10q10k10q10k.net

What changed in Vanda Pharmaceuticals Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Vanda Pharmaceuticals Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+474 added−390 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-09)

Top changes in Vanda Pharmaceuticals Inc.'s 2023 10-K

474 paragraphs added · 390 removed · 329 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+52 added−20 removed255 unchanged
Biggest changeSee Note 16, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference, for additional information. 14 Table of Contents Product Number Type HETLIOZ ® US 9,060,995 Method of treatment US 9,539,234 Method of treatment US 9,549,913 Method of treatment US 9,730,910* Method of treatment US 9,855,241 Method of treatment US RE46604* Method of treatment US 10,071,977 Drug substance US 10,149,829* Method of treatment US 10,179,119 Method of treatment US 10,376,487* Method of treatment US 10,449,176 Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,945,988 Method of treatment US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,266,622 Method of treatment US 11,285,129* Method of treatment HETLIOZ LQ ® US 9,539,234 Method of treatment US 9,730,910* Method of treatment US 10,071,977 Drug substance US 10,149,829* Method of treatment US 10,179,119 Method of treatment US 10,376,487* Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,202,770 Drug formulation US 11,266,622 Method of treatment US 11,285,129* Method of treatment Fanapt ® US 8,586,610* Method of treatment US 8,652,776 Method of treatment US 8,999,638 Method of treatment US 9,072,742 Method of treatment US 9,074,254 Method of treatment US 9,074,255 Method of treatment US 9,074,256 Method of treatment US 9,138,432* Method of treatment US 9,157,121 Method of treatment HETLIOZ ® and HETLOZ LQ ® Our rights to the NCE patent covering HETLIOZ ® capsules and oral suspension (HETLIOZ LQ ® ) and related intellectual property have been acquired through a license with BMS.
Biggest changeProduct Number Type HETLIOZ ® US 9,060,995 Method of treatment US 9,539,234 Method of treatment US 9,549,913 Method of treatment US 9,730,910* Method of treatment US 9,855,241 Method of treatment US RE46604* Method of treatment US 10,071,977 Drug substance US 10,149,829* Method of treatment US 10,179,119 Method of treatment US 10,376,487* Method of treatment US 10,449,176 Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,945,988 Method of treatment US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,266,622 Method of treatment US 11,285,129* Method of treatment US 11,566,011 Drug substance US 11,633,377 Method of treatment US 11,759,446 Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,833,130 Method of treatment US 11,850,229 Method of treatment HETLIOZ LQ ® US 9,539,234 Method of treatment US 9,730,910* Method of treatment US 10,071,977 Drug substance 15 Table of Contents Product Number Type US 10,149,829* Method of treatment US 10,179,119 Method of treatment US 10,376,487* Method of treatment US 10,610,510 Method of treatment US 10,610,511 Method of treatment US 10,829,465 Drug substance US 10,980,770 Method of treatment US 11,141,400 Method of treatment US 11,202,770 Drug formulation US 11,266,622 Method of treatment US 11,285,129* Method of treatment US 11,566,011 Drug substance US 11,633,377 Method of treatment US 11,759,446 Method of treatment US 11,760,740 Drug substance US 11,786,502 Method of treatment US 11,833,130 Method of treatment US 11,850,229 Method of treatment Fanapt ® US 8,586,610* Method of treatment US 8,652,776 Method of treatment US 8,999,638 Method of treatment US 9,072,742 Method of treatment US 9,074,254 Method of treatment US 9,074,255 Method of treatment US 9,074,256 Method of treatment US 9,138,432* Method of treatment US 9,157,121 Method of treatment PONVORY ® US 8,273,779 Method of treatment US 9,000,018 Method of treatment US 9,062,014 Drug substance US 10,220,023 Method of treatment US RE43728 Drug substance HETLIOZ ® and HETLOZ LQ ® Our rights to the NCE patent covering HETLIOZ ® capsules and oral suspension (HETLIOZ LQ ® ) and related intellectual property have been acquired through a license with BMS.
The FDA determined the action target date under the Prescription Drug User Fee Act Amendments of 2017 to be August 16, 2019 and, on that date, we received a complete response letter (CRL) from the FDA. The FDA asserted in the CRL that the measures demonstrating improved sleep were of unclear clinical significance.
The FDA determined the action target action date under the Prescription Drug User Fee Act Amendments of 2017 to be August 16, 2019 and, on that date, we received a complete response letter (CRL) from the FDA. The FDA asserted in the CRL that the measures demonstrating improved sleep were of unclear clinical significance.
Either party may terminate the Fanapt ® manufacturing agreement under certain circumstances upon specified written notice to the other party. In December 2020, we entered into a non-exclusive manufacturing agreement for the manufacture of commercial supplies of both 48 and 158 mL HETLIOZ LQ ® bottles.
Either party may terminate the Fanapt ® manufacturing agreement under certain circumstances upon specified written notice to the other party. In December 2020, we entered into a non-exclusive manufacturing agreement for the manufacture of commercial supplies of both 48 mL and 158 mL HETLIOZ LQ ® bottles.
Violations of the Anti-Kickback Statute are punishable by imprisonment, criminal fines, civil monetary penalties and exclusion from the participation in federal healthcare programs, such as Medicare and Medicaid.
Violations of the Anti-Kickback Statute are punishable by imprisonment, criminal fines, civil monetary penalties and exclusion from participation in federal healthcare programs, such as Medicare and Medicaid.
Among the provisions of the ACA of importance to pharmaceutical companies are: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program (MDRP) by increasing the minimum rebate for both branded and generic drugs and extending rebate liability to prescriptions for individuals enrolled in Medicaid managed care plans; • introduced a new methodology for the reporting of average manufacturer price by manufacturers under the MDRP for drugs that are inhaled, infused, instilled, implanted or injected; • expanded the types of entities eligible for the 340B drug discount program; 28 Table of Contents • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point‑of‑sale‑discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • established a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • added a requirement to annually report product samples that manufacturers and distributors provide to physicians; • expanded healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, and enhanced penalties for noncompliance; and • established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Among the provisions of the ACA of importance to pharmaceutical companies are: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program (MDRP) by increasing the minimum rebate for both branded and generic drugs and extending rebate liability to prescriptions for individuals enrolled in Medicaid managed care plans; • introduced a new methodology for the reporting of average manufacturer price by manufacturers under the MDRP for drugs that are inhaled, infused, instilled, implanted or injected; • expanded the types of entities eligible for the 340B drug discount program; • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point‑of‑sale‑discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • established a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; • added a requirement to annually report product samples that manufacturers and distributors provide to physicians; 30 Table of Contents • expanded healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, and enhanced penalties for noncompliance; and • established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Physician Payment Sunshine Act The Physician Payment Sunshine Act requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually (with certain exceptions) to Centers for Medicare & Medicaid Services (CMS) information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “ transfers of value ” to such physician owners.
Physician Payment Sunshine Act The Physician Payment Sunshine Act requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually (with certain exceptions) to Centers for Medicare & Medicaid Services (CMS) information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “ transfers of value ” to such physician or teaching hospitals.
Information contained on those websites is not incorporated by reference into this Annual Report or any other report or document that we file with the SEC. License Agreements Our rights to develop and commercialize our products are subject to the terms and conditions of licenses granted to us by other pharmaceutical companies.
Information contained on those websites is not incorporated by reference into this Annual Report or any other report or document that we file with the SEC. License Agreements Our rights to develop and commercialize certain of our products are subject to the terms and conditions of licenses granted to us by other pharmaceutical companies.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we believe the package is complete for any NDA filing to treat patients for 12 weeks or less.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we believe the package was complete for any NDA filing to treat patients for 12 weeks or less.
For more on patent litigation, see Note 16, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference.
For more on patent litigation, see Note 17, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference.
Under Prescription Drug User Fee Act Amendments of 2022 (PDUFA), the FDA has a goal of 10 months from the date of “filing” of a standard, completed NDA for a new molecular entity to review and act on the submission.
Under Prescription Drug User Fee Act Amendments of 2022, the FDA has a goal of 10 months from the date of “filing” of a standard, completed NDA for a new molecular entity to review and act on the submission.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their implementing regulations, impose certain requirements and restrictions on certain types of individuals and entities relating to the privacy and security of individually identifiable health information.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their implementing regulations, impose certain requirements and restrictions on certain types of entities relating to the privacy and security of individually identifiable health information.
See Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference, for additional information.
See Note 17, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference, for additional information.
See Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference, for additional information.
See Note 17, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” in Part I, Item 1A of this Annual Report, each of which is incorporated herein by reference, for additional information.
In connection with the settlement agreement with Novartis relating to Fanapt ® , we 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. The NCE patent expires normally in 2023 in the U.S., Europe, and other markets.
In connection with the settlement agreement with Novartis relating to Fanapt ® , we 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. The NCE patent expired normally in 2023 in the U.S., Europe, and other markets.
FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical holds on post-marketing clinical trials, enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties, any of which could have a material adverse effect on our business.
FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical holds on post-marketing clinical trials, enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or 24 Table of Contents communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties, any of which could have a material adverse effect on our business.
For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. The cost of prescription pharmaceuticals in the U.S. is likely to remain the subject of considerable discussion.
For these and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. The cost of prescription pharmaceuticals in the U.S. is likely to remain the subject of considerable discussion.
A sponsor may seek FDA designation of a compound as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
A sponsor may seek FDA 25 Table of Contents designation of a compound as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
This recognition of comorbidity led Vanda to an initiative to engage with the psychiatric community. Patients diagnosed with traumatic brain injury, including concussions, frequently suffer from sleep disorders, some of which may be circadian rhythm sleep-wake disorders, including Non-24.
This recognition of comorbidity led us to an initiative to engage with the psychiatric community. Patients diagnosed with traumatic brain injury, including concussions, frequently suffer from sleep disorders, some of which may be circadian rhythm sleep-wake disorders, including Non-24.
Our approved products are, and any additional product manufactured or distributed by us following FDA approval will be, subject to continuing regulation by the FDA, including, among other things, recordkeeping requirements, reporting of 22 Table of Contents adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements.
Our approved products are, and any additional product manufactured or distributed by us following FDA approval will be, subject to continuing regulation by the FDA, including, among other things, recordkeeping requirements, reporting of adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements.
Other patents and patent applications relating to Fanapt ® are owned by Vanda. Fanapt ® metabolites, formulations, genetic markers and uses are the subject of numerous patent filings in which protection has been sought in the U.S., Europe, and other markets.
Other patents and patent applications relating to Fanapt ® are owned by us. Fanapt ® metabolites, formulations, genetic markers and uses are the subject of numerous patent filings in which protection has been sought in the U.S., Europe, and other markets.
Orphan drug designation provides potential financial and regulatory incentives, including study design assistance, tax credits, waiver of FDA user fees, and up to seven years of market exclusivity upon marketing approval. In February 2011, the European Medicines Agency (EMA) designated HETLIOZ ® as an orphan medicinal product for the same indication.
Orphan drug designation provides potential financial and regulatory incentives, including study design assistance, tax credits, waiver of FDA user fees, and up to seven years of market 6 Table of Contents exclusivity upon marketing approval. In February 2011, the European Medicines Agency (EMA) designated HETLIOZ ® as an orphan medicinal product for the same indication.
The JET study showed effectiveness in treating travelers who traveled either five or eight time zones from Washington, DC to London and San Francisco or Los Angeles to London, respectively. The results support the previously reported pivotal JET5 and JET8 Phase III studies, which demonstrated improvements in patients who experienced circadian advances of five and eight hours, respectively.
The JET study showed effectiveness in treating travelers who traveled either five or eight time zones from Washington, D.C. to London and San Francisco or Los Angeles to London, respectively. The results support the previously reported pivotal JET5 and JET8 Phase III studies, which demonstrated improvements in patients who experienced circadian advances of five and eight hours, respectively.
HETLIOZ ® and its formulations, genetic markers and 15 Table of Contents uses are the subject of numerous patent filings for which protection has been sought in selected countries worldwide. The NCE patent covering HETLIOZ ® expired in December 2022 in the U.S., which is inclusive of a five-year extension granted under the Hatch-Waxman Act in October 2018.
HETLIOZ ® and its formulations, genetic markers and uses are the subject of numerous patent filings for which protection has been sought in selected countries worldwide. The NCE patent covering HETLIOZ ® expired in December 2022 in the U.S., which is inclusive of a five-year extension granted under the Hatch-Waxman Act in October 2018.
However, the antipruritic effect of tradipitant was robust in the mild atopic dermatitis population. The EPIONE study continued to demonstrate that tradipitant is safe and well-tolerated. The EPIONE 2 study was placed on hold in 2020. Atopic dermatitis is a chronic, relapsing inflammatory skin disorder characterized by the symptom of intense and persistent pruritus or itch.
However, the antipruritic effect of tradipitant was robust in the mild atopic dermatitis population. The EPIONE study continued to demonstrate that tradipitant is safe and well-tolerated. The EPIONE 2 study was placed on hold in 2020. 11 Table of Contents Atopic dermatitis is a chronic, relapsing inflammatory skin disorder characterized by the symptom of intense and persistent pruritus or itch.
The protocol for a pivotal Phase III motion sickness study was discussed with the FDA at the end of Phase II meeting, and the FDA agreed with the adequacy of the program design to support an NDA. The Phase III study is ongoing.
The protocol for a pivotal Phase III motion sickness study was discussed with the FDA at the end of Phase II meeting, and the FDA agreed with the adequacy of the program design to support an NDA.
We have paid UCSF $1.6 million in upfront fees and development milestones. As of December 31, 2022, remaining milestones include $11.9 million for development milestones and $33.0 million for future regulatory approval and sales milestones.
We have paid UCSF $1.6 million in upfront fees and development milestones. As of December 31, 2023, remaining milestones include $11.9 million for development milestones and $33.0 million for future regulatory approval and sales milestones.
More recently, in March 2021, President Biden signed into law the American Rescue Plan Act of 2021, which will eliminate the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
More recently, in March 2021, President Biden signed into law the American Rescue Plan Act of 2021, which eliminated the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
As with the totally blind, Non-24 in sighted individuals appears to be a comorbidity with certain other conditions. For example, a comorbidity has been established between psychiatric mood disorders and Non-24. Hospitalized individuals with neurological and psychiatric disorders can become insensitive to social cues, which 6 Table of Contents may predispose them to the development of Non-24.
As with the totally blind, Non-24 in sighted individuals appears to be a comorbidity with certain other conditions. For example, a comorbidity has been established between psychiatric mood disorders and Non-24. Hospitalized individuals with neurological and psychiatric disorders can become insensitive to social cues, which may predispose them to the development of Non-24.
A new drug must be approved by the FDA through the NDA process before it may be legally marketed in the U.S. The process of obtaining 19 Table of Contents regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign laws and regulations require the expenditure of substantial time and financial resources.
A new drug must be approved by the FDA through the NDA process before it may be legally marketed in the U.S. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign laws and regulations require the expenditure of substantial time and financial resources.
