		6,526,562		5,199,487

The Company incurred a net loss for the nine months ended September 30, 2022 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.

Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 183,186	$ 135,029	$ 49,397
Restricted cash included in non-current inventory and other	469		469
Total cash, cash equivalents and restricted cash	$ 183,655	$ 135,498	$ 49,866	$ 52,590

Inventory (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventory

Inventory consisted of the following as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Current assets
Work-in-process	$	—	$	23
Finished goods	1,006		1,171
Total inventory, current	$	1,006	$	1,194
Non-Current assets
Raw materials	$	935	$	1,043
Work-in-process	7,532		8,212
Finished goods	770		1,041
Total inventory, non-current	9,237		10,296
Total inventory	$	10,243	$	11,490

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

The following is a summary of the Company’s intangible assets as of September 30, 2023:


		September 30, 2023
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	15,572	$	17,428

The following is a summary of the Company’s intangible assets as of December 31, 2022:


		December 31, 2022
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	14,435	$	18,565

Summary of Future Intangible Asset Amortization

The following is a summary of the future intangible asset amortization schedule as of September 30, 2023:


(in thousands)	Total		2023		2024		2025		2026		2027		Thereafter
HETLIOZ®	$	17,428	$	366	$	1,463	$	1,463	$	1,463	$	1,463	$	11,210

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies 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 BMS under which it received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize HETLIOZ®. As of September 30, 2023, the Company has paid BMS $37.5 million in upfront fees and milestone obligations, including $33.0 million of regulatory approval and commercial milestones capitalized as intangible assets (see Note 6, Intangible Assets). The Company has no remaining milestone obligations to BMS. Additionally, the Company is obligated to make royalty payments on HETLIOZ® net sales to BMS. The royalty period in each territory where the Company commercializes HETLIOZ® is 10 years following the first commercial sale in the territory. In territories outside the U.S., the royalty is 5% on net sales. In the U.S., the royalty on net sales in the U.S. decreased from 10% to 5% in December 2022. This U.S. royalty will end in April 2024. 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 it receives from a third party in connection with any sublicensing arrangement, at a rate which is in the mid-twenties. The Company is obligated to use its commercially reasonable efforts to develop and commercialize HETLIOZ®. Fanapt®. Pursuant to the terms of a settlement agreement with Novartis Pharma AG (Novartis), Novartis transferred all U.S. and Canadian rights in the Fanapt® franchise to the Company on December 31, 2014. The Company paid directly to Sanofi S.A. (Sanofi) a fixed royalty of 3% of net sales through December 2019 related to manufacturing know-how. The Company is also obligated to pay Sanofi a fixed royalty on Fanapt® net sales equal to 6% on Sanofi know-how not related to manufacturing under certain conditions for a period of up to 10 years in markets where the new chemical entity (NCE) patent has expired or was not issued. The Company is obligated to pay this 6% royalty on net sales in the U.S. through November 2026. Tradipitant. 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-1 receptor antagonist, tradipitant, for all human indications. Lilly is eligible to receive future payments based upon achievement of specified development, regulatory approval and commercialization milestones as well as tiered-royalties on net sales at percentage rates up to the low double digits. As of September 30, 2023, the Company has paid Lilly $3.0 million in upfront fees and development milestones. As of September 30, 2023, remaining milestone obligations include a $2.0 million development milestone due upon the filing of the first application for marketing authorization for tradipitant in either the U.S. or European Union (E.U.), $10.0 million and $5.0 million for the first approval of an application for marketing authorization for tradipitant in the U.S. and E.U., respectively, and up to $80.0 million for sales milestones. The Company is obligated to use its commercially reasonable efforts to develop and commercialize tradipitant. Portfolio of CFTR activators and inhibitors. In March 2017, the Company entered into a license agreement with the University of California San Francisco (UCSF), under which the Company acquired an exclusive worldwide license to develop and commercialize a portfolio of CFTR activators and inhibitors. Pursuant to the license agreement, the Company will develop and commercialize the CFTR activators and inhibitors and is responsible for all development costs, including current pre-investigational new drug development work. UCSF is eligible to receive future payments based upon achievement of specified development and commercialization milestones as well as single-digit royalties on net sales. As of September 30, 2023, the Company has paid UCSF $1.6 million in upfront fees and development milestones. As of September 30, 2023, remaining milestone obligations include $11.9 million for development milestones and $33.0 million for future regulatory approval and sales milestones. Included in the $11.9 million of development milestones are $1.1 million of milestone obligations due upon the conclusion of clinical studies for each licensed product but not to exceed $3.2 million in total for the CFTR portfolio. VQW-765. In connection with a settlement agreement with Novartis relating to Fanapt®, the Company received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist. Pursuant to the license agreement, the Company is obligated to use its commercially reasonable efforts to develop and commercialize VQW-765 and is responsible for all development costs. The Company has no milestone obligations; however, Novartis is eligible to receive tiered-royalties on net sales at percentage rates up to the mid-teens. Other Agreements In September 2022, the Company entered into an agreement with OliPass Corporation (OliPass) to jointly develop a set of ASO molecules based on OliPass’ proprietary modified peptide nucleic acids. As consideration for entering into the arrangement, the Company paid OliPass an upfront fee of $3.0 million, which was recorded as research and development expense during the quarter ended September 30, 2022. The Company is funding the research and development activities and has the option to license jointly developed intellectual property upon successful development. Purchase Commitments In the course of its business, the Company regularly enters into agreements with third-party vendors under fee service arrangements, which generally may be terminated on 90 days’ notice without incurring additional charges, other than charges for work completed or materials procured 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. The Company’s non-cancellable purchase commitments for agreements longer than one year are not material. Various other long-term agreements entered into for services with other third-party vendors, such as inventory purchase commitments, are cancellable in nature or contain variable commitment terms within the agreement.

