vnda-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34186

VANDA PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)


Delaware						03-0491827
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2200 Pennsylvania Avenue NW, Suite 300E

Washington, DC 20037

(202) 734-3400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	VNDA	The Nasdaq Global Market
Series A Junior Participating Preferred Stock Purchase Right, par value $0.001 per share	-	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of May 1, 2025, there were 58,934,482 shares of the registrant’s common stock issued and outstanding.

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Vanda Pharmaceuticals Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2025

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		Page
PART I – FINANCIAL INFORMATION

ITEM 1	Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	5

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024	6

	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2025 and 2024	7

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2025 and 2024	8

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024	9

	Notes to Condensed Consolidated Financial Statements	10

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	35

ITEM 4	Controls and Procedures	36

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	36

ITEM 1A	Risk Factors	36

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	37

ITEM 3	Defaults Upon Senior Securities	37

ITEM 4	Mine Safety Disclosures	37

ITEM 5	Other Information	37

ITEM 6	Exhibits	38

Signatures		39

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (Quarterly Report) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” “target,” “goal,” “likely,” “will,” “would,” and “could,” or the negative of these terms and similar expressions or words, identify forward-looking statements. Forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances and uncertainties. If the risks, changes in circumstances or uncertainties materialize or the assumptions prove incorrect, the results of Vanda Pharmaceuticals Inc. (we, our, the Company or Vanda) may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The forward-looking statements in this Quarterly Report may include, but are not limited to, statements about:

•our ability to commercialize Fanapt® (iloperidone) oral tablets for the acute treatment of manic or mixed episodes associated with bipolar I disorder;

•our ability to continue to generate United States (U.S.) sales of Fanapt® oral tablets for the treatment of schizophrenia;

•our ability to obtain approval from the FDA for BysantiTM (milsaperidone) for bipolar I disorder, schizophrenia and major depressive disorder (MDD);

•our ability to continue to commercialize HETLIOZ® (tasimelteon) capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) in the U.S., in light of existing and potential generic competition, and Europe and HETLIOZ® capsules and oral suspension (HETLIOZ LQ®) for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) in the U.S.;

•our ability to obtain approval from the U.S. Food and Drug Administration (FDA) for HETLIOZ® beyond the currently approved indications;

•our ability to increase market awareness of Non-24 and SMS and market acceptance of HETLIOZ®;

•our ability to commercialize PONVORY® (ponesimod) tablets for the treatment of adults with relapsing forms of multiple sclerosis, including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease in the U.S. and Canada;

•our ability to obtain approval from the FDA for PONVORY® beyond the currently approved indications;

•our ability to obtain approval from the FDA for tradipitant for the treatment of gastroparesis and motion sickness;

•our level of success in commercializing Fanapt® and HETLIOZ® in new markets;

•our ability to overcome the continued reimbursement and patient access challenges we face as a result of third-party payor coverage;

•the impact of public health crises, epidemics, pandemics or similar events on our business and operations, including our revenue, our supply chain, our commercial activities, our ongoing and planned clinical trials and our regulatory activities;

•our dependence on third-party manufacturers to manufacture Fanapt®, HETLIOZ®, HETLIOZ LQ® and PONVORY® in sufficient quantities and quality;

•our ability to prepare, file, prosecute, defend and enforce any patent claims and other intellectual property rights;

•our ability to maintain rights to develop and commercialize our products under our license agreements;

•our ability to obtain and maintain regulatory approval of our products, and the labeling for any approved products;

•our expectations regarding the timing and success of preclinical studies and clinical trials;

•the safety and efficacy of our products;

•regulatory developments in the U.S., Europe and other jurisdictions;

•limitations on our ability to utilize some or all of our prior net operating losses and orphan drug and research and development credits;

•our expectations regarding the size and growth of the current and potential markets for our products and our ability to serve those markets;

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•our expectations regarding trends with respect to our revenues, costs, expenses, liabilities and cash, cash equivalents and marketable securities;

•our ability to identify or obtain rights to new products;

•our ability to attract and retain key scientific or management personnel;

•our expectations regarding the cost, time frame, outcome, insurance coverage and effects of any litigation or other dispute;

•our ability to obtain the capital necessary to fund our research and development or commercial activities;

•potential losses incurred from product liability claims made against us; and

•the use of our existing cash, cash equivalents and marketable securities.