The primary endpoint measured in Week 4 of treatment was assessed by the Young Mania Rating Scale (YMRS), a rating scale of clinical severity in the core symptoms of mania. At the end of the 4-week study, Fanapt ® treated patients showed a larger improvement than placebo treated patients, and this difference was highly statistically significant.
The primary 9 Table of Contents endpoint measured in Week 4 of treatment was assessed by the Young Mania Rating Scale (YMRS), a rating scale of clinical severity in the core symptoms of mania. At the end of the 4-week study, Fanapt ® treated patients showed a larger improvement than placebo treated patients, and this difference was highly statistically significant.
Patents for the aqueous microcrystals LAI formulation of Fanapt ® expire in 2023 in 16 Table of Contents the U.S. and in some markets in Europe. We have pending patent applications covering the use of iloperidone and plan on filing additional applications based on discoveries made throughout the development plan of this molecule.
Patents for the aqueous microcrystals LAI formulation of Fanapt ® expire in 2023 in the U.S. and in some markets in Europe. We have pending patent applications covering the use of iloperidone and plan on filing additional applications based on discoveries made throughout the development plan of this molecule.
Failure to report relevant data may result in civil fines and/or penalties. 26 Table of Contents Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA), prohibits U.S. corporations and their representatives and intermediaries from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.
Failure to report relevant data may result in civil fines and/or penalties. Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA), prohibits U.S. corporations and their representatives and intermediaries from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.
See Competition below for a discussion of commonly prescribed drugs for patients with sleep disorders. Fanapt ® for schizophrenia (tablets) Fanapt ® is a product approved for the treatment of schizophrenia. In May 2009, the FDA granted U.S. marketing approval of Fanapt ® for the acute treatment of schizophrenia in adults.
The most commonly prescribed drugs are hypnotics. See Competition below for a discussion of commonly prescribed drugs for patients with sleep disorders. Fanapt ® for schizophrenia (tablets) Fanapt ® is a product approved for the treatment of schizophrenia. In May 2009, the FDA granted U.S. marketing approval of Fanapt ® for the acute treatment of schizophrenia in adults.
Our product pipeline currently consists of the following products in clinical development or under regulatory review: HETLIOZ ® for jet lag disorder In March and May 2018, respectively, we announced the results of our JET8 and JET studies for the treatment of jet lag disorder.
Our product pipeline currently consists of the following products in clinical development or under regulatory review: 8 Table of Contents HETLIOZ ® for jet lag disorder In March and May 2018, respectively, we announced the results of our JET8 and JET studies for the treatment of jet lag disorder.
False Claims Act The False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds and knowingly making, or causing to be made or used, a false record or statement to get a false claim paid.
False Claims Act 27 Table of Contents The False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds and knowingly making, or causing to be made or used, a false record or statement to get a false claim paid.
In addition to requiring reporting transfers of value, some states have imposed price reporting requirements. These state laws apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
In addition to requiring reporting transfers of value, some states have imposed price reporting requirements. These state laws apply to items 28 Table of Contents and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
In addition, sedative-hypnotic treatments for certain sleep related disorders include, Ambien ® (zolpidem) by Sanofi (including Ambien CR ® ), Lunesta ® (eszopiclone) by Sunovion Pharmaceuticals Inc., Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, Silenor ® (doxepin) by Currax Pharmaceuticals LLC, Belsomra ® (suvorexant) by Merck & Co., Inc., Dayvigo ® (lemborexant) by Eisai Inc., generic products such as zaleplon, trazodone and doxepin, and over-the-counter remedies such as Benadryl ® and Tylenol PM ® .
In addition, sedative-hypnotic treatments for certain sleep related disorders include, Ambien ® (zolpidem) by Sanofi (including Ambien CR ® ), Lunesta ® (eszopiclone) by Woodward Pharma Services ., Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, Silenor ® (doxepin) by Currax Pharmaceuticals LLC, Belsomra ® (suvorexant) by Merck & Co., Inc., Dayvigo ® (lemborexant) by Eisai Inc., generic products such as agomelatine, zaleplon, trazodone and doxepin, and over-the-counter remedies such as Benadryl ® and Tylenol PM ® .
These clinical trials, often 20 Table of Contents referred to as “pivotal” clinical trials, are intended to establish the overall risk-benefit ratio of the compound and provide, if appropriate, an adequate basis for product labeling.
These clinical trials, often referred to as “pivotal” clinical trials, are intended to establish the overall risk-benefit ratio of the compound and provide, if appropriate, an adequate basis for product labeling.
Human Capital We had 290 full-time employees as of December 31, 2022, compared with 278 employees as of December 31, 2021. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our employee relations to be good.
Human Capital We had 203 full-time employees as of December 31, 2023, compared with 290 employees as of December 31, 2022. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our employee relations to be good.
A certification that the new drug will not infringe the already approved drug’s listed patents or that such patents are invalid is called a Paragraph IV certification. If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced drug have expired.
A certification that the new drug will not infringe the already approved drug’s listed patents or that such patents are invalid is called a Paragraph IV certification. If the 26 Table of Contents applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced drug have expired.
In these countries, pricing negotiations with governmental authorities can take nine to 12 months or longer after the receipt of regulatory 27 Table of Contents marketing approval for a product.
In these countries, pricing negotiations with governmental authorities can take nine to 12 months or longer after the receipt of regulatory marketing approval for a product.
In the event that we terminate the agreement, or if UCSF terminates the agreement due to our breach or for certain other reasons set forth in the agreement, all rights licensed 13 Table of Contents and developed by us under the agreement will revert or otherwise be licensed back to UCSF.
In the event that we terminate the agreement, or if UCSF terminates the agreement due to our breach or for certain other reasons set forth in the agreement, all rights licensed and developed by us under the agreement will revert or otherwise be licensed back to UCSF.
(collectively, Patheon), subsidiaries of Thermo Fisher Scientific, for the manufacture of HETLIOZ ® capsules and Fanapt ® oral tablets. In January 2014, we entered into a manufacturing agreement with Patheon for the manufacture of commercial supplies of HETLIOZ ® 20 mg capsules at Patheon’s Cincinnati, Ohio manufacturing site.
We have agreements in place with Patheon Pharmaceuticals Inc. and Patheon Inc. (collectively, Patheon), subsidiaries of Thermo Fisher Scientific, for the manufacture of HETLIOZ ® capsules and Fanapt ® oral tablets. In January 2014, we entered into a manufacturing agreement with Patheon for the manufacture of commercial supplies of HETLIOZ ® 20 mg capsules at Patheon’s Cincinnati, Ohio manufacturing site.
In territories outside the U.S., the royalty is 5% on net sales. In December 2022, the royalty on net sales in the U.S. decreased from 10% to 5%. This U.S. royalty will end in April 2024.
In December 2022, the royalty on net sales in the U.S. decreased from 10% to 5%. This U.S. royalty will end in April 2024.
Corresponding NCE patent protection has expired in most other markets. The U.S. Patent and Trademark Office has issued 17 method of treatment patents for HETLIOZ ® that will expire between 2033 and 2035 and three drug substance patents that will expire in 2035. Additionally, the U.S.
Corresponding NCE patent protection has expired in most other markets. The U.S. Patent and Trademark Office has issued 22 method of treatment patents for HETLIOZ ® that will expire between 2033 and 2041 and four drug substance patents that will expire in 2035. Additionally, the U.S.
In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC resolving the lawsuits against MSN. The consolidated lawsuits against the remaining HETLIOZ ® Defendants were tried in March 2022. In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S. Patent No. RE46,604, and that the asserted claims of U.S.
In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC 16 Table of Contents resolving the lawsuits against MSN. The consolidated lawsuits against the remaining HETLIOZ ® Defendants were tried in March 2022. In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S. Patent No.
The key elements of our strategy to accomplish this goal are to: • Maximize the commercial success of HETLIOZ ® and Fanapt ® ; • Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach; • Pursue the clinical development and regulatory approval of our products, including tradipitant; • Apply our pharmacogenetics and pharmacogenomics expertise to differentiate our products; • Expand our product portfolio through the identification and acquisition of additional products; and • Utilize novel and innovative approaches in pursuit of each of these strategies. 5 Table of Contents Commercialized Products Our commercial product portfolio consists of: Product Indication 2022 Net Sales (in millions) Geography Non-24 (capsules) Nighttime sleep disturbances in SMS (capsules and HETLIOZ LQ ® oral suspension) $159.7 United States Europe (Non-24 in blind patients only) Schizophrenia (tablets) $94.7 United States Israel HETLIOZ ® for Non-24 (capsules) In January 2014, HETLIOZ ® capsules were approved in the U.S. for the treatment of adults with Non-24.
The key elements of our strategy to accomplish this goal are to: • Maximize the commercial success of HETLIOZ ® , Fanapt ® and PONVORY ® ; • Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach; • Pursue the clinical development and regulatory approval of our products, including tradipitant; • Apply our pharmacogenetics and pharmacogenomics expertise to differentiate our products; • Expand our product portfolio through the identification and acquisition of additional products; and • Utilize novel and innovative approaches in pursuit of each of these strategies. 5 Table of Contents Commercialized Products Our commercial product portfolio consists of: Product Indication 2023 Net Sales (in millions) Geography Non-24 (capsules) Nighttime sleep disturbances in SMS (capsules and HETLIOZ LQ ® oral suspension) $100.2 United States Europe (Non-24 in blind patients only) Schizophrenia (tablets) $90.9 United States Israel Relapsing forms of multiple sclerosis (tablets) $1.6 United States Canada HETLIOZ ® for Non-24 (capsules) In January 2014, HETLIOZ ® capsules were approved in the U.S. for the treatment of adults with Non-24.
The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing.
The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information.
Before approving an NDA, the FDA may also inspect one or more clinical trial sites to assure compliance with GCP requirements. After the FDA evaluates an NDA, it will issue an approval letter or a complete response letter (CRL).
Before approving an NDA, the FDA may also inspect one or more clinical trial sites to assure compliance with GCP requirements. 23 Table of Contents After the FDA evaluates an NDA, it will issue an approval letter or a CRL.
Accordingly, securing patents, regulatory data package protection, and other proprietary rights is an essential element of our business strategies. Tradipitant and VQW-765 are covered by NCE and other patents and patent applications related to their respective medicinal uses. In addition, NCE patent protection has been sought for VTR-297 and CFTR. Patent applications for these active ingredients remain pending.
Accordingly, securing patents, regulatory data package protection, and other proprietary rights are an essential element of our business strategies. 14 Table of Contents PONVORY ® , tradipitant and VQW-765 are covered by NCE and other patents and patent applications related to their respective medicinal uses. In addition, NCE patent protection has been sought for VTR-297 and CFTR.
We filed a lawsuit against the FDA in September 2022 demanding that the FDA immediately publish in the Federal 8 Table of Contents Register a notice of opportunity for a hearing on the jet lag disorder sNDA. The FDA then published the notice in the Federal Register in October 2022.
We filed a lawsuit against the FDA in September 2022 demanding that the FDA immediately publish in the Federal Register a notice of opportunity for a hearing on the jet lag disorder sNDA. The FDA then published the notice in the Federal Register in October 2022. We have asked the U.S.
However, there are numerous factors that could cause interruptions in the supply of our products, including regulatory reviews, changes in our sources for manufacturing, disputes with a manufacturer, or financial instability of manufacturers, all of which could negatively impact our operation and our financial results. We have agreements in place with Patheon Pharmaceuticals Inc. and Patheon Inc.
However, there are numerous factors that could cause interruptions in the supply of our products, including regulatory reviews, changes in our sources for manufacturing, disputes with a 20 Table of Contents manufacturer, or financial instability of manufacturers, all of which could negatively impact our operation and our financial results.
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. We have paid Lilly $3.0 million in upfront fees and development milestones.
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.
We have no 12 Table of Contents remaining milestone obligations to BMS. Additionally, we are obligated to make royalty payments on HETLIOZ ® net sales to BMS. The royalty period in each territory where we commercialize HETLIOZ ® is 10 years following the first commercial sale in the territory.
We have no remaining milestone obligations to BMS. Additionally, we are obligated to make royalty payments on HETLIOZ ® net sales to BMS. The royalty period in each territory where we commercialize 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.
The study had two primary endpoints: percentage of participants vomiting, and Motion Sickness Severity Scale (MSSS) Worst score. In the overall population, a significantly higher percentage of participants experienced vomiting in the placebo arm as compared to the tradipitant arm. The MSSS Worst score endpoint also favored tradipitant, but the difference did not reach statistical significance.
In the overall population, a significantly higher percentage of participants experienced vomiting in the placebo arm as compared to the tradipitant arm. The MSSS Worst score endpoint also favored tradipitant, but the difference did not reach statistical significance.
The IRA, as well as other federal, state and foreign healthcare reform measures that have been and may be adopted in the future, could have a material adverse effect on our business. 29 Table of Contents These healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price for any approved product and/or the level of reimbursement physicians receive for administering any approved product.
These healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies 31 Table of Contents and additional downward pressure on the price for any approved product and/or the level of reimbursement physicians receive for administering any approved product.
Portfolio of CFTR activators and inhibitors Our portfolio of CFTR activators and inhibitors may have broad applicability in addressing a number of high unmet medical needs, including chronic dry eye, constipation, polycystic kidney disease, cholestasis and secretory diarrheas. We plan on filing applications based on discoveries made throughout the development plan of these product candidates.
We have pending patent applications covering the use of VTR-297 and plan on filing additional applications based on discoveries made throughout the development plan of this molecule. 18 Table of Contents Portfolio of CFTR activators and inhibitors Our portfolio of CFTR activators and inhibitors may have broad applicability in addressing a number of high unmet medical needs, including chronic dry eye, constipation, polycystic kidney disease, cholestasis and secretory diarrheas.
These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our business.
These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning 21 Table of Contents letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
During the development of a new drug, sponsors are given several opportunities to meet with the FDA. These meetings can provide an opportunity for the sponsor to share information about the progress of the application or clinical trials, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.
These meetings can provide an opportunity for the sponsor to share information about the progress of the application or clinical trials, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.
Where it is necessary to 17 Table of Contents share our proprietary information or data with outside parties, our policy is to make available only that information and data required to accomplish the desired purpose and only pursuant to a duty of confidentiality on the part of those parties.
We require all of our employees, relevant consultants and advisors to enter into confidentiality agreements. Where it is necessary to share our proprietary information or data with outside parties, our policy is to make available only that information and data required to accomplish the desired purpose and only pursuant to a duty of confidentiality on the part of those parties.
In addition, we have a number of drugs in development, including: • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, delayed sleep phase disorder (DSPD), sleep disturbances in autism spectrum disorder (ASD) and pediatric Non-24; • Fanapt ® (iloperidone) for the treatment of bipolar I disorder and Parkinson’s disease psychosis 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, atopic dermatitis, and COVID-19 pneumonia; • 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.
In addition, we have 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; • PONVORY (ponesimod) for the treatment of inflammatory/autoimmune disorders, including but not limited to ulcerative colitis, psoriasis, Crohn's disease, atopic dermatitis, eosinophilic esophagitis and alopecia areata; • Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis; • VHX-896, the active metabolite of iloperidone; • 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; • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis, hematologic malignancies and with potential use as a treatment for several oncology indications; • 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 IGHMBP2.