Business Organization and Presentation	9 Months Ended
Business Organization and Presentation	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business Organization and Presentation	Business Organization and Presentation Business Organization Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s commercial portfolio is currently comprised of two products, HETLIOZ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and nighttime sleep disturbances in Smith-Magenis Syndrome (SMS) and Fanapt® for the treatment of schizophrenia. HETLIOZ® is the first product approved by the United States Food and Drug Administration (FDA) for patients with Non-24 and patients with SMS. In addition, the Company has a number of drugs in development, including: •HETLIOZ® (tasimelteon) for the treatment of jet lag disorder, insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24; •Fanapt® (iloperidone) for the treatment of bipolar I disorder and a long acting injectable (LAI) formulation for the treatment of schizophrenia; •Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis; •VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of hematologic malignancies and with potential use as a treatment for several oncology indications; •Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera; •VQW-765, a small molecule nicotinic acetylcholine receptor partial agonist, for the treatment of performance anxiety and psychiatric disorders; •VHX-896, the active metabolite of iloperidone; and •Antisense oligonucleotide (ASO) molecules. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Vanda Pharmaceuticals Inc. and its wholly-owned subsidiaries and have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K (Annual Report) for the fiscal year ended December 31, 2022. The financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period.

Stock-Based Compensation - Additional Information (Details)	Sep. 30, 2023 shares
2006 Plan and 2016 Plan \| Outstanding Options and RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares subject to outstanding options and RSUs (in shares)	6,963,943
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock authorized for issuance (in shares)	13,790,000
Number of shares of common stock available for future grant (in shares)	4,529,226

Commitments and Contingencies - HETLIOZ - Additional Information (Details) - HETLIOZ® - USD ($) $ in Millions	1 Months Ended	9 Months Ended	11 Months Ended	236 Months Ended
	Dec. 31, 2022	Sep. 30, 2023	Nov. 30, 2022	Sep. 30, 2023
Commitments and Contingencies [Line Items]
Development and milestone obligations paid to third party				$ 37.5
Intangible assets capitalized				$ 33.0
Royalty payment period		10 years
Percentage of future sublicense fees payable to third-party		mid-twenties
Non-US
Commitments and Contingencies [Line Items]
Royalty payable percentage on net sales		5.00%
U.S.
Commitments and Contingencies [Line Items]
Royalty payable percentage on net sales	5.00%		10.00%

Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 17,428	$ 18,565
HETLIOZ®
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	33,000	33,000
Accumulated Amortization	15,572	14,435
Net Carrying Amount	$ 17,428	$ 18,565

Commitments and Contingencies - Other Agreements (Details) $ in Millions	3 Months Ended
	Sep. 30, 2022 USD ($)
OliPass Corporation \| Additional Funding Agreement Terms
Commitments and Contingencies [Line Items]
Consideration for entering into the arrangement	$ 3.0

Commitments and Contingencies - Purchase Commitments - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Agreements for clinical and marketing services, termination notice period	90 days