All forward-looking statements in this report are expressly qualified in their entirety by the cautionary statements contained throughout this report. We caution you not to rely too heavily on such forward-looking statements. Each forward-looking statement speaks only as of the date of this Quarterly Report, and we undertake no obligation, and specifically decline any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

We encourage you to read Management’s Discussion and Analysis of Financial Condition and Results of Operations and our unaudited condensed consolidated financial statements contained in this Quarterly Report. In addition to the risks described in Part I, Item 1A, Risk Factors, of our annual report on Form 10-K (Annual Report) for the fiscal year ended December 31, 2024 and Item 1A, Risk Factors, of this Quarterly Report, other unknown or unpredictable factors also could affect our results. Therefore, the information in this report should be read together with other reports and documents that we file with the Securities and Exchange Commission from time to time, including on Form 10-Q and Form 8-K, which may supplement, modify, supersede or update those risk factors. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

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Part I — FINANCIAL INFORMATION


ITEM 1			Financial Statements (Unaudited)

VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(in thousands, except for share and per share amounts)	March 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	111,796	$	102,316
Marketable securities	229,112		272,327
Accounts receivable, net	44,603		47,101
Inventory	1,923		1,726
Prepaid expenses and other current assets	20,476		15,420
Total current assets	407,910		438,890
Property and equipment, net	2,439		2,132
Operating lease right-of-use assets	5,208		5,602
Finance lease right-of-use assets	4,828		4,943
Intangible assets, net	112,344		114,096
Deferred tax assets	89,147		81,440
Non-current inventory and other	10,060		9,101
Total assets	$	631,936	$	656,204
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	45,279	$	39,086
Product revenue allowances	58,644		60,895

Total current liabilities	103,923		99,981
Operating lease non-current liabilities	4,404		4,944
Finance lease non-current liabilities	2,947		3,146
Other non-current liabilities	9,245		9,587
Total liabilities	120,519		117,658
Commitments and contingencies (Notes 8 and 14)
Stockholders’ equity:
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding at March 31, 2025 and December 31, 2024	—		—
Common stock, $0.001 par value; 150,000,000 shares authorized; 58,933,982 and 58,310,644 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	59		58
Additional paid-in capital	714,761		712,706
Accumulated other comprehensive income	383		74
Accumulated deficit	(203,786)		(174,292)
Total stockholders’ equity	511,417		538,546
Total liabilities and stockholders’ equity	$	631,936	$	656,204

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended
(in thousands, except for share and per share amounts)	March 31, 2025		March 31, 2024
Revenues:
Net product sales	$	50,041	$	47,462
Total revenues	50,041		47,462
Operating expenses:
Cost of goods sold excluding amortization	3,521		3,440
Research and development	35,712		21,154
Selling, general and administrative	50,084		30,085
Intangible asset amortization	1,752		2,018
Total operating expenses	91,069		56,697
Loss from operations	(41,028)		(9,235)
Other income, net	3,660		4,571
Loss before income taxes	(37,368)		(4,664)
Benefit for income taxes	(7,874)		(518)
Net loss	$	(29,494)	$	(4,146)
Net loss per share:
Basic	$	(0.50)	$	(0.07)
Diluted	$	(0.50)	$	(0.07)
Weighted average shares outstanding:
Basic	58,527,775		57,760,940
Diluted	58,527,775		57,760,940

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)