This pharmacokinetic study is ongoing and will serve to inform the dosing for a later clinical study of Fanapt ® LAI for the treatment of schizophrenia. 9 Table of Contents Fanapt ® for Parkinson ’ s disease psychosis A clinical program of Fanapt ® in Parkinson ’ s disease psychosis is ongoing.
This pharmacokinetic study is ongoing and will serve to inform the dosing for a later clinical study of Fanapt ® LAI for the treatment of schizophrenia.
Drugs receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing trials or if such trials fail to verify the predicted clinical benefit.
As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. Drugs receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing trials or if such trials fail to verify the predicted clinical benefit.
While there are no FDA approved treatments for patients with SMS other than HETLIOZ ® , there are a number of drugs approved and prescribed for patients with sleep disorders that may be used to treat patients with SMS. The most commonly prescribed drugs are hypnotics.
In September 2023, the EMA designated HETLIOZ ® as an orphan medicinal product for the treatment of SMS. While there are no FDA approved treatments for patients with SMS other than HETLIOZ ® , there are a number of drugs approved and prescribed for patients with sleep disorders that may be used to treat patients with SMS.
See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® . 7 Table of Contents Research and Development We have built a research and development organization that includes extensive expertise in the scientific disciplines of pharmacogenetics and pharmacogenomics. We operate cross-functionally and are led by an experienced research and development management team.
Research and Development We have built a research and development organization that includes extensive expertise in the scientific disciplines of pharmacogenetics and pharmacogenomics. We operate cross-functionally and are led by an experienced research and development management team.
Although the NCE patents protecting Fanapt ® and HETLIOZ ® have expired, Fanapt ® remains protected by additional patents and HETLIOZ ® remains protected by additional patents, some of which we have asserted against current generic competitors. For more on the license and sublicense arrangements related to these active ingredients, see License Agreements above.
Patent applications for these active ingredients remain pending. Although the NCE patents protecting Fanapt ® and HETLIOZ ® have expired, Fanapt ® remains protected by additional patents and HETLIOZ ® remains protected by additional patents, some of which we have asserted against current generic competitors.
VQW-765 Novartis owns the NCE patent as well as patent applications directed to methods of using VQW-765, VQW-765 formulations, and combinations of VQW-765 with other active pharmaceutical ingredients.
We plan on filing applications based on discoveries made throughout the development plan of these product candidates. VQW-765 Novartis owns the NCE patent as well as patent applications directed to methods of using VQW-765, VQW-765 formulations, and combinations of VQW-765 with other active pharmaceutical ingredients.
These developments may render our products or technologies obsolete or noncompetitive. We believe the primary competitors for HETLIOZ ® and Fanapt ® are as follows: • For HETLIOZ ® in the treatment of nighttime sleep disturbances in SMS, there are no FDA approved direct competitors.
We believe the competitors for HETLIOZ ® , Fanapt ® and PONVORY ® are as follows: • For HETLIOZ ® in the treatment of nighttime sleep disturbances in SMS, there are no FDA approved direct competitors.
The TSST creates an acute stress by requiring participants to make an interview-style presentation in front of a panel who provides no feedback or encouragement. Participants who received VQW-765 showed numerically lower stress levels compared to those who received placebo. A significant relationship was also seen between exposure to VQW-765 (amount of drug measured in blood) and the clinical response.
Participants who received VQW-765 showed numerically lower stress levels compared to those who received placebo. A significant relationship was also seen between exposure to VQW-765 (amount of drug measured in blood) and the clinical response.
Tradipitant for gastroparesis In December 2018, we announced results from a Phase II randomized clinical study (2301) of tradipitant as a monotherapy in the treatment of gastroparesis.
In a randomized placebo controlled clinical study, PONVORY ® has been shown to reduce the symptoms and signs of psoriasis. Tradipitant for gastroparesis In December 2018, we announced results from a Phase II randomized clinical study (2301) of tradipitant as a monotherapy in the treatment of gastroparesis.
Tradipitant (VLY-686) In April 2012, we entered into a license agreement with Eli Lilly and Company (Lilly) pursuant to which we 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.
We may lose our rights to develop and commercialize Fanapt ® if we fail to comply with certain requirements in the Titan license agreement regarding our financial condition, or if we fail to comply with certain diligence obligations regarding our development or commercialization activities. 13 Table of Contents Tradipitant (VLY-686) In April 2012, we entered into a license agreement with Eli Lilly and Company (Lilly) pursuant to which we 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.
The class of melatonin agonists includes Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, Valdoxan ® (agomelatine) by Servier Laboratories Limited, Circadin ® (long-acting melatonin) by Neurim Pharmaceuticals Ltd. and the food supplement melatonin.
The class of melatonin agonists includes Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, and the food supplement melatonin.
In this event, the NDA must be 21 Table of Contents resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. The FDA may refer an application for a new drug to an advisory committee within the FDA.
The resubmitted application also is subject to review before the FDA accepts it for filing. The FDA may refer an application for a new drug to an advisory committee within the FDA.
We believe that VPO-227 has the potential to be an orally administered treatment for cholera. In October 2022, VPO-227 was granted orphan drug designation by FDA for the treatment of cholera. VQW-765 We are evaluating VQW-765 for the treatment of psychiatric disorders.
In addition, an early stage CFTR inhibitor program is planned for VPO-227 for the treatment of secretory diarrhea disorders, including cholera. We believe that VPO-227 has the potential to be an orally administered treatment for cholera. In October 2022, VPO-227 was granted orphan drug designation by the FDA for the treatment of cholera.
These trials, often referred to as “Phase IV” trials, are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of such clinical trials as a condition of approval of an NDA.
These trials, often referred to as “Phase IV” trials, are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Orange Book. Drugs listed in the Orange Book can, in turn be cited by potential competitors in support of approval of an ANDA.
Drugs listed in the Orange Book can, in turn be cited by potential competitors in support of approval of an ANDA.
We intend 30 Table of Contents to satisfy the disclosure requirements under Item 5.05 of Form 8‑K regarding amendments to, or waivers from, provisions of our code of business conduct and ethics by posting such information on the website address and location specified above.
We intend to satisfy the disclosure requirements under Item 5.05 of Form 8‑K regarding amendments to, or waivers from, provisions of our code of business conduct and ethics by posting such information on the website address and location specified above. 32 Table of Contents None of the information contained on our website or www.sec.gov is incorporated by reference into this Annual Report or any other report or document filed with the SEC unless expressly stated otherwise therein.
A 25 Table of Contents number of states also have anti-kickback laws that establish similar prohibitions that may apply to items or services reimbursed by government programs, as well as any third-party payors, including commercial payors, known as “all-payor” laws.
A number of states also have anti-kickback laws that establish similar prohibitions that may apply to items or services reimbursed by government programs, as well as any third-party payors, including commercial payors, known as “all-payor” laws. Prescription Drug Marketing Act As part of the sales and marketing process, pharmaceutical companies frequently provide healthcare providers with samples of approved drugs.
As of December 31, 2022, remaining milestones include a $2.0 million development milestone due upon the filing of the first marketing authorization for tradipitant in either the U.S. or the E.U, $10.0 million and $5.0 million for the first approval of a marketing authorization for tradipitant in the U.S. and E.U., respectively, and up to $80.0 million for sales milestones.
As of December 31, 2023, remaining milestones include $10.0 million and $5.0 million milestones for the first approval of a marketing authorization for tradipitant in the U.S. and the E.U., respectively, and up to $80.0 million for sales milestones. We are obligated to use commercially reasonable efforts to develop and commercialize tradipitant.
Shift work and excessive sleepiness disorder treatments include Nuvigil ® (armodafinil) and Provigil ® (modafinil) both by Teva Pharmaceutical Industries Ltd. • For Fanapt ® in the treatment of schizophrenia, the atypical antipsychotics competitors are Risperdal ® (risperidone), including the LAI formulation Risperdal Consta ® and Invega ® (paliperidone), including the LAI formulation Invega ® Sustenna ® , each by Johnson & Johnson, the LAI formulation Zyprexa ® Relprevv TM (olanzapine) by Lilly, Abilify ® (aripiprazole) by Otsuka America Pharmaceutical Inc., Abilify Maintena ® (the LAI formulation of Abilify ® ) by Lundbeck/Otsuka America Pharmaceutical Inc., Geodon ® (ziprasidone) by Viatris, Inc., Saphris ® (asenapine) by AbbVie Inc., Latuda ® (lurasidone) by Sunovion Pharmaceuticals Inc., Rexulti ® (brexpiprazole) by Lundbeck/Otsuka America Pharmaceutical, Inc., Aristada ® (aripiprazole lauroxil) extended-release injectable suspension by Alkermes, plc, Vraylar ® (cariprazine) by AbbVie Inc., Perseris ® (risperidone) extended-release injectable suspension by Indivior plc, Caplyta ® (lumapteperone) by Intra-Cellular Therapies, 18 Table of Contents Inc., Lybalvi ® (olanzapine and samidorphan) by Alkermes, plc, and generic clozapine and quetiapine, as well as the typical antipsychotics haloperidol, chlorpromazine, thioridazine, and sulpiride (all of which are generic).
Shift work and excessive sleepiness disorder treatments include Nuvigil ® (armodafinil) and Provigil ® (modafinil) both by Teva. • For Fanapt ® in the treatment of schizophrenia, the atypical antipsychotics competitors are Risperdal ® (risperidone), including the LAI formulation Risperdal Consta ® and Invega ® (paliperidone), including the LAI formulation Invega ® Sustenna ® , each by Johnson & Johnson, the LAI formulation Zyprexa ® Relprevv TM (olanzapine) by Cheplapharm, Abilify ® (aripiprazole) by Otsuka America Pharmaceutical Inc., Abilify Maintena ® (the LAI formulation of Abilify ® ) by Lundbeck/Otsuka America Pharmaceutical Inc., Geodon ® (ziprasidone) by Viatris, Inc., Saphris ® (asenapine) by Allergan, Latuda ® (lurasidone) by Sunovion Pharmaceuticals Inc., Rexulti ® (brexpiprazole) by Lundbeck/Otsuka America Pharmaceutical, Inc., Aristada ® (aripiprazole lauroxil) extended-release injectable suspension by Alkermes, plc, Vraylar ® (cariprazine) by AbbVie Inc., Perseris ® (risperidone) extended-release injectable suspension by Indivior plc, Caplyta ® (lumapteperone) by Intra-Cellular Therapies, Inc., Lybalvi ® (olanzapine and samidorphan) by Alkermes, plc, and generic clozapine and quetiapine, as well as the typical antipsychotics haloperidol, chlorpromazine, thioridazine, and sulpiride (all of which are generic). • For PONVORY ® in the treatment of RMS, the competitors include Avonex ® (interferon beta-1a), Tysabri ® (natalizumab) and Plegridy ® (peginterferon beta-1a), all by Biogen Inc., Vumerity ® (diroximel fumerate) by Biogen Inc./Alkermes, plc, Betaseron ® (interferon beta-1b) by Bayer Healthcare Pharmaceuticals Inc., Rebif ® (interferon beta-1a) and Mavenclad ® (cladribine), both by Merck KGaA, Extavia ® (interferon beta-1b) and Mayzent ® (siponimod), both by Novartis AG, Lemtrada ® (alemtuzumab) by Sanofi, Ocrevus ® (ocrelizumab) by Roche Holding AG/Biogen Inc., Zeposia ® (ozanimod) by BMS, Briumvi ® (ubiltuximab) by TG Therapeutics, Inc., Kesimpta ® (ofatumumab) by Novartis, Tyruko ® (natalizumab) by Sandoz Group AG and generic dimethyl fumarate, fingolimod, glatiramer acetate and teriflunomide.

… 106 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

150 edited+52 added−22 removed318 unchanged
Biggest changeThe GDPR implements stringent operational requirements for processors and controllers of personal data, including, for example, expanded disclosure requirements about how personal information is to be used, strengthened individual data subject rights, limitations on retention of personal data, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data, shortened mandatory data breach notification timelines and higher standards for controllers to demonstrate they have obtained valid consent for certain data processing activities.
Biggest changeThe GDPR implements stringent operational requirements for controllers and processors of personal data, including, for example, transparent information for the data subjects regarding the processing of their personal data, appropriate legal basis for processing personal data that may require to obtain the valid consent of the data subjects where applicable, expanded individual data subject rights, limitations on retention of personal data, increased requirements pertaining to data security and confidentiality, mandatory data breach notification with the competent supervisory authority and higher standards for controllers and processors to demonstrate their compliance with the GDPR by documenting it.
This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (beginning October 1, 2022); and replaces the Medicare Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (beginning October 1, 2022); and replaces the Medicare Part D coverage gap discount program with a new discounting program (beginning in 2025).
We are subject to stringent laws, rules, regulations, policies, industry standards and contractual obligations regarding data privacy and security in foreign jurisdictions and may be subject to additional related laws and regulations in other jurisdictions into which we expand.
We are subject to stringent laws, rules, regulations, policies, industry standards and contractual obligations regarding data privacy and security in foreign jurisdictions and may be subject to additional related laws, rules, regulations, policies, industry standards and contractual obligations in other jurisdictions into which we expand.
Our board of directors previously adopted a rights agreement, the provisions of which could have had the effect of discouraging, delaying or preventing a change in or management or control over us. While there is no plan to do so at this time, our board of directors may choose to adopt a new rights plan in the future.
Our board of directors previously adopted a rights agreement, the provisions of which could have had the effect of discouraging, delaying or preventing a change in management or control over us. While there is no plan to do so at this time, our board of directors may choose to adopt a new rights plan in the future.
Our ability to enroll patients in, and the commencement and rate of completion of, clinical trials for our products may be affected by many factors, including: • the size and nature of the patient population; • the design of the trial protocol for our clinical trials; • the eligibility and exclusion criteria for the trial in question; • the availability of competing therapies and competing clinical trials, and physician and patient perception of our product candidates and our other product candidates being studied in relation to these other potential options; • the availability of raw materials and the possibility of raw materials expiring prior to their use; • difficulty in maintaining contact with patients after treatment, resulting in incomplete data; • poor effectiveness of our products during clinical trials; • unforeseen safety issues or side effects; • the number and location of clinical sites in our clinical trials; • the proximity and availability of clinical trial sites for prospective patients; • the availability of time and resources at the institutions where clinical trials are and will be conducted; • the availability of adequate financing to fund ongoing clinical trial expenses; • the study endpoints that rely on subjective patient reported outcomes; and • the impact of global health crises; 46 Table of Contents • governmental or regulatory delays and changes in regulatory requirements and guidelines.