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 183,186	$ 135,029
Marketable securities	306,672	331,830
Accounts receivable, net	29,272	33,512
Inventory	1,006	1,194
Prepaid expenses and other current assets	16,436	17,727
Total current assets	536,572	519,292
Property and equipment, net	2,128	2,573
Operating lease right-of-use assets	7,428	8,400
Intangible assets, net	17,428	18,565
Deferred tax assets	67,772	74,039
Non-current inventory and other	10,277	11,378
Total assets	641,605	634,247
Current liabilities:
Accounts payable and accrued liabilities	32,595	45,551
Product revenue allowances	52,242	45,885
Total current liabilities	84,837	91,436
Operating lease non-current liabilities	7,472	8,813
Other non-current liabilities	6,196	6,800
Total liabilities	98,505	107,049
Commitments and contingencies (Notes 8 and 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding at September 30, 2023 and December 31, 2022	0	0
Common stock, $0.001 par value; 150,000,000 shares authorized; 57,529,499 and 56,783,764 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	58	57
Additional paid-in capital	697,001	686,235
Accumulated other comprehensive loss	(967)	(1,193)
Accumulated deficit	(152,992)	(157,901)
Total stockholders’ equity	543,100	527,198
Total liabilities and stockholders’ equity	$ 641,605	$ 634,247

Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables And Accruals [Line Items]
Research and development expenses	$ 13,079	$ 9,474
Consulting and other professional fees	6,293	9,241
Compensation and employee benefits	5,081	6,839
Royalties payable	2,280	4,979
Operating lease liabilities	2,374	2,328
Accounts payable and other accrued liabilities	3,488	12,690
Total accounts payable and accrued liabilities	32,595	45,551
Prepaid expenses and other current assets	$ 16,436	17,727
Gordon v. Vanda Pharmaceuticals Inc.
Payables And Accruals [Line Items]
Total accounts payable and accrued liabilities		11,500
Prepaid expenses and other current assets		$ 11,500

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of PresentationThe accompanying unaudited condensed consolidated financial statements include the accounts of Vanda Pharmaceuticals Inc. and its wholly-owned subsidiaries and have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K (Annual Report) for the fiscal year ended December 31, 2022. The financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP 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. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluation could change. Actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted CashFor purposes of the Condensed Consolidated Balance Sheets and Condensed 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. Cash and cash equivalents include investments in money market funds with commercial banks and financial institutions, and commercial paper of high-quality corporate issuers. Restricted cash relates primarily to amounts held as collateral for letters of credit for leases for office space at the Company’s Washington, D.C. headquarters.
Major Customers	Major Customers HETLIOZ® is available in the U.S. for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. Fanapt® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. The Company invoices and records revenue when its customers, specialty pharmacies and wholesalers, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. There were six major customers that each accounted for more than 10% of total revenues and, as a group, represented 89% of total revenues for the nine months ended September 30, 2023. There were four major customers that each accounted for more than 10% of accounts receivable and, as a group, represented 90% of total accounts receivable at September 30, 2023. Receivables are carried at transaction price net of allowance for credit losses. Allowance for credit losses is measured using historical loss rates based on the aging of receivables and incorporating current conditions and forward-looking estimates.
Recent Accounting Pronouncements	Recent Accounting Pronouncements There are no recent accounting pronouncements that are expected to have a material impact on the Company’s condensed consolidated financial statements or related disclosures.
Marketable Securities	The Company’s assets classified in Level 1 and Level 2 as of September 30, 2023 and December 31, 2022 consist of cash equivalents and 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 Level 2 instruments is also 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 and corporate notes that use as their basis readily observable market parameters.
Earnings per Share	Earnings per ShareBasic 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, as calculated using the treasury stock method.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 137	$ 3,270	$ 4,909	$ (586)
Other comprehensive income (loss):
Net foreign currency translation loss	(18)	(37)	(6)	(83)
Change in net unrealized gain (loss) on marketable securities	(109)	(24)	301	(1,594)
Tax benefit (provision) on other comprehensive income (loss)	25	7	(69)	367
Other comprehensive income (loss), net of tax	(102)	(54)	226	(1,310)
Comprehensive income (loss)	$ 35	$ 3,216	$ 5,135	$ (1,896)