	Three Months Ended
(in thousands)	March 31, 2025		March 31, 2024
Net loss	$	(29,494)	$	(4,146)
Other comprehensive income (loss):
Net foreign currency translation gain (loss)	25		(19)
Change in net unrealized gain (loss) on marketable securities	375		(430)
Tax benefit (provision) on other comprehensive income (loss)	(91)		96
Other comprehensive income (loss), net of tax	309		(353)
Comprehensive loss	$	(29,185)	$	(4,499)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
(in thousands, except for share amounts)	Shares	Par Value
Balances at December 31, 2024	58,310,644	$	58	$	712,706	$	74	$	(174,292)	$	538,546

Issuance of common stock from the exercise of stock options and settlement of restricted stock units, net of shares withheld for taxes	623,338	1		(916)		—		—		(915)
Stock-based compensation expense	—	—		2,971		—		—		2,971
Net loss	—	—		—		—		(29,494)		(29,494)
Other comprehensive income, net of tax	—	—		—		309		—		309
Balances at March 31, 2025	58,933,982	$	59	$	714,761	$	383	$	(203,786)	$	511,417


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
(in thousands, except for share amounts)	Shares	Par Value
Balances at December 31, 2023	57,534,499	$	58	$	700,274	$	(30)	$	(155,392)	$	544,910

Issuance of common stock from the exercise of stock options and settlement of restricted stock units	662,024	—		—		—		—		—
Stock-based compensation expense	—	—		3,584		—		—		3,584
Net loss	—	—		—		—		(4,146)		(4,146)
Other comprehensive loss, net of tax	—	—		—		(353)		—		(353)
Balances at March 31, 2024	58,196,523	$	58	$	703,858	$	(383)	$	(159,538)	$	543,995

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended
(in thousands)	March 31, 2025		March 31, 2024
Cash flows from operating activities
Net loss	$	(29,494)	$	(4,146)
Adjustments to reconcile loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment	231		206
Stock-based compensation	2,971		3,584
Amortization of premiums and accretion of discounts on marketable securities	(749)		(1,466)

Intangible asset amortization	1,752		2,018
Deferred income taxes	(7,797)		(246)
Other non-cash adjustments, net	1,853		641
Changes in operating assets and liabilities:
Accounts receivable	2,534		(2,587)
Prepaid expenses and other assets	(5,390)		1,781
Inventory	(1,850)		29
Accounts payable and other liabilities	5,636		1,165
Product revenue allowances	(2,844)		6,590
Net cash provided by (used in) operating activities	(33,147)		7,569
Cash flows from investing activities

Asset acquisition	—		(2,705)
Purchases of property and equipment	(436)		(7)
Purchases of marketable securities	(43,329)		(76,006)
Sales and maturities of marketable securities	87,667		60,500
Net cash provided by (used in) investing activities	43,902		(18,218)
Cash flows from financing activities
Principal payments on finance leases	(409)		—


Tax obligations paid in connection with settlement of restricted stock units	(915)		—
Net cash provided by (used in) financing activities	(1,324)		—
Effect of exchange rate changes on cash, cash equivalents and restricted cash	49		(14)
Net change in cash, cash equivalents and restricted cash	9,480		(10,663)
Cash, cash equivalents and restricted cash
Beginning of period	102,785		136,290
End of period	$	112,265	$	125,627

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VANDA PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Business Organization and Presentation

Business Organization

Vanda Pharmaceuticals Inc. (the Company or Vanda) 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.