Our ability to enroll patients in, and the commencement and rate of completion of, clinical trials for our products may be affected by many factors, including: • the size and nature of the patient population; • the design of the trial protocol for our clinical trials; • the eligibility and exclusion criteria for the trial in question; • the availability of competing therapies and competing clinical trials, and physician and patient perception of our product candidates and our other product candidates being studied in relation to these other potential options; • the availability of raw materials and the possibility of raw materials expiring prior to their use; • difficulty in maintaining contact with patients after treatment, resulting in incomplete data; • poor effectiveness of our products during clinical trials; • unforeseen safety issues or side effects; • the number and location of clinical sites in our clinical trials; • the proximity and availability of clinical trial sites for prospective patients; • the availability of time and resources at the institutions where clinical trials are and will be conducted; • the availability of adequate financing to fund ongoing clinical trial expenses; • the study endpoints that rely on subjective patient reported outcomes; • the impact of global health crises; and 49 Table of Contents • governmental or regulatory delays and changes in regulatory requirements and guidelines.
There can be no assurance that we will achieve sustained profitability, which depends on many factors, including but not limited to, our ability to obtain regulatory approval for our products and achieve success in commercializing them in the U.S., Europe and our other target jurisdictions, as well as other factors described in this Annual Report.
There can be no assurance that we will achieve sustained profitability, which depends on many factors, including but not limited to, our ability to obtain regulatory approval for our products and achieve success in commercializing them in the U.S., Europe, Canada and our other target jurisdictions, as well as other factors described in this Annual Report.
The following factors, in addition to the other risk factors described in this section, may also have a significant impact on the market price of our common stock: • our level of success in commercializing our products; • our level of success in executing our commercialization strategies; • publicity regarding actual or potential litigation involving us and the outcome of any such litigation; • publicity regarding actual or potential testing or trial results relating to products under development by us or our competitors; • the outcome of regulatory review relating to products under development by us or our competitors; • regulatory developments in the U.S. and foreign countries; • newly enacted healthcare legislation or changes to existing legislation; • developments concerning any collaboration or other strategic transaction we may undertake; • announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors; • safety issues with our products or those of our competitors; • announcements of technological innovations or new therapeutic products or methods by us or others; • actual or anticipated variations in our quarterly operating results; 57 Table of Contents • changes in estimates of our financial results or recommendations by securities analysts or failure to meet such financial expectations; • changes in government regulations or policies; • changes in patent legislation or patent decisions or adverse changes to patent law; • additions or departures of key personnel or members of our board of directors; • the publication of negative research or articles about our company, our business or our products by industry analysts or others; • market rumors or press reports; • publicity regarding actual or potential transactions involving us; and • economic, political and other external factors beyond our control.
The following factors, in addition to the other risk factors described in this section, may also have a significant impact on the market price of our common stock: • our level of success in commercializing our products; • our level of success in executing our commercialization strategies; • publicity regarding actual or potential litigation involving us and the outcome of any such litigation; • publicity regarding actual or potential testing or trial results relating to products under development by us or our competitors; • the outcome of regulatory review relating to products under development by us or our competitors; • regulatory developments in the U.S. and foreign countries; • newly enacted healthcare legislation or changes to existing legislation; • developments concerning any collaboration or other strategic transaction we may undertake; • announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors; • safety issues with our products or those of our competitors; • announcements of technological innovations or new therapeutic products or methods by us or others; • actual or anticipated variations in our quarterly operating results; • changes in estimates of our financial results or recommendations by securities analysts or failure to meet such financial expectations; • changes in government regulations or policies; • changes in patent legislation or patent decisions or adverse changes to patent law; • additions or departures of key personnel or members of our board of directors; • the publication of negative research or articles about our company, our business or our products by industry analysts or others; • market rumors or press reports; • publicity regarding actual or potential transactions involving us; and • economic, political and other external factors beyond our control.
Introducing a replacement or backup manufacturer or supplier for HETLIOZ ® , HETLIOZ LQ ® or Fanapt ® requires a lengthy regulatory and commercial process, including FDA approval of chemistry, manufacturing and controls (CMC) changes, and there can be no guarantee that we could obtain necessary regulatory approvals in a timely fashion or at all.
Introducing a replacement or backup manufacturer or supplier for HETLIOZ ® , HETLIOZ LQ ® , Fanapt ® or PONVORY ® requires a lengthy regulatory and commercial process, including FDA approval of chemistry, manufacturing and controls (CMC) changes, and there can be no guarantee that we could obtain necessary regulatory approvals in a timely fashion or at all.
These events, among others, could result in product recalls, product liability actions or withdrawals or additional regulatory controls, any of which could have a material adverse effect on our business, results of operations and financial condition. 45 Table of Contents In addition, if after receiving marketing approval of a product, we or others identify undesirable side effects caused by such product, we could face one or more of the following: • regulatory authorities may require us to implement a REMS, such as the addition of labeling statements (e.g., “black box” warning or a contraindication); • regulatory authorities may withdraw their approval of the product; • we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and • our or the product’s reputation may suffer.
These events, among others, could result in product recalls, product liability actions or withdrawals or additional regulatory controls, any of which could have a material adverse effect on our business, results of operations and financial condition. 48 Table of Contents In addition, if after receiving marketing approval of a product, we or others identify undesirable side effects caused by such product, we could face one or more of the following: • regulatory authorities may require us to implement a REMS, such as the addition of labeling statements (e.g., “black box” warning or a contraindication); • regulatory authorities may withdraw their approval of the product; • we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and • our or the product’s reputation may suffer.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we believe the package is complete for any NDA filing to treat patients for 12 weeks or less.
However, because long-term safety data is not normally a requirement for short-term indications, and with a preclinical profile that has not precluded clinical development, we believe the package was complete for any NDA filing to treat patients for 12 weeks or less.
The FDA or applicable foreign regulatory agency can delay, limit or deny approval of a product for many reasons, including that: • a product may not be shown to be safe or effective; • the FDA or foreign agency may interpret data from preclinical and clinical trials in different ways than we do; 44 Table of Contents • the FDA or foreign agency may not approve our or our partners’ manufacturing processes or facilities; • a product may not be approved for all the indications we request; • the FDA or foreign agency may change its approval policies or adopt new regulations; • the FDA or foreign agency may not meet, or may extend, the PDUFA date or its foreign equivalent with respect to a particular NDA or foreign application; and • the FDA or foreign agency may not agree with our regulatory approval strategies or components of the regulatory filings, such as clinical trial designs.
The FDA or applicable foreign regulatory agency can delay, limit or deny approval of a product for many reasons, including that: • a product may not be shown to be safe or effective; • the FDA or foreign agency may interpret data from preclinical and clinical trials in different ways than we do; • the FDA or foreign agency may not approve our or our partners’ manufacturing processes or facilities; • a product may not be approved for all the indications we request; 47 Table of Contents • the FDA or foreign agency may change its approval policies or adopt new regulations; • the FDA or foreign agency may not meet, or may extend, the PDUFA date or its foreign equivalent with respect to a particular NDA or foreign application; and • the FDA or foreign agency may not agree with our regulatory approval strategies or components of the regulatory filings, such as clinical trial designs.
While our clinical trials have since resumed patient enrollment, we may experience future disruptions as a result of the COVID-19 pandemic or other health crises that could adversely impact our sales activities, supply chain, our ongoing and planned clinical trials, and other regulatory activities, including: • curtailment of our sales force or patient access to healthcare providers, which may reduce the number of prescription refills or new patient starts, thereby adversely affecting our revenues; • interruption of, or delays in receiving, supplies of the active pharmaceutical ingredients that our contract manufacturing organizations use to manufacture our products and any related interruption of, or delays in receiving, supplies of our products from these organizations, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; 36 Table of Contents • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; • delays or difficulties in enrolling patients in our clinical trials; • interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; • limitations on our employee resources or those of third-party clinical research organizations towards the development of our products, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and • interruption or delays in the operations of regulatory agencies, which may impact review and approval timelines.
While our clinical trials have since resumed patient enrollment, we may experience future disruptions as a result of the lasting effects of the COVID-19 pandemic or other health crises that could adversely impact our sales activities, supply chain, our ongoing and planned clinical trials, and other regulatory activities, including: 38 Table of Contents • curtailment of our sales force or patient access to healthcare providers, which may reduce the number of prescription refills or new patient starts, thereby adversely affecting our revenues; • interruption of, or delays in receiving, supplies of the active pharmaceutical ingredients that our contract manufacturing organizations use to manufacture our products and any related interruption of, or delays in receiving, supplies of our products from these organizations, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; • delays or difficulties in enrolling patients in our clinical trials; • interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; • limitations on our employee resources or those of third-party clinical research organizations towards the development of our products, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and • interruption or delays in the operations of regulatory agencies, which may impact review and approval timelines.
The termination of any of these arrangements might adversely affect our ability to develop, commercialize and market our products. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Our collaborators will have significant discretion in determining the efforts and resources that they will apply to these collaborations.
The termination of any of these arrangements might adversely affect our ability to develop, commercialize and market our products. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Our collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations.
Our amended and restated certificate of incorporation and bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • do not provide for cumulative voting in the election of directors, which would allow holders of less than a majority of the stock to elect some directors; • establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors only be removed from office for cause; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office; • limit who may call special meetings of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and • establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Our amended and restated certificate of incorporation and bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • do not provide for cumulative voting in the election of directors, which would allow holders of less than a majority of the stock to elect some directors; 62 Table of Contents • establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors only be removed from office for cause; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office; • limit who may call special meetings of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and • establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
If the FDA does not approve our sNDAs for HETLIOZ ® for the treatment of jet lag disorder or insomnia or continued development of tasimelteon for the treatment of jet lag disorder is significantly delayed or terminated, our business will be significantly harmed, and the market price of our stock could decline.
If the FDA does not approve our sNDAs for HETLIOZ ® for the treatment of jet lag disorder or insomnia, continued development of tasimelteon for the treatment of jet lag disorder and insomnia will be significantly delayed or terminated, our business will be significantly harmed, and the market price of our stock could decline.
We have been engaged in identifying and developing drug products since March 2003, which has required, and will continue to require, significant research and development expenditures. The continued commercialization of HETLIOZ ® and Fanapt ® will also require substantial additional expenditures.
We have been engaged in identifying and developing drug products since March 2003, which has required, and will continue to require, significant research and development expenditures. The continued commercialization of HETLIOZ ® , Fanapt ® and PONVORY ® will also require substantial additional expenditures.
We may also be subject to additional sanctions, including, but not limited, to the following: • Warning letters, public warnings and untitled letters; • Court-ordered seizures or injunctions; • Civil or criminal penalties, or criminal prosecutions; • Variation, suspension or withdrawal of regulatory approvals for our products; • Changes to the package insert of our products, such as additional warnings regarding potential side effects or potential limitations on the current dosage or administration; • Requirements to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, or other issues involving our products; • Implementation of risk mitigation programs and post-approval obligations; • Restrictions on our continued manufacturing, marketing, distribution or sale of our products; • Temporary or permanent closing of the facilities of our third-party contract manufacturers; • Interruption or suspension of clinical trials; and • Refusal by regulators to consider or approve applications for additional indications.
We may also be subject to additional sanctions, including, but not limited, to the following: • Warning letters, public warnings and untitled letters; • Court-ordered seizures or injunctions; 43 Table of Contents • Civil or criminal penalties, or criminal prosecutions; • Variation, suspension or withdrawal of regulatory approvals for our products; • Changes to the package insert of our products, such as additional warnings regarding potential side effects or potential limitations on the current dosage or administration; • Requirements to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, or other issues involving our products; • Implementation of risk mitigation programs and post-approval obligations; • Restrictions on our continued manufacturing, marketing, distribution or sale of our products; • Temporary or permanent closing of the facilities of our third-party contract manufacturers; • Interruption or suspension of clinical trials; and • Refusal by regulators to consider or approve applications for additional indications.
We are dependent on CROs, third-party vendors and investigators for preclinical testing and clinical trials related to our drug discovery and development efforts and we will likely continue to depend on them to assist in our future discovery and development efforts.
We are generally dependent on CROs, third-party vendors and investigators for preclinical testing and clinical trials related to our drug discovery and development efforts and we will likely continue to depend on them to assist in our future discovery and development efforts.
See Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” each of which is incorporated herein by reference, for additional information.
See Note 17, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” each of which is incorporated herein by reference, for additional information.
See Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” each of which is incorporated herein by reference, for additional information.
See Note 17, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful ,” each of which is incorporated herein by reference, for additional information.
See Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful, ” each of which is incorporated herein by reference, for additional information.
See Note 17, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this Annual Report and the risk factor entitled “ We are, have been, and may continue to be, involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful, ” each of which is incorporated herein by reference, for additional information.
Food and Drug Administration (FDA) approved our New Drug Application (NDA) for HETLIOZ ® for the treatment of Non-24 and in April 2014, we commenced the U.S. commercial launch of HETLIOZ ® .
In January 2014, the U.S. Food and Drug Administration (FDA) approved our New Drug Application (NDA) for HETLIOZ ® for the treatment of Non-24 and in April 2014, we commenced the U.S. commercial launch of HETLIOZ ® .
Healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications 34 Table of Contents on pharmaceutical products, could impact our ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.
Healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications 36 Table of Contents on pharmaceutical products, could impact our ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.
See Note 16, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report, which is incorporated herein by reference, for information regarding ongoing litigation related to similar matters. Further, the FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products.
See Note 17, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report, which is incorporated herein by reference, for information regarding ongoing litigation related to similar matters. Further, the FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products.
We believe that tradipitant has a well-established safety profile, as demonstrated by the results of extensive testing in animals and humans. Despite these results, however, the FDA informed us in December 2018 that in order to treat patients beyond 12 weeks, we will have to conduct a nine-month non-rodent chronic toxicity study.
We believe that tradipitant has a well-established safety profile, as demonstrated by the results of extensive testing in animals and humans. Despite these results, however, the FDA informed us in December 2018 that in order to treat patients beyond 12 weeks, we would have to conduct a nine-month non-rodent chronic toxicity study.
On December 13, 2022, following conclusion of the trial, the Delaware District Court issued its ruling in favor of the Defendants, finding that the Defendants’ use of a generic HETLIOZ ® , for which they were seeking FDA approval, did not infringe one of our HETLIOZ ® patents and the asserted claims of certain of our other HETLIOZ ® patents were invalid.
In December 2022, following conclusion of the trial, the Delaware District Court issued its ruling in favor of the Defendants, finding that the Defendants’ use of a generic HETLIOZ ® , for which they were seeking FDA approval, did not infringe one of our HETLIOZ ® patents and the asserted claims of certain of our other HETLIOZ ® patents were invalid.
If we fail to adequately fund our research and development activities and commercialization efforts, we may be unable to continue operations or we may be forced to share our rights to commercialize our products with third parties on terms that may not be attractive to us. Our activities will necessitate significant uses of working capital throughout 2023 and beyond.
If we fail to adequately fund our research and development activities and commercialization efforts, we may be unable to continue operations or we may be forced to share our rights to commercialize our products with third parties on terms that may not be attractive to us. Our activities will necessitate significant uses of working capital throughout 2024 and beyond.
As described elsewhere in these risk factors and in Note 16, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report, incorporated herein by reference, we have initiated lawsuits to enforce our patent rights against certain generic pharmaceutical companies.