- Definition

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

+ References

+ Details

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

+ References

+ Details

- Definition

Amount of tax expense (benefit) allocated to other comprehensive income (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Legal Matters	9 Months Ended
Legal Matters	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Legal Matters	Legal Matters HETLIOZ®. Between April 2018 and March 2021, the Company filed numerous Hatch-Waxman lawsuits in the U.S. District Court for the District of Delaware (Delaware District Court) against Teva Pharmaceuticals USA, Inc. (Teva), MSN Pharmaceuticals Inc. and MSN Laboratories Private Limited (MSN) and Apotex Inc. and Apotex Corp. (Apotex, and collectively with Teva and MSN, the HETLIOZ® Defendants) asserting that U.S. Patent Nos. RE46,604 (‘604 Patent), 9,060,995, 9,539,234, 9,549,913, 9,730,910 (‘910 Patent), 9,844,241, 10,071,977, 10,149,829 (‘829 Patent), 10,376,487 (‘487 Patent), 10,449,176, 10,610,510, 10,610,511, 10,829,465, and 10,611,744 will be infringed by the HETLIOZ® Defendants’ generic versions of HETLIOZ® for which they were seeking FDA approval. As initially disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2022, in January 2022, the Company entered into a license agreement with MSN and Impax Laboratories LLC (Impax) resolving the lawsuits against MSN (the MSN/Impax License Agreement). The MSN/Impax License Agreement grants MSN and Impax a non-exclusive license to manufacture and commercialize MSN’s generic version of HETLIOZ® in the U.S. effective as of March 13, 2035, unless prior to that date the Company obtains pediatric exclusivity for HETLIOZ®, in which case the license will be effective as of July 27, 2035. The MSN/Impax License Agreement also provides that MSN and Impax may launch a generic version of HETLIOZ® earlier under certain limited circumstances. The consolidated lawsuits against the remaining HETLIOZ® Defendants were tried in March 2022. On December 13, 2022, the Delaware District Court ruled that Teva and Apotex did not infringe the ‘604 Patent, and that the asserted claims of the ‘604, ‘910, ‘829 and ‘487 Patents were invalid. In December 2022, the Company appealed the Delaware District Court’s decision to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) and an oral argument for the appeal was held in March 2023. On May 10, 2023, a three-judge panel of the Federal Circuit affirmed the Delaware District Court’s ruling, and on June 9, 2023, the Company requested a rehearing or rehearing en banc from the Federal Circuit. On August 16, 2023, the Federal Circuit denied the Company’s petition for a rehearing. The Company intends to file a petition for a writ of certiorari with the U.S. Supreme Court to review the Federal Circuit’s decision, and on October 13, 2023, the Company filed an application for an extension of time to file a petition for a writ of certiorari to the U.S. Supreme Court to review the Federal Circuit’s decision. Chief Justice Roberts granted the application, extending the time to file to January 12, 2024. On December 27, 2022, the Company filed patent infringement lawsuits, including Hatch-Waxman Act claims, against each of Teva and Apotex in the U.S. District Court for the District of New Jersey (NJ District Court) asserting that U.S. Patent No. 11,285,129, a method of administration patent that was not litigated in the Delaware District Court cases (‘129 Patent), will be infringed by Teva’s and Apotex’ generic versions of HETLIOZ®, each of which was approved by the FDA. The Company asked the NJ District Court to, among other things, order that the effective date of the FDA’s approval of Teva’s and Apotex’ generic versions of HETLIOZ® be a date that is no earlier than the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine, and enjoin each of Teva and Apotex from the commercial manufacture, use, import, offer for sale and/or sale of their generic versions of HETLIOZ® until the expiration of the ‘129 Patent, or such later date that the NJ District Court may determine. In February 2023, the case was transferred to the Delaware District Court, where the Company’s lawsuit remains pending. In January 2023, the Company filed a lawsuit in the NJ District Court against Teva challenging Teva’s advertising and marketing practices related to its at-risk launch of its generic version of HETLIOZ® for the single indication of Non-24. The Company believes that Teva’s advertising and marketing practices related to its generic version of HETLIOZ® promote its product for uses beyond the limited labeling that Teva sought, and the FDA approved. The Company seeks to, among other things, enjoin Teva from engaging in false and misleading advertising and recover monetary damages. In March 2023, Teva filed a motion to dismiss or to transfer the case to the Delaware District Court, which remains pending. In January 2023, the Company filed a lawsuit in the U.S. District Court for the District of Columbia (DC District Court) against the FDA challenging the FDA’s approval of Teva’s Abbreviated New Drug Application (ANDA) for its generic version of HETLIOZ® capsules under the Administrative Procedure Act (APA), the Food, Drug, and Cosmetic Act (FDCA), and FDA regulations. Under the FDCA, every ANDA must contain information to show that the labeling proposed for the generic drug is the same as the labeling approved for the listed drug. The labeling and packaging for HETLIOZ® includes Braille, but Teva’s generic tasimelteon does not. On this basis, the Company believes that Teva’s approved labeling does not comply with applicable requirements. The Company has asked the DC District Court to, among other things, vacate the FDA’s approval of Teva’s ANDA, declare that the approval of the ANDA was unlawful, arbitrary, and capricious and compel the FDA to order Teva to recall its generic HETLIOZ® product. In February 2023, Teva intervened in the lawsuit as a defendant. In September 2023, the Company amended its lawsuit to request that the DC District Court set aside the FDA’s July 2023 denial of the Company’s citizen petition, originally filed with the FDA in January 2023. The Company’s lawsuit remains pending. In September 2023, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s approval