The Company’s commercial portfolio is currently comprised of three products: Fanapt® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease. HETLIOZ® is the first product approved by the United States Food and Drug Administration (FDA) for patients with Non-24 and for patients with SMS. In addition, the Company has a number of drugs and/or additional indications for current products in development, including:

•Fanapt® (iloperidone) long acting injectable (LAI) formulation for the treatment of schizophrenia;

•BysantiTM (milsaperidone), the active metabolite of Fanapt®, for the acute treatment of manic or mixed episodes associated with bipolar I disorder and for the treatment of schizophrenia and major depressive disorder (MDD);

•HETLIOZ® (tasimelteon) for the treatment of jet lag disorder, insomnia, pediatric insomnia, delayed sleep phase disorder (DSPD) and pediatric Non-24;

•PONVORY® (ponesimod) for the treatment of psoriasis and ulcerative colitis;

•Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis;

•Imsidolimab, an IL-36R antagonist, for the treatment of generalized pustular psoriasis (GPP);

•VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis and 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 social/performance anxiety and psychiatric disorders; and

•Antisense oligonucleotide (ASO) molecules, including VCA-894A for the treatment of Charcot-Marie-Tooth Disease, Type 2S (CMT2S), caused by cryptic slice site variants within the IGHMBP2 gene and VGT-1849A for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy.

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, 2024. The financial information as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 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, 2024 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.

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2. 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 and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluation could change. Actual results could differ from those estimates under different assumptions or conditions.

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 office space leases 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 for the three months ended March 31, 2025 and 2024 were as follows:


(in thousands)	March 31, 2025		March 31, 2024
Cash and cash equivalents	$	111,796	$	125,158


Restricted cash included in non-current inventory and other	469		469
Total cash, cash equivalents and restricted cash	$	112,265	$	125,627

Revenue from Net Product Sales

The Company’s net product sales consist of sales of Fanapt®, HETLIOZ® and PONVORY®. Net sales by product for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended
(in thousands)	March 31, 2025		March 31, 2024
Fanapt® net product sales	$	23,545	$	20,579
HETLIOZ® net product sales	20,872		20,053
PONVORY® net product sales	5,624		6,830
Total net product sales	$	50,041	$	47,462

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. During the remainder of 2023, although there was continued destocking at specialty pharmacy customers, inventory levels remained elevated relative to inventory levels prior to the entrance of generic competition and remained elevated throughout 2024 and 2025. Going forward, HETLIOZ® net product sales may reflect lower unit sales as a result of the reduction of elevated levels at specialty pharmacy customers or may be variable depending upon when specialty pharmacy customers need to purchase again. Further, HETLIOZ® net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. The Company constrained HETLIOZ® net product sales for the three months ended March 31, 2025 and 2024 to an amount not probable of significant revenue reversal. The amount of revenue recognized during the three months ended March 31, 2025 related to changes in estimates on revenue constrained during prior periods was $1.0 million. The amount of revenue recognized during the three months ended March 31, 2024 related to changes in estimates on revenue constrained during prior periods 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. The Company’s PONVORY® net product sales for the three months ended December 31, 2024 included approximately $3.0 million of variable consideration that is subject to dispute but that the Company believes is not probable of significant revenue reversal.

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Major Customers

Fanapt® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. HETLIOZ® is available in the United States (U.S.) for distribution through a limited number of specialty pharmacies and is not available in retail pharmacies. PONVORY® is available in the U.S. for distribution primarily through a limited number of specialty distributors and specialty pharmacies. The Company invoices and records revenue when its customers, wholesalers, specialty pharmacies and specialty distributors, receive product from the third-party logistics warehouse, which is the point at which control is transferred to the customer. Revenues and accounts receivable are concentrated with these customers. Outside the U.S., the Company has a distribution agreement for the commercialization of Fanapt® in Israel and sells HETLIOZ® in Germany. There were four major customers that each accounted for more than 10% of total revenues and, as a group, represented 81% of total revenues for the three months ended March 31, 2025. There were four major customers that each accounted for more than 10% of accounts receivable and, as a group, represented 91% of total accounts receivable at March 31, 2025. 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

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures. The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements. The standard is effective for years beginning after December 15, 2024 and early adoption is permitted. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40), which addresses the disaggregation of income statement expenses. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

3. Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of March 31, 2025, 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	$	189,685	$	574	$	(99)	$	190,160
Corporate debt	38,951		6		(5)		38,952