As described elsewhere in these risk factors and in Note 17, Legal Matters , to the consolidated financial statements in Part II, Item 8 of this Annual Report, incorporated herein by reference, we have initiated lawsuits to enforce our patent rights against certain generic pharmaceutical companies.
If our continued commercial efforts are not successful with respect to HETLIOZ ® and Fanapt ® in the U.S., Europe or other jurisdictions in which these products may be approved for sale, our ability to generate increased product sales revenue may be adversely affected.
If our continued commercial efforts are not successful with respect to HETLIOZ ® , Fanapt ® and PONVORY ® in the U.S., Europe, Canada or other jurisdictions in which these products may be approved for sale, our ability to generate increased product sales revenue may be adversely affected.
Specifically, the applicant must certify in the application that: I. there is no patent information listed for the reference drug; II. the listed patent has expired for the reference drug; III. the listed patent for the reference drug has not expired, but will expire on a particular date and approval is sought after patent expiration; or IV. the listed patent for the reference drug is invalid, unenforceable, or will not be infringed by the manufacture, use or sale of the product for which the ANDA or 505(b)(2) NDA is submitted.
Specifically, the applicant must certify in the application that: 58 Table of Contents I. there is no patent information listed for the reference drug; II. the listed patent has expired for the reference drug; III. the listed patent for the reference drug has not expired, but will expire on a particular date and approval is sought after patent expiration; or IV. the listed patent for the reference drug is invalid, unenforceable, or will not be infringed by the manufacture, use or sale of the product for which the ANDA or 505(b)(2) NDA is submitted.
This activity represents a significant investment in the commercial success of HETLIOZ ® and Fanapt ® , which is uncertain.
This activity represents a significant investment in the commercial success of HETLIOZ ® , Fanapt ® and PONVORY ® , which is uncertain.
Our expansion and development of HETLIOZ ® outside the U.S. is generally not subject to the adverse patent ruling in the U.S. 31 Table of Contents In the fourth quarter of 2014, we acquired the U.S. commercial rights to Fanapt ® , and began selling, marketing and distributing Fanapt ® in the U.S.
Our expansion and development of HETLIOZ ® outside the U.S. is generally not subject to the adverse patent ruling in the U.S. 33 Table of Contents In the fourth quarter of 2014, we acquired the U.S. commercial rights to Fanapt ® , and began selling, marketing and distributing Fanapt ® in the U.S.
In addition, any provider that we retain will be subject to current Good Laboratory Practices as set forth in 21 Code of Federal 48 Table of Contents Regulations (C.F.R.) Part 58 and Good Clinical Practices as set forth in 21 C.F.R.
In 51 Table of Contents addition, any provider that we retain will be subject to current Good Laboratory Practices as set forth in 21 Code of Federal Regulations (C.F.R.) Part 58 and Good Clinical Practices as set forth in 21 C.F.R.
For example, federal enforcement agencies have recently pursued enforcement actions against pharmaceutical companies’ product and patient assistance programs, including relationships with specialty pharmacies, and support for charitable foundations providing patients with co-pay assistance. In addition, Relators have filed lawsuits involving manufacturer reimbursement support services as well as promotion of pharmaceutical products beyond labeled claims.
For example, federal enforcement agencies have recently pursued 44 Table of Contents enforcement actions against pharmaceutical companies’ product and patient assistance programs, including relationships with specialty pharmacies, and support for charitable foundations providing patients with co-pay assistance. In addition, Relators have filed lawsuits involving manufacturer reimbursement support services as well as promotion of pharmaceutical products beyond labeled claims.
We believe that comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. 60 Table of Contents We are increasingly dependent on information technology systems, infrastructure and data. Cybersecurity breaches could expose us to liability, damage our reputation, compromise our confidential information or otherwise adversely affect our business.
We believe that comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. We are increasingly dependent on information technology systems, infrastructure and data. Cybersecurity breaches could expose us to liability, damage our reputation, compromise our confidential information or otherwise adversely affect our business.
Any additional adverse developments or results or perceived adverse developments or results with respect to our regulatory submission for jet lag disorder or insomnia will significantly harm our business and could cause the market price of our stock to decline.
Any additional adverse developments or results or perceived adverse developments or results with respect to our regulatory submissions for jet lag disorder or insomnia will significantly harm our business and could cause the market price of our stock to decline.
Examples of such adverse developments include, but are not limited to: 37 Table of Contents • the FDA determining that additional clinical studies are required with respect to the bipolar I disorder program; • safety, efficacy or other concerns arising from clinical or non-clinical studies in the bipolar I disorder program, or the manufacturing processes or facilities used for the bipolar I disorder program; or • the FDA determining that the bipolar I disorder program raises safety concerns or does not demonstrate substantial evidence of efficacy.
Examples of such adverse developments include, but are not limited to: • the FDA determining that additional clinical studies are required with respect to the bipolar I disorder program; • safety, efficacy or other concerns arising from clinical or non-clinical studies in the bipolar I disorder program, or the manufacturing processes or facilities used for the bipolar I disorder program; or • the FDA determining that the bipolar I disorder program raises safety concerns or does not demonstrate substantial evidence of efficacy.
We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. These transactions could include: • mergers; • acquisitions; • strategic alliances; • licensing agreements; and • co-promotion and similar agreements.
We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. These transactions could include: • mergers; • acquisitions; • asset purchases; • strategic alliances; • licensing agreements; and • co-promotion and similar agreements.
For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.
For these and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.
Even after obtaining regulatory approvals for the sale of our products, the commercial success of these products will depend, among other things, on their acceptance by physicians, patients, third-party payors and other members of the medical community as therapeutic and cost-effective alternatives to competing products and treatments.
Even after obtaining regulatory approvals for the sale of our products, the commercial success of these products will depend, among other things, on their acceptance by physicians, patients, third-party payors and other members of the medical 40 Table of Contents community as therapeutic and cost-effective alternatives to competing products and treatments.
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we fail to 54 Table of Contents receive such extensions or exclusive rights, our ability to prevent competitors from manufacturing, marketing and selling generic versions of our products will be materially impaired.
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we fail to receive such extensions or exclusive rights, our ability to prevent competitors from manufacturing, marketing and selling generic versions of our products will be materially impaired.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors. 58 Table of Contents Our business could be negatively affected as a result of the actions of activist stockholders.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors. Our business could be negatively affected as a result of the actions of activist stockholders.
This could prevent the commercialization or limit the commercial potential of our products. Even if we are able to maintain insurance that we believe is adequate, our results of operations and financial condition may be materially adversely affected by a product liability claim.
This could prevent the commercialization or limit the commercial potential of our 53 Table of Contents products. Even if we are able to maintain insurance that we believe is adequate, our results of operations and financial condition may be materially adversely affected by a product liability claim.
Any termination or reversion of our rights to develop or commercialize our products would have a material adverse effect on our business. 52 Table of Contents If our efforts to protect the proprietary nature of the intellectual property related to our products are not adequate, we may not be able to compete effectively in our markets.
Any termination or reversion of our rights to develop or commercialize our products would have a material adverse effect on our business. If our efforts to protect the proprietary nature of the intellectual property related to our products are not adequate, we may not be able to compete effectively in our markets.
Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, 56 Table of Contents which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
However, a challenge by a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions may cause our actual financial results to deviate from previous estimates. 59 Table of Contents Future transactions may harm our business or the market price of our stock.
However, a challenge by a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions may cause our actual financial results to deviate from previous estimates. Future transactions may harm our business or the market price of our stock.
Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses, which would result in dilution for stockholders or the incurrence of indebtedness and may not be available on terms which would otherwise be acceptable to us.
Moreover, we may need to raise additional funds through public or 63 Table of Contents private debt or equity financing to acquire any businesses, which would result in dilution for stockholders or the incurrence of indebtedness and may not be available on terms which would otherwise be acceptable to us.
We must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes them to 340B covered entities. HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B eligible drugs.
We must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes them to 340B covered entities and state Medicaid programs. HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B eligible drugs.
Privacy Shield, which had enabled the transfer of personal data from the E.U. to the U.S. for companies that had self-certified to the Privacy Shield. While we do not rely on the Privacy Shield, the ECJ decision also raised questions about the continued validity of the European Commission’s Standard Contractual Clauses, on which we rely.
Privacy Shield, which had enabled the transfer of personal data from the E.U. to the U.S. for companies that had self-certified to the Privacy Shield. While we do not rely on the Privacy Shield, the ECJ decision also raised questions about the continued validity of the EC’s Standard Contractual Clauses, on which we rely.
If we or our manufacturers are 49 Table of Contents unable to purchase these materials for our products, there would be a shortage in supply or the commercial launch of such products would be delayed, which would materially and adversely affect our ability to generate revenues from the sale of such products.
If we or our manufacturers are unable to purchase these materials for our products, there would be a shortage in supply or the commercial launch of such products would be delayed, which would materially and adversely affect our ability to generate revenues from the sale of such products.
With the at risk launch of a generic version of HETLIOZ ® and further generic versions possible, it may not be viable for us to invest in market education to grow the U.S. market and our ability to maintain current promotional efforts and attract favorable commercial terms in several aspects of our business will likely be adversely affected as we face increased generic competition.
With the launch of generic versions of HETLIOZ ® and further generic versions possible, it may not be viable for us to invest in market education to grow the U.S. market and our ability to maintain current promotional efforts and attract favorable commercial terms in several aspects of our business will likely be adversely affected as we face increased generic competition.
The use of specialty pharmacies involves certain risks, including, but not limited to, risks that these specialty pharmacies will: • not provide us accurate or timely information regarding their inventories, the number of patients who are using HETLIOZ ® or complaints about HETLIOZ ® ; • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support HETLIOZ ® , particularly in light of the recent entry into the market of a generic version of HETLIOZ ® ; • not devote the resources necessary to sell HETLIOZ ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
The use of specialty pharmacies involves certain risks, including, but not limited to, risks that these specialty pharmacies will: • not provide us accurate or timely information regarding their inventories, the number of patients who are using HETLIOZ ® or complaints about HETLIOZ ® ; 45 Table of Contents • reduce their efforts or discontinue to sell or support or otherwise not effectively sell or support HETLIOZ ® , particularly in light of the recent entry into the market of generic versions of HETLIOZ ® ; • not devote the resources necessary to sell HETLIOZ ® in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
In the event of a withdrawal of either HETLIOZ ® or Fanapt ® from the market, our revenues would decline significantly and our business would be seriously harmed.
In the event of a withdrawal of HETLIOZ ® , Fanapt ® or PONVORY ® from the market, our revenues would decline significantly and our business would be seriously harmed.
We also own HETLIOZ ® U.S. method of treatment patents (directed to the approved method of treatment as described in the HETLIOZ ® label approved by the FDA), which expire normally between 2033 and 2035, and three drug substance patents that expire in 2035. Additionally, the U.S.
We also own HETLIOZ ® U.S. method of treatment patents (directed to the approved method of treatment as described in the HETLIOZ ® label approved by the FDA), which expire normally between 2033 and 2041, and four drug substance patents that expire in 2035. Additionally, the U.S.
These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients.
These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as certain small rural hospitals and hospitals that serve a disproportionate share of low-income patients.
We may not succeed in maintaining or gaining additional market acceptance of HETLIOZ ® and Fanapt ® in the U.S. and we may not succeed in commercializing HETLIOZ ® or Fanapt ® outside of the U.S.
We may not succeed in maintaining or gaining additional market acceptance of HETLIOZ ® , Fanapt ® and PONVORY ® in the U.S. and we may not succeed in commercializing HETLIOZ ® or Fanapt ® outside of the U.S or PONVORY ® in Canada.
The license agreement grants MSN and Impax a non-exclusive license to manufacture and commercialize MSN’s 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 license agreement grants MSN and Impax a non-exclusive license to manufacture and commercialize MSN’s version of HETLIOZ ® in the U.S. effective as of March 13, 2035, unless prior to that date we obtain pediatric exclusivity for HETLIOZ ® , in which case the license will be effective as of July 27, 2035.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve tradipitant for a chronic 35 Table of Contents indication.
The lack of long-term (i.e., more than 12 weeks in humans) safety data would likely impact the FDA’s willingness to approve tradipitant for a chronic indication.
Any such restriction could slow or stop production development or result in decreased sales, damage to our reputation or the initiation of 40 Table of Contents lawsuits against us or our third-party contract manufacturers.
Any such restriction could slow or stop production development or result in decreased sales, damage to our reputation or the initiation of lawsuits against us or our third-party contract manufacturers.
In the E.U., prescription drug pricing and reimbursement are subject to governmental control and reimbursement mechanisms used by private and public health insurers in the E.U. vary by Member State. For the public systems, 50 Table of Contents reimbursement is determined by law and/or by guidelines established by the responsible national authority.
In the E.U., prescription drug pricing and reimbursement are subject to governmental control and reimbursement mechanisms used by private and public health insurers in the E.U. vary by Member State. For the public systems, reimbursement is determined by law and/or by guidelines established by the responsible national authority.
If the litigation is resolved in favor of the ANDA applicant before the expiration of the 30-month period, the stay will be 55 Table of Contents immediately lifted and the FDA’s review of the application may be completed.
If the litigation is resolved in favor of the ANDA applicant before the expiration of the 30-month period, the stay will be immediately lifted and the FDA’s review of the application may be completed.
For example, despite the positive results of our completed trials for HETLIOZ ® and Fanapt ® , as well as the FDA’s approval of the NDA for HETLIOZ ® for the treatment of Non-24 in January 2014, the NDA for Fanapt ® for the treatment of schizophrenia in May 2009, the EC’s grant of the centralized marketing authorization for HETLIOZ ® for the treatment of Non-24 in totally blind adults in July 2015, and the FDA’s approval of the sNDA and NDA for HETLIOZ ® capsule and liquid formulation for the treatment of adults and children, respectively, with nighttime sleep disturbances in SMS in December 2020, we are uncertain whether either of these products will ultimately prove to be effective and safe in humans long term and in all uses.
For example, despite the positive results of the completed trials for HETLIOZ ® , Fanapt ® and PONVORY ® , as well as the FDA’s approval of the NDA for HETLIOZ ® for the treatment of Non-24 in January 2014, the NDA for Fanapt ® for the treatment of schizophrenia in May 2009, the EC’s grant of the centralized marketing authorization for HETLIOZ ® for the treatment of Non-24 in totally blind adults in July 2015, the FDA’s approval of the sNDA and NDA for HETLIOZ ® capsule and liquid formulation for the treatment of adults and children, respectively, with nighttime sleep disturbances in SMS in December 2020, and the NDA for PONVORY ® for the treatment of RMS in adults in March 2021 and Health Canada’s approval of PONVORY ® for the treatment of adults with RMS in April 2021, we are uncertain whether either of these products will ultimately prove to be effective and safe in humans long term and in all uses.
A specialty pharmacy is a pharmacy that specializes in the dispensing of medications for complex or chronic conditions that often require a 42 Table of Contents high level of patient education and ongoing management.
A specialty pharmacy is a pharmacy that specializes in the dispensing of medications for complex or chronic conditions that often require a high level of patient education and ongoing management.