of MSN’s ANDA for its generic version of HETLIOZ® capsules under the APA, the FDCA, and FDA regulations. The Company believes that MSN’s underlying approval data, particularly its bioequivalence studies, are faulty. On this basis, the Company has asked the DC District Court to, among other things, vacate the FDA’s approval of MSN’s ANDA, declare that the approval of the ANDA was unlawful, arbitrary, and capricious and compel the FDA to order MSN to recall its generic HETLIOZ® product. The Company’s lawsuit remains pending. Other Matters. From April 2022 to October 2023, the Company filed twelve lawsuits in the DC District Court against the FDA to compel the FDA to produce records under the Freedom of Information Act (FOIA) regarding, among other matters: the FDA’s denial of the Company’s supplemental New Drug Application (sNDA) for HETLIOZ® in the treatment of jet lag disorder; cases in which the FDA waived its putative requirement of a 9-month non-rodent toxicity study before drugs can be tested on human patients for extended durations; communications external to and within the FDA relating to tradipitant and HETLIOZ®; a warning letter that the FDA sent to Vanda concerning Vanda’s webpages for HETLIOZ® and Fanapt®; the FDA’s removal of a clinical trials design presentation from its website; discipline reviews relating to the FDA’s evaluations of the Company’s sNDA for HETLIOZ® and a third-party sNDA for jet lag; internal standard operating procedures or guidance relating to the FDA’s processing of incoming FOIA requests; and bioequivalence and other study reports submitted relating to the FDA’s consideration of Teva’s ANDA. Two of these lawsuits were resolved in the Company’s favor in June 2023 and August 2023, respectively, one is pending resolution and the other nine remain outstanding. The FDA has failed to respond and provide the requested documents within the statutory timeframe with respect to each of these nine outstanding requests. The Company has asked the DC District Court to, among other things, compel the FDA to comply with its obligations and declare that its lack of compliance violates FOIA. In April 2022, the Company filed a lawsuit in the U.S. District Court for the District of Maryland (the MD District Court) against the Centers for Medicare & Medicaid Services (CMS) and the Administrator of CMS challenging CMS’ rule broadly interpreting the defined terms “line extension” and “new formulation” under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA), which went into effect in January 2022 (the Rule). The Company believes that the Rule is unlawful and contrary to the intent of Congress when it passed the ACA. Under the Rule, certain of the Company’s products would be treated as line extensions and new formulations subject to enhanced rebates, despite the statutory text and CMS’ own long-standing practice, under which such products would not constitute line extensions or new formulations. In March 2023, the MD District Court ruled that CMS’ interpretation of the terms was reasonable and consistent with Congress’ intent. In April 2023, the Company appealed the ruling to the U.S. Court of Appeals for the Fourth Circuit, which has tentatively scheduled an oral argument for the week of January 22, 2024. In May 2022, the Company filed a lawsuit in the DC District Court against the FDA challenging the FDA’s denial of Fast Track designation for tradipitant. In October 2021, the Company submitted to the FDA a request for Fast Track designation for tradipitant under the Food and Drug Administration Modernization Act of 1997 (FDAMA). The FDAMA provides for expedited development and review of drugs that receive Fast Track designation from the FDA. Under the FDAMA, the FDA must designate a drug as a Fast Track product if it both (1) is intended to treat a serious or life-threatening disease or condition and (2) demonstrates the potential to address unmet medical needs for such disease or condition. Although Fast Track designation is non-discretionary when the criteria are satisfied, the FDA denied the Company’s request for Fast Track designation. The Company does not believe that the FDA based its decision on the relevant criteria. Therefore, among other reasons, the Company maintains that the FDA’s denial is unlawful. The Company has asked the DC District Court to, among other things, set aside and vacate the FDA’s denial. An oral argument was held in January 2023. In August 2023, the DC District Court ruled against the Company. In September 2023, the Company appealed the ruling to the U.S. Court of Appeals for the District of Columbia Circuit, where the Company’s lawsuit remains pending. In September 2022, the Company filed a lawsuit in the DC District Court against the FDA to compel the FDA to comply with two separate nondiscretionary obligations under the FDCA and its implementing regulations: an obligation to publish a notice of an opportunity for a hearing on the Company’s sNDA in the Federal Register within 180 days of the filing of the sNDA, and a separate obligation to publish the same notice within 60 days of the request for a hearing. The FDA published the notice of an opportunity for a hearing on October 11, 2022. The Company has asked the DC District Court to, among other things, compel the FDA to comply with its obligations and declare that its lack of compliance violates the FDCA and the FDA regulations. The Company’s lawsuit remains pending. In May 2023, the Company filed a lawsuit in the U.S. Court of Federal Claims (Federal Claims Court) against the federal government for the uncompensated taking and misuse of the Company’s trade secrets and confidential information. The Company believes that the FDA violated the Fifth Amendment’s due process clause by improperly providing confidential details from the Company’s drug master files for HETLIOZ® and Fanapt® to generic drug manufacturers during the FDA’s review of the manufacturers’ ANDAs. The Company has asked the Federal Claims Court to, among other things, declare that the FDA’s disclosure of the Company’s confidential commercial information constitutes a taking for purposes of the Fifth Amendment and award just compensation. The federal government has filed a motion to dismiss the complaint, which the Company has opposed. The Company’s lawsuit remains pending.