Total marketable securities	$	228,636	$	580	$	(104)	$	229,112

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2024, 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	$	227,720	$	371	$	(261)	$	227,830
Corporate debt	44,506		9		(18)		44,497

Total marketable securities	$	272,226	$	380	$	(279)	$	272,327

4. 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

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•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 March 31, 2025 and December 31, 2024 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 March 31, 2025, as follows:


			Fair Value Measurement as of March 31, 2025 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	$	190,160	$	190,160	$	—	$	—
Corporate debt	67,884		—		67,884		—

Total assets measured at fair value	$	258,044	$	190,160	$	67,884	$	—

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2024, as follows:


			Fair Value Measurement as of December 31, 2024 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	$	227,830	$	227,830	$	—	$	—
Corporate debt	44,497		—		44,497		—

Total assets measured at fair value	$	272,327	$	227,830	$	44,497	$	—

Total assets measured at fair value as of March 31, 2025 include $28.9 million cash equivalents. Total assets measured at fair value as of December 31, 2024 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.

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5. Inventory

Inventory consisted of the following as of March 31, 2025 and December 31, 2024:


(in thousands)	March 31, 2025		December 31, 2024
Current assets

Finished goods	1,923		1,726
Total inventory, current	$	1,923	$	1,726
Non-Current assets
Raw materials	$	934	$	934
Work-in-process	5,766		6,236
Finished goods	1,660		617
Total inventory, non-current	8,360		7,787
Total inventory	$	10,283	$	9,513

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, taking into account all possible alternative uses for the inventory available in the ordinary course of business. 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 $2.5 million of Fanapt® product, $7.3 million of HETLIOZ® product and $0.5 million of PONVORY® product as of March 31, 2025. The Company’s inventory balance consisted of $2.0 million of Fanapt® product, $7.3 million of HETLIOZ® product and $0.2 million of PONVORY® product as of December 31, 2024.

6. Intangible Assets

HETLIOZ®. In January 2014, the Company announced that the FDA had approved the 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.

PONVORY®. On December 7, 2023, the Company acquired the U.S. and Canadian rights to PONVORY® from Actelion Pharmaceuticals Ltd. (Janssen), a Johnson & Johnson Company. The total purchase price of $104.9 million, $100.7 million of which was paid in 2023 and the remaining $4.2 million in 2024, was allocated to the acquired intangible asset for the U.S. and Canadian rights to PONVORY®. The PONVORY® intangible asset is being amortized on a straight-line basis over the estimated economic useful life of the related product rights. During the first quarter of 2024, the estimated useful life for the PONVORY® intangible asset was changed from 2035 to 2042 based on a change in the estimated economic useful life of the related product rights.

The following is a summary of the Company’s amortizing intangible assets as of March 31, 2025:


		March 31, 2025
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	17,765	$	15,235

PONVORY®	2042	104,894		7,785		97,109
Total amortizing intangible assets		$	137,894	$	25,550	$	112,344

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The following is a summary of the Company’s amortizing intangible assets as of December 31, 2024:


		December 31, 2024
(in thousands)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
HETLIOZ®	2035	$	33,000	$	17,400	$	15,600

PONVORY®	2042	104,894		6,398		98,496
Total amortizing intangible assets		$	137,894	$	23,798	$	114,096

As of March 31, 2025 and December 31, 2024, 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 $1.8 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively. The following is a summary of the future intangible asset amortization schedule as of March 31, 2025:


(in thousands)	Total		2025		2026		2027		2028		2029		Thereafter
HETLIOZ®	$	15,235	$	1,097	$	1,463	$	1,463	$	1,463	$	1,463	$	8,286
PONVORY®	97,109		4,158		5,544		5,544		5,544		5,544		70,775
Total amortizing intangible assets	$	112,344	$	5,255	$	7,007	$	7,007	$	7,007	$	7,007	$

SEC Form 10-Q filed by Vanda Pharmaceuticals Inc.