The at risk launch of a generic version of HETLIOZ ® and further generic competition may make it more difficult for us to identify or attract third-party collaborators and obtain favorable commercial terms in any such agreement or arrangement. Any arrangements we do enter into may not be scientifically or commercially successful.
The launch of generic versions of HETLIOZ ® and further generic competition may make it more difficult for us to identify or attract third-party collaborators and obtain favorable commercial terms in any such agreement or arrangement. Any arrangements we do enter into may not be scientifically or commercially successful.
We expect to continue to incur significant expenses and to utilize a substantial portion of our cash resources as we continue the commercialization of HETLIOZ ® and Fanapt ® , evaluate foreign market opportunities for HETLIOZ ® and Fanapt ® and continue to grow our operational capabilities, both domestically and abroad.
We expect to continue to incur significant expenses and to utilize a substantial portion of our cash resources as we continue the commercialization of HETLIOZ ® and Fanapt ® and commence commercial operations for PONVORY ® , evaluate foreign market opportunities for HETLIOZ ® and Fanapt ® and continue to grow our operational capabilities, both domestically and abroad.
If the FDA does not accept our tradipitant NDA or sNDA filings for the use of tradipitant for patients with gastroparesis and patients with motion sickness; if the FDA determines that our clinical trial results for tradipitant for the treatment of gastroparesis or for the treatment of motion sickness do not demonstrate adequate safety and substantial evidence of efficacy; or if the FDA does not approve an applicable PDUFA date, continued development of tradipitant will be significantly delayed or terminated, our business will be significantly harmed, and the market price of our stock could decline.
If the FDA does not approve our tradipitant NDA filing for the use of tradipitant for patients with gastroparesis or accept our sNDA filing for the use of tradipitant for patients with motion sickness; or if the FDA determines that our clinical trial results for tradipitant for the treatment of gastroparesis or for the treatment of motion sickness do not demonstrate adequate safety and substantial evidence of efficacy, continued development of tradipitant will be significantly delayed or terminated, our business will be significantly harmed, and the market price of our stock could decline.
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 Patent, ‘910 Patent, ‘829 Patent and ‘487 Patent were invalid.
In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe the ‘604 Patent, and that the asserted claims of the ‘604 Patent, ‘910 Patent, ‘829 Patent and ‘487 Patent were invalid.
Our ability to generate significant product revenue from sales of HETLIOZ ® and Fanapt ® , both in the U.S. and abroad, in the near term will depend on, among other things, our ability to: • defend our patents and intellectual property from generic competition, including the impact of and outcome of our pending appeal of the December 2022 Delaware District Court’s ruling and the litigation that we recently commenced in the New Jersey and Florida District Courts; • properly price and obtain adequate coverage and reimbursement of these products by governmental authorities, private health insurers, managed care organizations and other third-party payors; • gain broad acceptance of our products from physicians, health care payors, patients, pharmacists and the medical community; • minimize the impact of disruptions caused by public health crises; • maintain commercial manufacturing arrangements with third-party manufacturers; • produce, through a validated process, sufficiently large quantities of inventory of our products to meet demand; • continue to maintain and grow a wide variety of internal sales, distribution and marketing capabilities sufficient to sustain sales trajectories of our products; • maintain compliance with ongoing labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other post-market requirements; • obtain regulatory approval to expand the labeling of our approved products for additional indications; • obtain regulatory approval for HETLIOZ ® or Fanapt ® in additional countries; • maintain our existing regulatory approval for HETLIOZ ® in Europe; • adequately protect against and effectively respond to any claims by holders of patents and other intellectual property rights that our products infringe their rights; and • adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops in respect to our products, as well as the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.
Our ability to generate significant product revenue from sales of HETLIOZ ® , Fanapt ® and PONVORY ® both in the U.S. and abroad, in the near term will depend on, among other things, our ability to: • defend our patents and intellectual property from generic competition; • properly price and obtain adequate coverage and reimbursement of these products by governmental authorities, private health insurers, managed care organizations and other third-party payors; • gain broad acceptance of our products from physicians, health care payors, patients, pharmacists and the medical community; • minimize the impact of disruptions caused by public health crises; • maintain commercial manufacturing arrangements with third-party manufacturers; • produce, through a validated process, sufficiently large quantities of inventory of our products to meet demand; • continue to maintain and grow a wide variety of internal sales, distribution and marketing capabilities sufficient to sustain sales trajectories of our products; • maintain compliance with ongoing labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other post-market requirements; • obtain regulatory approval to expand the labeling of our approved products for additional indications; • obtain regulatory approval for HETLIOZ ® or Fanapt ® in additional countries; • maintain our existing regulatory approval for HETLIOZ ® in Europe and PONVORY ® in Canada; • adequately protect against and effectively respond to any claims by holders of patents and other intellectual property rights that our products infringe their rights; and • adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops in respect to our products, as well as the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.
Our long-term capital requirements are expected to depend on many factors, including, among others: 47 Table of Contents • our level of success in commercializing HETLIOZ ® and Fanapt ® , as well as other products that may be approved, globally; • outcomes of ongoing and potential patent litigation, including the outcome of our pending appeal of the December 2022 Delaware District Court’s ruling; • costs of developing and maintaining sales, marketing and distribution channels and our ability to sell our products; • market acceptance of our products; • costs involved in establishing and maintaining manufacturing capabilities for commercial quantities of our products; • the number of potential formulations and products in development; • progress with preclinical studies and clinical trials; • time and costs involved in obtaining regulatory (including FDA) approval; • costs involved in preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property claims; • cost of evaluating and acquiring new products from third parties; • competing technological and market developments; • costs for recruiting and retaining employees and consultants; • costs for training physicians; and • legal, accounting, insurance and other professional and business-related costs.
Our long-term capital requirements are expected to depend on many factors, including, among others: • our level of success in commercializing HETLIOZ ® , Fanapt ® and PONVORY ® , as well as other products that may be approved, globally; • outcomes of ongoing and potential patent litigation; • costs of developing and maintaining sales, marketing and distribution channels and our ability to sell our products; • market acceptance of our products; • costs involved in establishing and maintaining manufacturing capabilities for commercial quantities of our products; • the number of potential formulations and products in development; • progress with preclinical studies and clinical trials; • time and costs involved in obtaining regulatory (including FDA) approval; • costs involved in preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property claims; • cost of evaluating and acquiring new products from third parties; • competing technological and market developments; • costs for recruiting and retaining employees and consultants; • costs for training physicians; and • legal, accounting, insurance and other professional and business-related costs.
Transactions involving our common stock, even those outside our control, such as purchases or sales by investors, within the testing period could result in an ownership change. A limitation on our ability to utilize some or all of our net operating losses (NOLs) or credits could have a material adverse effect on our results of operations and cash flows.
Transactions involving our common stock, even those outside our control, such as purchases or sales by investors, within the testing period could result in an ownership change. A limitation on our ability to utilize some or all of our NOLs or credit carryforwards could have a material adverse effect on our results of operations and cash flows.
Risks Related to our Business and Industry We are dependent on the commercial success of HETLIOZ ® and Fanapt ® . In the U.S., HETLIOZ ® competes with a generic version of HETLIOZ ® and we could experience increased generic competition in the near term.
Risks Related to our Business and Industry We are dependent on the commercial success of HETLIOZ ® , Fanapt ® and PONVORY ® . In the U.S., HETLIOZ ® competes with generic versions of HETLIOZ ® and we could experience increased generic competition in the near term.
This may be onerous and if our efforts to comply with GDPR or other applicable E.U. laws, rules, regulations and standards are not successful, or are perceived to be unsuccessful, it could adversely affect our business. In July 2020, the European Court of Justice (ECJ) invalidated the E.U.-U.S.
Member States, relating to privacy and data protection. This may be onerous and if our efforts to comply with GDPR or other applicable E.U. laws, rules, regulations and standards are not successful, or are perceived to be unsuccessful, it could adversely affect our business. In July 2020, the European Court of Justice (ECJ) invalidated the E.U.-U.S.
However, Teva has launched its generic version of HETLIOZ ® at risk in the U.S. The FDA has approved ANDAs for Apotex and MSN and other potential competitors may be successful in obtaining ANDA approval and launching generic versions as well.
The FDA has approved ANDAs for Teva, Apotex and MSN, and Teva and Apotex have launched their generic versions of HETLIOZ ® at risk in the U.S., and MSN has launched its generic version as well. In addition, other potential competitors may be successful in obtaining ANDA approval and launching their own generic versions.
If we fail to continue to develop sales, marketing and distribution capabilities, if sales efforts are not effective or if costs of developing sales, marketing and distribution capabilities exceed their cost effectiveness, our business, results of operations and financial condition could be materially adversely affected. 32 Table of Contents As a result of the decision in favor of generic drug companies in connection with our HETLIOZ ® patent litigation, we could face increased generic competition in the near term and our revenues and results of operations could be materially and adversely affected by the launch of one or more additional generic versions of HETLIOZ ® in the U.S.
If we fail to continue to develop sales, marketing and distribution capabilities, if sales efforts are not effective or if costs of developing sales, marketing and distribution capabilities exceed their cost effectiveness, our business, results of operations and financial condition could be materially adversely affected. 34 Table of Contents As a result of the decision in favor of generic drug companies in connection with our HETLIOZ ® patent litigation, we have faced generic competition in the near term and our revenues and results of operations could be further affected by the launch of additional generic versions of HETLIOZ ® in the U.S.
Ownership changes occurred in the years ended December 31, 2014 and 2008. We believe that the ownership changes in 2014 and 2008 will not impact our ability to utilize NOL and credit carryforwards; however, future ownership changes may cause our existing tax attributes to have additional limitations.
An ownership change occurred in the year ended December 31, 2014. We believe that the ownership change in 2014 will not impact our ability to utilize NOL and credit carryforwards; however, future ownership changes may cause our existing tax attributes to have additional limitations.
If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, interest in the purchase of our stock could decrease, which could cause our stock price or trading volume to decline. Our common stock may experience future dilution as a result of future equity offerings.
If this analyst ceases coverage of our company or fails to regularly publish reports on us, interest in the purchase of our stock could decrease, which could cause our stock price or trading volume to decline. Our common stock may experience future dilution as a result of future equity offerings.
For example, the collection and use of health data and other personal data is governed in the European Union by the General Data Protection Regulation (GDPR), which became applicable in May 2018.
For example, the collection and use of health data and other personal data is governed in the E.U. by the General Data Protection Regulation (GDPR), which became applicable in May 2018.
On December 13, 2022, the U.S. District Court for the District of Delaware (the Delaware District Court) ruled in favor of certain generic drug companies in our patent litigation alleging that the companies’ generic versions of HETLIOZ ® capsules, for which they were seeking FDA approval, infringed our patents covering HETLIOZ ® .
In December 2022, the U.S. District Court for the District of Delaware (Delaware District Court) ruled in favor of certain generic drug companies in our patent litigation alleging that the companies’ generic versions of HETLIOZ ® capsules, for which they were seeking FDA approval, infringed our patents covering HETLIOZ ® . We appealed the decision to the U.S.
The GDPR may increase our responsibility and liability in relation to personal data that we may process, and we may be required to implement additional measures in an effort to comply with the GDPR and with other laws, rules, regulations and standards in the E.U., including those of E.U. Member States, relating to privacy and data protection.
The GDPR may increase our responsibility and liability in relation to health data and other personal data that we may collect and process, and we may be required to implement additional measures in an effort to comply with the GDPR and with other laws, rules, regulations and standards in the E.U., including those of E.U.

… 144 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES Our headquarters office consists of a total of 43,462 square feet of office space located at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. under operating leases and subleases that expire between 2026 and 2028 and are subject to renewal options.
Biggest changeITEM 2. PROPERTIES Our headquarters office consists of a total of 43,462 square feet of office space located at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. under operating leases and subleases that expire between 2026 and 2028 and certain of these leases are subject to renewal options.
In addition, we have 2,880 square feet of office space in London, England under an operating lease that has a lease term ending in 2026, and other short-term leases. We believe that these facilities are suitable and adequate to meet our anticipated near-term needs.
In addition, we have 2,880 square feet of office space in London, England under an operating lease that has a lease term ending in 2026, and other short-term leases. We believe that these facilities are suitable and adequate 66 Table of Contents to meet our anticipated near-term needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS Information with respect is item may be found in Note 16, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this annual report on Form 10-K, which is incorporated herein by reference. 61 Table of Contents
Biggest changeITEM 3. LEGAL PROCEEDINGS Information with respect to this item may be found in Note 17, Legal Matters, to the consolidated financial statements in Part II, Item 8 of this annual report on Form 10-K, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on The Nasdaq Global Market under the symbol “VNDA.” As of February 2, 2023, there were eight holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on The Nasdaq Global Market under the symbol “VNDA.” As of February 1, 2024, there were nine holders of record of our common stock.
The following graph and related information is being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201), nor shall such information be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing. 62 Table of Contents
The following graph and related information is being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201), nor shall such information be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing. 67 Table of Contents
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters The following graph shows the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters The following graph shows the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the iShares Biotechnology Index.
An investment of $100 (with reinvestment of dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2017 and its relative performance is tracked through December 31, 2022.
An investment of $100 (with reinvestment of dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2018 and its relative performance is tracked through December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+41 added−19 removed41 unchanged
Biggest changeIn addition, we have a number of drugs in development, including: • HETLIOZ ® (tasimelteon) for the treatment of jet lag disorder, insomnia, delayed sleep phase disorder (DSPD), sleep disturbances in autism spectrum disorder (ASD) and pediatric Non-24; • Fanapt ® (iloperidone) for the treatment of bipolar I disorder and Parkinson’s disease psychosis 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, atopic dermatitis, and COVID-19 pneumonia; • 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.
Biggest changeIn addition, we have 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; • PONVORY (ponesimod) for the treatment of inflammatory/autoimmune disorders, including but not limited to ulcerative colitis, psoriasis, Crohn's disease, atopic dermatitis, eosinophilic esophagitis and alopecia areata; • Tradipitant (VLY-686), a small molecule neurokinin-1 (NK-1) receptor antagonist, for the treatment of gastroparesis, motion sickness and atopic dermatitis; • VHX-896, the active metabolite of iloperidone; • 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; • VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis, hematologic malignancies and with potential use as a treatment for several oncology indications; • 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 IGHMBP2.
We accrue service fees at the time of revenue recognition, resulting in a reduction of product sales and the recognition of an accrued liability, unless it is a payment for a distinct good or service from the customer in which case the fair value of those distinct goods or services are recorded as selling, general and administrative expense. • Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance.
We accrue service fees at the time of revenue recognition, resulting in a reduction of product sales and the recognition of an accrued liability, unless it is a payment for a distinct good or service from the customer in which case the fair value of those distinct goods or services are recorded as selling, general and administrative expense. • Co-pay assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-pay assistance.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Based on our current operating plans, which include costs and expenses in connection with our continued clinical development of tradipitant and our other products, U.S. commercial activities for HETLIOZ ® and Fanapt ® , pursuit of market approval of HETLIOZ ® and Fanapt ® in other regions and in other indications, and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months.