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Equity [Abstract]
Foreign currency translation	$ (13)	$ (7)
Unrealized loss on marketable securities	(954)	(1,186)
Accumulated other comprehensive loss	$ (967)	$ (1,193)

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Reconciliation of Cash, Cash Equivalents and Restricted Cash


(in thousands)	September 30, 2023		September 30, 2022
Cash and cash equivalents	$	183,186	$	49,397


Restricted cash included in non-current inventory and other	469		469
Total cash, cash equivalents and restricted cash	$	183,655	$	49,866

Net Product Sales

The Company’s net product sales consist of sales of HETLIOZ® and Fanapt®. Net sales by product for the three and nine months ended September 30, 2023 and 2022 were as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
HETLIOZ® net product sales	$	17,500	$	41,335	$	79,095	$	119,554
Fanapt® net product sales	21,315		23,983		68,274		70,346
Total net product sales	$	38,815	$	65,318	$	147,369	$	189,900

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Option Activity

A summary of option activity under the Plans for the nine months ended September 30, 2023 follows:


(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, 2022	4,232,210	$	14.19	5.81	$	—
Granted	944,776	6.92

Expired	(130,417)	12.38

Outstanding at September 30, 2023	5,046,569	12.88		5.94	—
Exercisable at September 30, 2023	3,436,844	14.26		4.60	—
Vested and expected to vest at September 30, 2023	4,837,998	13.08		5.81	—

Summary of RSU Activity

A summary of RSU activity for the Plans for the nine months ended September 30, 2023 is as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	1,915,546	$	14.41
Granted	868,243	6.96
Forfeited	(119,680)	12.92
Vested	(746,735)	15.05
Unvested at September 30, 2023	1,917,374	10.88

Stock-Based Compensation Expense

Stock-based compensation expense recognized for the three and nine months ended September 30, 2023 and 2022 was comprised of the following:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Research and development	$	739	$	981	$	2,538	$	3,040
Selling, general and administrative	2,428		2,907		8,229		9,456
Total stock-based compensation expense	$	3,167	$	3,888	$	10,767	$	12,496

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 nine months ended September 30, 2023 and 2022 were as follows:


	Nine Months Ended
	September 30, 2023		September 30, 2022
Expected dividend yield	0	%	0	%
Weighted average expected volatility	47	%	46	%
Weighted average expected term (years)	6.16		6.05
Weighted average risk-free rate	3.89	%	2.03	%

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net income (loss)	$ 137	$ 1,520	$ 3,252	$ 3,270	$ 2,574	$ (6,430)	$ 4,909	$ (586)
Denominator:
Weighted average shares outstanding, basic (in shares)	57,519,031			56,574,503			57,329,969	56,397,805
Effect of dilutive securities (in shares)	76,313			394,530			182,256	0
Weighted average shares outstanding, diluted (in shares)	57,595,344			56,969,033			57,512,225	56,397,805
Net income (loss) per share, basic and diluted:
Basic (in dollars per share)	$ 0.00			$ 0.06			$ 0.09	$ (0.01)
Diluted (in dollars per share)	$ 0.00			$ 0.06			$ 0.09	$ (0.01)
Antidilutive securities excluded from calculations of diluted net income (loss) per share (in shares)	6,724,127			5,238,283			6,526,562	5,199,487

Stock-Based Compensation - Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted (Details)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]
Expected dividend yield	0.00%	0.00%
Weighted average expected volatility	47.00%	46.00%
Weighted average expected term (years)	6 years 1 month 28 days	6 years 18 days
Weighted average risk-free rate	3.89%	2.03%

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes For the three months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $0.3 million and a provision for income taxes of $2.2 million, respectively. The income tax expense (benefit) for the three months ended September 30, 2023 and 2022 was primarily driven by the estimated effective tax rate for the year, as well as discrete income tax expense of $0.2 million and $0.4 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded a provision for income taxes of $3.1 million and $2.3 million, respectively. The income tax expense for the nine months ended September 30, 2023 and 2022 was primarily driven by the estimated effective tax rate for the year, as well as discrete income tax expense of $2.1 million and $1.8 million, respectively.