Based on our current operating plans, which include costs and expenses in connection with our continued clinical development of tradipitant and our other products, pursuit of regulatory approval of tradipitant, U.S. commercial activities for HETLIOZ ® , Fanapt ® and PONVORY ® , pursuit of regulatory approval of HETLIOZ ® and Fanapt ® in other regions and in other indications, and payments due upon achievement of milestones under our license agreements, we believe that our cash, cash equivalents and marketable securities and cash received from product sales will be sufficient for at least the next 12 months.
Our ability to generate meaningful product sales and achieve profitability largely depends on our level of success in commercializing HETLIOZ ® and Fanapt ® in the U.S. and Europe, on our ability, alone or with others, to complete the development of our products, and to obtain the regulatory approvals for and to manufacture, market and sell our products.
Our ability to generate meaningful product sales and achieve profitability largely depends on our level of success in commercializing HETLIOZ ® and Fanapt ® in the U.S. and Europe and PONVORY ® in the U.S and Canada, on our ability, alone or with others, to complete the development of our products, and to obtain the regulatory approvals for and to manufacture, market and sell our products.
Outside the U.S., we sell HETLIOZ ® in Germany and have a distribution agreement with Megapharm Ltd. for the commercialization of Fanapt ® in Israel. 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.
Outside the U.S., we sell HETLIOZ ® in Germany and have a distribution agreement for the commercialization of Fanapt ® in Israel. 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.
Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid.
Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid and Medicare.
The ending balances of discounts, returns and other as of December 31, 2022 and 2021 primarily represent estimated product returns of Fanapt ® and wholesaler distribution fees applicable to sales of Fanapt ® . Stock-based compensation.
The ending balances of discounts, returns and other as of December 31, 2023 and 2022 primarily represent estimated product returns of Fanapt ® and wholesaler distribution fees applicable to sales of Fanapt ® . Stock-based compensation.
A summary of our significant accounting policies appears in the notes to our audited consolidated financial statements for the year ended December 31, 2022 included in this Annual Report.
A summary of our significant accounting policies appears in the notes to our audited consolidated financial statements for the year ended December 31, 2023 included in this Annual Report.
Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts.
Variable consideration may be constrained and is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts.
The allowance for rebates is based on statutory or contracted discount rates and estimated patient utilization. • Chargebacks: Chargebacks are discounts that occur when contracted indirect customers purchase directly from specialty pharmacies and wholesalers.
The allowances for rebates are based on statutory or contracted discount rates and estimated patient utilization. • Chargebacks: Chargebacks are discounts that occur when contracted indirect customers purchase directly from specialty pharmacies and wholesalers.
We also have long-term contractual obligations related to our operating leases and license agreements. Refer to Note 7, Leases , and Note 10, Commitments and Contingencies , respectively, to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about these commitments. We do not have any off-balance sheet arrangements.
We also have long-term contractual obligations related to our operating leases and license agreements. See Note 8, Leases , and Note 11, Commitments and Contingencies , respectively, to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about these commitments. We do not have any off-balance sheet arrangements.
Co-pay assistance utilization is based on information provided by our third-party administrator. 66 Table of Contents • Product returns: We generally offer direct customers a limited right to return as contractually defined with our customers.
Co-pay assistance utilization is based on information provided by our third-party administrator. • Product returns: We generally offer direct customers a limited right to return as contractually defined with our customers.
We expense research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and 67 Table of Contents subsequent to FDA approval, manufacturing and milestone payments made under license agreements are capitalized.
We expense research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments made under license agreements are capitalized.
The provision for discounts, returns and other of $30.6 million and $31.2 million for the years ended December 31, 2022 and 2021, represents wholesaler distribution fees applicable to sales of Fanapt ® and estimated product returns of Fanapt ® , and co-pay assistance costs and prompt pay discounts applicable to the sales of both HETLIOZ ® and Fanapt ® .
The provision for discounts, returns and other of $28.5 million and $30.6 million for the years ended December 31, 2023 and 2022, represents wholesaler distribution fees applicable to sales of Fanapt ® and estimated product returns of Fanapt ® , and co-pay assistance costs and prompt pay discounts applicable to the sales of both HETLIOZ ® and Fanapt ® .
This discussion and analysis generally addresses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This discussion and analysis generally addresses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
See Note 14, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information. Liquidity and Capital Resources As of December 31, 2022, our total cash and cash equivalents and marketable securities were $466.9 million compared to $432.8 million at December 31, 2021.
See Note 15, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information. 76 Table of Contents Liquidity and Capital Resources As of December 31, 2023, our total cash and cash equivalents and marketable securities were $388.3 million compared to $466.9 million at December 31, 2022.
Cash flows provided by operating activities during the year ended December 31, 2022 were $32.0 million, a decrease of $32.2 million compared to $64.2 million during the year ended December 31, 2021.
Cash flows provided by operating activities during the year ended December 31, 2023 were $12.8 million, a decrease of $19.2 million compared to $32.0 million during the year ended December 31, 2022.
Our marketable securities consist of investments in government sponsored and corporate enterprises and commercial paper. 70 Table of Contents Our liquidity resources as of December 31, 2022 and 2021 are summarized as follows: (in thousands) December 31, 2022 December 31, 2021 Cash and cash equivalents $ 135,029 $ 52,071 Marketable securities: U.S.
Our marketable securities consist of investments in government sponsored and corporate enterprises and commercial paper. Our liquidity resources as of December 31, 2023 and 2022 are summarized as follows: (in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 135,821 $ 135,029 Marketable securities: U.S.
When we determine that the carrying value of our intangible assets may not be recoverable based upon the existence of one or more of the indicators of impairment, we measure any impairment based on the amount that carrying value exceeds fair value. We filed several Hatch-Waxman lawsuits in the U.S.
When we determine that the carrying value of our intangible assets may not be recoverable based upon the existence of one or more of the indicators of impairment, we measure any impairment based on the amount that carrying value exceeds fair value.
The decrease reflects a decrease of $26.9 million in net income and a decrease of $8.7 million in non-cash charges primarily due to a decrease in the change in deferred tax assets and additional amortization of discounts on our marketable securities, partially offset by an increase of $3.3 million from the net change in operating assets and liabilities. Investing Activities.
The decrease reflects a decrease of $3.8 million in net income, a decrease of $8.6 million in non-cash charges primarily due to additional amortization of discounts on our marketable securities, and a decrease of $6.8 million from the net change in operating assets and liabilities. Investing Activities.
Fanapt ® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. We invoice and record revenue when 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. Revenues and accounts receivable are concentrated with these customers.
We invoice and record revenue when 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. Revenues and accounts receivable are concentrated with these customers.
Sales of generic versions of HETLIOZ ® could result in a significant reduction in the demand for HETLIOZ ® and/or the price at which we can sell it, which would have a material and adverse impact on our revenues and results of operations.
Sales of generic versions of HETLIOZ ® have resulted in and could continue to result in a reduction in the demand for HETLIOZ ® and/or the price at which we can sell it and/or create volatility in net product sales in future periods, which could have a material impact on our revenues and results of operations.
Other income primarily consists of investment income on our marketable securities, which increased in 2022 as a result of higher yields on our marketable securities. Provision for income taxes. A provision for income taxes of $5.0 million and $9.2 million was recorded for the years ended December 31, 2022 and 2021, respectively.
Other income was $20.3 million for the year ended December 31, 2023 compared to $5.0 million for the year ended December 31, 2022. Other income primarily consists of investment income on our marketable securities, which increased in 2023 as a result of higher yields on our marketable securities. Provision for income taxes.
Research and development expenses increased by $10.4 million, or 14%, to $85.8 million for the year ended December 31, 2022 compared to $75.4 million for the year ended December 31, 2021.
Research and development expenses decreased by $8.9 million, or 10%, to $76.8 million for the year ended December 31, 2023 compared to $85.8 million for the year ended December 31, 2022.
The following table summarizes sales discounts and allowance activity as of and for the years ended December 31, 2022, 2021 and 2020: (in thousands) Rebates & Chargebacks Discounts, Returns and Other Total Balances at December 31, 2019 22,392 10,151 32,543 Provision related to current period sales 70,563 27,952 98,515 Adjustments for prior period sales (480) 1,327 847 Credits/payments made (65,605) (30,557) (96,162) Balances at December 31, 2020 26,870 8,873 35,743 Provision related to current period sales 83,965 31,176 115,141 Adjustments for prior period sales (853) 193 (660) Credits/payments made (78,128) (30,641) (108,769) Balances at December 31, 2021 31,854 9,601 41,455 Provision related to current period sales 92,109 30,636 122,745 Adjustments for prior period sales (2,647) 1,396 (1,251) Credits/payments made (83,857) (31,609) (115,466) Balances at December 31, 2022 $ 37,459 $ 10,024 $ 47,483 The provision for rebates and chargebacks of $92.1 million and $84.0 million for the years ended December 31, 2022 and 2021, respectively, and their ending balances at December 31, 2022 and 2021, primarily represent Medicaid rebates applicable to sales of Fanapt ® and, to a lesser extent, Medicaid rebates applicable to sales of HETLIOZ ® .
There was no right of return asset as of December 31, 2023 or 2022. 72 Table of Contents The following table summarizes sales discounts and allowance activity as of and for the years ended December 31, 2023, 2022 and 2021: (in thousands) Rebates & Chargebacks Discounts, Returns and Other Total Balances at December 31, 2020 26,870 8,873 35,743 Provision related to current period sales 83,965 31,176 115,141 Adjustments for prior period sales (853) 193 (660) Credits/payments made (78,128) (30,641) (108,769) Balances at December 31, 2021 31,854 9,601 41,455 Provision related to current period sales 92,109 30,636 122,745 Adjustments for prior period sales (2,647) 1,396 (1,251) Credits/payments made (83,857) (31,609) (115,466) Balances at December 31, 2022 37,459 10,024 47,483 Provision related to current period sales 85,916 28,488 114,404 Adjustments for prior period sales (267) 276 9 Credits/payments made (82,957) (28,361) (111,318) Balances at December 31, 2023 $ 40,151 $ 10,427 $ 50,578 The provision for rebates and chargebacks of $85.9 million and $92.1 million for the years ended December 31, 2023 and 2022, respectively, and their ending balances at December 31, 2023 and 2022, primarily represent Medicaid rebates applicable to sales of Fanapt ® and, to a lesser extent, Medicaid rebates applicable to sales of HETLIOZ ® .
We recognize revenue when control of the product is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those product sales, which is typically once the product physically arrives at the customer. 65 Table of Contents HETLIOZ ® is available in the U.S. for distribution through a limited number of specialty pharmacies, and is not available in retail pharmacies.
We recognize revenue when control of the product is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those product sales, which is typically once the product physically arrives at the customer.
Total revenues decreased by $14.3 million, or 5%, to $254.4 million for the year ended December 31, 2022 compared to $268.7 million for the year ended December 31, 2021.
Year ended December 31, 2023 compared to year ended December 31, 2022 Revenues . Total revenues decreased by $61.7 million, or 24%, to $192.6 million for the year ended December 31, 2023 compared to $254.4 million for the year ended December 31, 2022.
Treasury and government agencies 177,170 194,719 Corporate debt 154,660 186,023 Total marketable securities 331,830 380,742 Total cash, cash equivalents and marketable securities $ 466,859 $ 432,813 As of December 31, 2022, we maintained all of our cash, cash equivalents and marketable securities in two financial institutions.
Treasury and government agencies 185,115 177,170 Corporate debt 67,328 154,660 Total marketable securities 252,443 331,830 Total cash, cash equivalents and marketable securities $ 388,264 $ 466,859 As of December 31, 2023, we maintained all of our cash, cash equivalents and marketable securities in two financial institutions.
Third-party royalty costs were 5% of HETLIOZ ® net product sales in Germany and 6% of Fanapt ® net product sales. Third-party royalty costs on HETLIOZ ® net product sales in the U.S. decreased from 10% to 5% in December 2022. Research and development expenses.
Third-party royalty costs on HETLIOZ ® net product sales in the U.S. decreased from 10% to 5% in December 2022 and are expected to end in the second quarter of 2024.
The increase was primarily due to an increase in clinical trial expenses associated with our Fanapt ® development program and our other development programs, which include a $3.0 million upfront fee expensed in the third quarter of 2022 in consideration for entering into a research and development agreement. 69 Table of Contents The following table summarizes the costs of our product development initiatives for the years ended December 31, 2022 and 2021.
Expenses for our other development programs, which include expenses incurred on product discovery such as ASO, included a $3.0 million upfront fee expensed in the third quarter of 2022 in consideration for entering into a research and development agreement. The following table summarizes the costs of our product development initiatives for the years ended December 31, 2023 and 2022.
Our intangible assets consist of capitalized license costs for products approved by the FDA. We amortize our intangible assets on a straight-line basis over the estimated useful economic life of the related product patents. We assess the impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Our intangible assets consist of capitalized license costs for products approved by the FDA or costs to acquire already commercialized products. We amortize our intangible assets on a straight-line basis over the estimated useful economic life of the related product patents.
Cash flows provided by investing activities during the year ended December 31, 2022 were $49.9 million, an increase of $126.6 million compared to cash used in investing activities of $76.7 million during the year ended December 31, 2021.
Cash flows used in investing activities during the year ended December 31, 2023 were $12.1 million, a decrease in cash of $62.0 million compared to cash provided by investing activities of $49.9 million during the year ended December 31, 2022.
Clinical trials are inherently complex, often involve multiple service providers, and can include payments made to investigator physicians at study sites. Because billing for services often lags delivery of service by a substantial amount of time, we often are required to estimate a significant portion of our accrued clinical expenses.
Because billing for services often lags delivery of service by a substantial amount of time, we often are required to estimate a significant portion of our accrued clinical expenses.
There can be no assurance that any additional financing required in the future will be available on acceptable terms, if at all. 71 Table of Contents Cash Flow The following table summarizes our net cash flows from operating, investing and financing activities for the years ended December 31, 2022 and 2021: Year Ended December 31, (in thousands) 2022 2021 Net Change Net cash provided by (used in): Operating activities: Net income $ 6,275 $ 33,152 $ (26,877) Non-cash charges 19,635 28,325 (8,690) Net change in operating assets and liabilities 6,074 2,737 3,337 Operating activities 31,984 64,214 (32,230) Investing activities: Purchases of property and equipment (679) (552) (127) Net purchases, sales and maturities of marketable securities 50,604 (76,144) 126,748 Investing activities 49,925 (76,696) 126,621 Financing activities: Proceeds from the exercise of stock options 734 3,550 (2,816) Financing activities 734 3,550 (2,816) Effect of exchange rate changes on cash, cash equivalents and restricted cash 265 (91) 356 Net change in cash, cash equivalents and restricted cash $ 82,908 $ (9,023) $ 91,931 Operating Activities.