- 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
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-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Summary of Accounts Payable and Accrued Liabilities

The following is a summary of the Company’s accounts payable and accrued liabilities as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Research and development expenses	$	13,079	$	9,474
Consulting and other professional fees	6,293		9,241
Compensation and employee benefits	5,081		6,839
Royalties payable	2,280		4,979
Operating lease liabilities	2,374		2,328

Accounts payable and other accrued liabilities	3,488		12,690
Total accounts payable and accrued liabilities	$	32,595	$	45,551

Commitments and Contingencies - Tradipitant - Additional Information (Details) - Tradipitant - USD ($) $ in Millions	9 Months Ended	138 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Commitments and Contingencies [Line Items]
Future percentage of royalty payments based net sales	low double digits
Development and milestone obligations paid to third party		$ 3.0
Pre-NDA Approval Milestones
Commitments and Contingencies [Line Items]
Possible future milestone payment	$ 2.0
Regulatory Approval Milestone \| U.S.
Commitments and Contingencies [Line Items]
Possible future milestone payment	10.0
Regulatory Approval Milestone \| E.U.
Commitments and Contingencies [Line Items]
Possible future milestone payment	5.0
Sales Milestone
Commitments and Contingencies [Line Items]
Possible future milestone payment	$ 80.0

Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Summary of Accumulated Balances Related to Each Component of Other Comprehensive Loss

The accumulated balances related to each component of other comprehensive loss, net of taxes, were as follows as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Foreign currency translation	$	(13)	$	(7)
Unrealized loss on marketable securities	(954)		(1,186)
Accumulated other comprehensive loss	$	(967)	$	(1,193)

Stock-Based Compensation - Summary of Option Activity (Details) - 2006 Plan and 2016 Plan - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Number of Shares
Beginning balance (in shares)	4,232,210
Granted (in shares)	944,776
Expired (in shares)	(130,417)
Ending balance (in shares)	5,046,569	4,232,210
Exercisable at end of period (in shares)	3,436,844
Vested and expected to vest at end of period (in shares)	4,837,998
Weighted Average Exercise Price at Grant Date
Beginning balance (in dollars per share)	$ 14.19
Granted (in dollars per share)	6.92
Expired (in dollars per share)	12.38
Ending balance (in dollars per share)	12.88	$ 14.19
Exercisable at end of period (in dollars per share)	14.26
Vested and expected to vest at end of period (in dollars per share)	$ 13.08
Weighted Average Remaining Term (Years)
Outstanding	5 years 11 months 8 days	5 years 9 months 21 days
Exercisable at end of period	4 years 7 months 6 days
Vested and expected to vest at end of period	5 years 9 months 21 days
Aggregate Intrinsic Value
Beginning balance	$ 0
Ending balance	0	$ 0
Exercisable at end of period	0
Vested and expected to vest at end of period	$ 0

Stock-Based Compensation - Restricted Stock Units - Additional Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) installment shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting equal installments \| installment	36
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting equal installments \| installment	4
Full acceleration of vesting, employee or executive officer subject to involuntary termination, period post change of control of the Company	24 months
Unrecognized compensation expenses related to unvested RSUs \| $	$ 16.1
Unrecognized compensation expenses, weighted average period	1 year 6 months
Grant date fair value of common stock granted (in shares) \| shares	746,735
Grant date fair value of common stock vested \| $	$ 11.2

Commitments and Contingencies - Fanapt - Additional Information (Details) - Fanapt®		60 Months Ended
	Dec. 31, 2014	Dec. 31, 2019
Commitments and Contingencies [Line Items]
Royalty payable percentage on net sales	6.00%	3.00%
Royalty payment period	10 years

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Assets Measured at Fair Value on Recurring Basis

The Company held certain assets that are required to be measured at fair value on a recurring basis as of September 30, 2023, as follows:


			Fair Value Measurement as of September 30, 2023 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	208,342	$	208,342	$	—	$	—
Corporate debt	98,330		—		98,330		—

Total assets measured at fair value	$	306,672	$	208,342	$	98,330	$	—

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2022, as follows:


			Fair Value Measurement as of December 31, 2022 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	177,170	$	177,170	$	—	$	—
Corporate debt	154,660		—		154,660		—

Total assets measured at fair value	$	331,830	$	177,170	$	154,660	$	—

Commitments and Contingencies - CFTR Activators and Inhibitors - Additional Information (Details) - CFTR Activators and Inhibitors - USD ($) $ in Millions	9 Months Ended	79 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Commitments and Contingencies [Line Items]
Future percentage of royalty payments based net sales	single-digit
Development and milestone obligations paid to third party		$ 1.6
Developmental Milestone
Commitments and Contingencies [Line Items]
Possible future milestone payments	$ 11.9
Future Regulatory Approval and Sales Milestones
Commitments and Contingencies [Line Items]
Possible future milestone payments	33.0
Development and Milestone Payment, Conclusion of Clinical Studies
Commitments and Contingencies [Line Items]
Possible future milestone payments	1.1
Development and Milestone Payment, Conclusion of Clinical Studies \| Maximum
Commitments and Contingencies [Line Items]
Possible future milestone payments	$ 3.2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Net product sales	$ 38,815	$ 65,318	$ 147,369	$ 189,900
Total revenues	38,815	65,318	147,369	189,900
Operating expenses:
Cost of goods sold excluding amortization	3,063	6,320	11,336	18,044
Research and development	16,600	24,857	52,484	67,316
Selling, general and administrative	24,767	29,854	89,270	103,703
Intangible asset amortization	380	379	1,137	1,137
Total operating expenses	44,810	61,410	154,227	190,200
Income (loss) from operations	(5,995)	3,908	(6,858)	(300)
Other income	5,875	1,553	14,858	1,987
Income (loss) before income taxes	(120)	5,461	8,000	1,687
Provision (benefit) for income taxes	(257)	2,191	3,091	2,273
Net income (loss)	$ 137	$ 3,270	$ 4,909	$ (586)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.00	$ 0.06	$ 0.09	$ (0.01)
Diluted (in dollars per share)	$ 0.00	$ 0.06	$ 0.09	$ (0.01)
Weighted average shares outstanding:
Basic (in shares)	57,519,031	56,574,503	57,329,969	56,397,805
Diluted (in shares)	57,595,344	56,969,033	57,512,225	56,397,805

Intangible Assets - Summary of Future Intangible Asset Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 17,428	$ 18,565
HETLIOZ®
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	17,428	$ 18,565
2023	366
2024	1,463
2025	1,463
2026	1,463
2027	1,463
Thereafter	$ 11,210

Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

The following is a summary of the Company’s accounts payable and accrued liabilities as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Research and development expenses	$	13,079	$	9,474
Consulting and other professional fees	6,293		9,241
Compensation and employee benefits	5,081		6,839
Royalties payable	2,280		4,979
Operating lease liabilities	2,374		2,328

Accounts payable and other accrued liabilities	3,488		12,690
Total accounts payable and accrued liabilities	$	32,595	$	45,551

As of December 31, 2022, the prepaid expenses and other current assets and accounts payable and accrued liabilities balances included $11.5 million related to the case Gordon v. Vanda Pharmaceuticals Inc. In January 2023, the settlement related to the case was fully and finally approved. As a result, the Company removed the associated prepaid and liability balances. (See Note 16, Legal Matters, in Part II, Item 8 of the Annual Report for additional information.)

Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 307,909	$ 333,368
Gross Unrealized Gains	1	14
Gross Unrealized Losses	(1,238)	(1,552)
Fair Market Value	306,672	331,830
U.S. Treasury and government agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	209,419	178,351
Gross Unrealized Gains	1	0
Gross Unrealized Losses	(1,078)	(1,181)
Fair Market Value	208,342	177,170
Corporate debt
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	98,490	155,017
Gross Unrealized Gains	0	14
Gross Unrealized Losses	(160)	(371)
Fair Market Value	$ 98,330	$ 154,660

Stock-Based Compensation - Stock Option - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023 USD ($) installment $ / shares	Sep. 30, 2022 USD ($) $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation option awards contractual term	10 years
Vesting period for subsequent stock options granted to employees and new directors	4 years
Portion of initial stock options granted to employees and new directors that vests on first anniversary of grant date	25.00%
Portion of initial stock options granted to employees and new directors that vests ratably over three years after completion of first year of service	75.00%
Number of vesting equal installments \| installment	36
Options granted, weighted average fair value per share (in dollars per share) \| $ / shares	$ 3.53	$ 5.18
Proceeds from exercise of stock options	$ 0	$ 129,000
Service option awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Full acceleration of vesting, employee or executive officer subject to involuntary termination, period post change of control of the Company	24 months
Unrecognized compensation expenses	$ 7,100,000
Unrecognized compensation expenses, weighted average period	1 year 2 months 12 days

Fair Value Measurements (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 306,672,000	$ 331,830,000
Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	208,342,000	177,170,000
Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	98,330,000	154,660,000
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	208,342,000	177,170,000
Quoted Prices in Active Markets for Identical Assets (Level 1) \| U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	208,342,000	177,170,000
Quoted Prices in Active Markets for Identical Assets (Level 1) \| Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	98,330,000	154,660,000
Significant Other Observable Inputs (Level 2) \| U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Significant Other Observable Inputs (Level 2) \| Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	98,330,000	154,660,000
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Significant Unobservable Inputs (Level 3) \| U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Significant Unobservable Inputs (Level 3) \| Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 0	$ 0