There can be no assurance that any additional financing required in the future will be available on acceptable terms, if at all. 77 Table of Contents Cash Flow The following table summarizes our net cash flows from operating, investing and financing activities for the years ended December 31, 2023 and 2022: Year Ended December 31, (in thousands) 2023 2022 Net Change Net cash provided by (used in): Operating activities: Net income $ 2,509 $ 6,275 $ (3,766) Non-cash charges 11,039 19,635 (8,596) Net change in operating assets and liabilities (747) 6,074 (6,821) Operating activities 12,801 31,984 (19,183) Investing activities: Asset acquisition (100,665) — (100,665) Purchases of property and equipment (383) (679) 296 Net purchases, sales and maturities of marketable securities 88,992 50,604 38,388 Investing activities (12,056) 49,925 (61,981) Financing activities: Proceeds from the exercise of stock options — 734 (734) Financing activities — 734 (734) Effect of exchange rate changes on cash, cash equivalents and restricted cash 47 265 (218) Net change in cash, cash equivalents and restricted cash $ 792 $ 82,908 $ (82,116) Operating Activities.
Our income tax expense or benefit is determined by applying the statutory tax rates in jurisdictions where we operate to each period’s income before income taxes. Adjustments are made for permanent differences in taxability or deductibility of pretax items as well as for other items, such as tax credits that are generated on our research and development activities.
Adjustments are made for permanent differences in taxability or deductibility of pretax items as well as for other items, such as tax credits that are generated on our research and development activities.
Teva has since launched its generic version of HETLIOZ ® at risk in the U.S. The FDA has approved the ANDAs for Apotex and MSN, and HETLIOZ ® could face even more competition from generic companies in the U.S. in the near term in light of the patent litigation rulings against us.
The FDA has also 74 Table of Contents approved the ANDA for MSN Pharmaceuticals, Inc. and MSN Laboratories Private Limited (MSN), and HETLIOZ ® could face even more competition from other generic companies in the U.S. in the near term in light of the patent litigation rulings against us.
Year Ended December 31, (in thousands) 2022 2021 Direct project costs (1) HETLIOZ ® $ 12,084 $ 11,450 Fanapt ® 26,931 22,284 Tradipitant 25,232 23,460 VTR-297 1,814 1,928 CFTR 1,168 3,180 VQW-765 3,570 2,548 Other 7,230 3,067 Total direct project costs 78,029 67,917 Indirect project costs (1) Stock-based compensation 3,964 3,955 Other indirect overhead 3,777 3,491 Total indirect project costs 7,741 7,446 Total research and development expense $ 85,770 $ 75,363 (1) We record direct costs, including personnel costs and related benefits, on a project-by-project basis.
Year Ended December 31, (in thousands) 2023 2022 Direct project costs (1) HETLIOZ ® $ 8,978 $ 12,084 Fanapt ® 11,306 26,931 Tradipitant 32,781 25,232 VTR-297 1,595 1,814 CFTR 1,490 1,168 VQW-765 988 3,570 VHX-896 6,186 2,148 Other 5,683 5,082 Total direct project costs 69,007 78,029 Indirect project costs (1) Stock-based compensation 3,323 3,964 Other indirect overhead 4,493 3,777 Total indirect project costs 7,816 7,741 Total research and development expense $ 76,823 $ 85,770 (1) We record direct costs, including personnel costs and related benefits, on a project-by-project basis.
Estimates for expected Medicare Part D coverage gap are based in part on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits. • Service fees: We receive sales order management, data and distribution services from certain customers, for which we are assessed fees.
We account for the Medicare Part D coverage gap using a point of sale model. Estimates for expected Medicare Part D coverage gap are based in part on historical activity and, where available, actual and pending prescriptions when we have validated the insurance benefits.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information on recent accounting pronouncements. 68 Table of Contents Results of Operations We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals.
Results of Operations We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, including our and our partners’ ability to continue to successfully commercialize our products, including activities related to recently acquired PONVORY ® , any possible payments made or received pursuant to license agreements, progress of our research and development efforts, the timing and outcome of clinical trials and related possible regulatory approvals and the status of existing and future potential litigation involving our products and intellectual property.
Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The analysis is highly dependent upon historical and projected taxable income.
We assess the need for a valuation allowance against our deferred tax asset each quarter through the review of all available positive and negative evidence. Deferred tax assets are reduced by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized.
If actual results in the future vary from our estimates, we adjust our estimate in the period identified, which would affect net product sales in the period such variances become known. Reserves for variable consideration are classified as product revenue allowances on the Consolidated Balance Sheets, with the exception of prompt-pay discounts which are classified as reductions of accounts receivable.
Reserves for variable consideration are classified as product revenue allowances on the Consolidated Balance Sheets, with the exception of prompt-pay discounts, which are classified as reductions of accounts receivable.
Intangible asset amortization was $1.5 million for each of the years ended December 31, 2022 and 2021. Other income . Other income was $5.0 million for the year ended December 31, 2022 compared to $0.2 million for the year ended December 31, 2021.
Intangible asset amortization . Intangible asset amortization was $2.1 million for the year ended December 31, 2023 compared to $1.5 million for the year ended December 31, 2022. Amortization expense increased in 2023 due to amortization on the intangible asset from the recently acquired rights to PONVORY ® in the U.S. and Canada. Other income .
Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with our research and development efforts and has no alternative future use.
Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with our research and development efforts and has no alternative future use. 73 Table of Contents Clinical trials are inherently complex, often involve multiple service providers, and can include payments made to investigator physicians at study sites.
Projected taxable income includes significant assumptions related to revenue, commercial expenses and research and development activities, which could be affected by the resolution of our HETLIOZ ® patent litigation, amongst other factors.
The analysis is highly dependent upon historical and projected taxable income. Projected taxable income includes significant assumptions related to revenue, commercial expenses and research and development activities, which could be affected by the HETLIOZ ® generic competition and our ability to obtain regulatory approval from the FDA for products or new indications in development, among other factors.
Our 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 U.S. Food and Drug Administration (FDA) for patients with Non-24 and patients with SMS.
HETLIOZ ® is the first product approved by the U.S. Food and Drug Administration (FDA) for patients with Non-24 and for patients with SMS.
Cost of goods sold decreased by $1.3 million, or 5%, to $24.3 million for the year ended December 31, 2022 compared to $25.6 million for the year ended December 31, 2021. Cost of goods sold includes third-party manufacturing costs of product sold, third-party royalty costs and distribution and other costs.
PONVORY ® net product sales were $1.6 million for the year ended December 31, 2023, which reflects sales during the post-acquisition period. Cost of goods sold. Cost of goods sold decreased by $9.5 million, or 39%, to $14.8 million for the year ended December 31, 2023 compared to $24.3 million for the year ended December 31, 2022.
Revenues were as follows: Year Ended December 31, (in thousands) 2022 2021 Net Change Percent HETLIOZ ® net product sales $ 159,655 $ 173,536 $ (13,881) (8) % Fanapt ® net product sales 94,727 95,146 (419) — % Total net product sales $ 254,382 $ 268,682 $ (14,300) (5) % HETLIOZ ® net product sales decreased by $13.9 million, or 8%, to $159.7 million for the year ended December 31, 2022 compared to $173.5 million for the year ended December 31, 2021.
Revenue from net product sales were as follows: Year Ended December 31, (in thousands) 2023 2022 Net Change Percent HETLIOZ ® net product sales $ 100,167 $ 159,655 $ (59,488) (37) % Fanapt ® net product sales 90,873 94,727 (3,854) (4) % PONVORY ® net product sales 1,600 — 1,600 N/A Total net product sales $ 192,640 $ 254,382 $ (61,742) (24) % HETLIOZ ® net product sales decreased by $59.5 million, or 37%, to $100.2 million for the year ended December 31, 2023 compared to $159.7 million for the year ended December 31, 2022.
In December 2022, the Delaware District Court ruled in favor of the Defendants in our patent litigation relating to the Defendants’ filing of Abbreviated New Drug Applications (ANDAs) for generic versions of HETLIOZ ® in the U.S. We disagree with the ruling that the claims of our patents are invalid and are vigorously pursuing appeal.
In December 2022, the U.S. District Court for the District of Delaware (Delaware District Court) ruled in favor of Teva and Apotex in our patent litigation relating to their filing of ANDAs for generic versions of HETLIOZ ® in the U.S., and in May 2023, a three-judge panel of the Federal Circuit affirmed this ruling.
The decrease to net product sales was attributable to a decrease in volume partially offset by an increase in price net of deductions. The decrease in volume was due in part to continued reimbursement challenges for prescriptions for patients with Non-24.
The decrease to net product sales was attributable to a decrease in price net of deductions and a decrease in volume.
As a result, we performed an impairment review for our HETLIOZ ® asset group and determined, based upon our review of undiscounted cash flows, that the carrying value of our HETLIOZ ® asset group, inclusive of the intangible asset, is recoverable. Accordingly, we did not record an intangible asset impairment charge during the year ended December 31, 2022.
As a result of the unfavorable events and subsequent developments in the fourth quarter of 2022 and second quarter of 2023 related to the HETLIOZ ® patent litigation (see Note 17, Legal Matters , to the consolidated financial statements included in Part II, Item 8 of this Annual Report) we performed impairment reviews for our HETLIOZ ® asset group and determined, based upon our review of undiscounted cash flows, that the carrying value of our HETLIOZ ® asset group, inclusive of the intangible asset, is recoverable.
The increase in selling, general and administrative expenses was primarily the result of an increase in spending on ongoing litigation and other corporate activities as well as costs related to our sales force, partially offset by a decrease in spending on marketing activities for our commercial products. Intangible asset amortization .
Selling, general and administrative expenses decreased by $23.6 million, or 17%, to $112.9 million for the year ended December 31, 2023 compared to $136.5 million for the year ended December 31, 2022. The decrease in selling, general and administrative expenses was primarily the result of a decrease in spending on marketing, sales and commercial support activities for our commercial products.
Additionally, our expected cash flows continue to support our estimated useful economic life of the intangible asset through March 2035. Income taxes. We assess the need for a valuation allowance against our deferred tax asset each quarter through the review of all available positive and negative evidence.
Furthermore, the litigation and subsequent events do not relate to the HETLIOZ LQ ® oral suspension formulation. Our expected cash flows continue to support our estimated useful economic life of the intangible asset through 2035. Income taxes.
The change in investing activities reflects the timing of net reinvestment of available cash and cash equivalents in our portfolio of marketable securities. Financing Activities. Cash flows provided by financing activities during the year ended December 31, 2022 were $0.7 million, a decrease of $2.8 million compared to $3.6 million during the year ended December 31, 2021.
Cash flows provided by financing activities during the year ended December 31, 2022 were $0.7 million. There were no exercises of stock options during the year ended December 31, 2023.
We currently record sales allowances for the following: • Prompt-pay: Specialty pharmacies and wholesalers are offered discounts for prompt payment.
Due to transactions that resulted in increased inventory stocking at specialty pharmacy customers of HETLIOZ ® in 2023, the time it takes to resolve these uncertainties is expected to be longer than we have historically experienced. We currently record sales allowances for the following: • Prompt-pay: Specialty pharmacies and wholesalers are generally offered discounts for prompt payment.
We expect to submit this NDA to the FDA in the first half of 2023. • The Phase III study of tradipitant in the treatment of motion sickness is over 75% enrolled. Results are expected by mid-2023.
In May 2023, we previously announced positive results from its first Phase III study of tradipitant in the treatment of motion sickness. We plan to pursue FDA approval upon completion of the clinical development program.
Removed
Operational Highlights HETLIOZ ® • We are continuing to pursue regulatory approvals for HETLIOZ ® in the indications of insomnia and jet lag disorder. • In December 2022, the U.S. District Court for the District of Delaware delivered its decision for the consolidated HETLIOZ ® patent lawsuit against defendants Teva Pharmaceuticals USA, Inc. (Teva) and Apotex Inc. and Apotex Corp.
Added
Our commercial portfolio is currently comprised of three products, 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), Fanapt ® for the treatment of schizophrenia and PONVORY ® , which we acquired the U.S. and Canadian rights to on December 7, 2023, for the treatment of relapsing forms of multiple sclerosis (MS), to include clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults.
Removed
(Apotex), ruling in favor of the defendants. We filed an appeal to the U.S. Court of Appeals for the Federal Circuit where an oral argument is scheduled for March 14, 2023.
Added
Operational Highlights 69 Table of Contents HETLIOZ ® • The supplemental New Drug Application (sNDA) for HETLIOZ ® in the treatment of insomnia is under review by the FDA with a Prescription Drug User Fee Act (PDUFA) target action date of March 4, 2024.
Removed
Despite the pending appeal, Teva has launched at risk its generic version of HETLIOZ ® in the U.S. 64 Table of Contents • In December 2022, we filed patent infringement lawsuits against each of Teva and Apotex in the U.S. District Court for the District of New Jersey asserting that Teva and Apotex’s generic versions of HETLIOZ ® infringe U.S.
Added
We announced that on February 4, 2024, we received a notification from the FDA stating that the FDA had identified deficiencies that preclude discussion of labeling and postmarketing requirements/commitments at this time. No deficiencies were disclosed by the FDA in the notification, and the FDA stated that the notification does not reflect a final decision on the information under review.
Removed
Patent No. 11,285,129. Tradipitant • We are continuing to conduct an open-label safety study for tradipitant in gastroparesis and approximately the first 400 patients enrolled in the study were locked in preparation for the Company’s planned New Drug Application (NDA) submission.
Added
On February 6, 2024, we filed suit in the U.S. District Court for the District of Columbia (D.C. District Court) challenging the FDA’s conduct in reviewing the insomnia sNDA. We are asking the D.C.
Removed
The study continues to enroll open label patients and we continue to receive requests from patients seeking access to tradipitant through the Expanded Access program, which has multiple patients who have taken tradipitant for more than one year. • We are preparing for the submission of an NDA for tradipitant for patients with gastroparesis.
Added
District Court to compel the FDA to adhere to the legally mandated 180-day review period for sNDAs and to declare as unlawful and void the regulations the FDA relies upon to issue complete response letters. • We are also continuing to pursue FDA approval for HETLIOZ ® in the treatment of jet lag disorder.
Removed
Fanapt ® • In December 2022, we announced positive results in the Phase III clinical study of Fanapt ® in acute manic and mixed episodes associated with bipolar I disorder in adults. We plan to submit a supplemental New Drug Application (sNDA) in the first half of 2023.
Added
We announced in January 2024 that the D.C. District Court granted our motion for summary judgment on our claim against the FDA for unlawfully delaying a hearing on the approvability of our sNDA for HETLIOZ ® in the treatment of jet lag disorder. The D.C.
Removed
Early-Stage Programs • In December 2022, we announced results in a Phase II clinical study of VQW-765 in the treatment of acute performance anxiety in social situations. This is the first time that an alpha 7 nicotinic acetylcholine receptor (α7-nAChR) partial agonist has shown efficacy in a clinical study of performance anxiety.
Added
District Court ordered the FDA to either finally resolve our jet lag sNDA or commence a hearing on the sNDA on or before March 5, 2024. • In January 2024, we filed a petition for a writ of certiorari with the U.S. Supreme Court to review the decision of the U.S.
Removed
We account for the Medicare Part D coverage gap using a point of sale model.
Added
Court of Appeals for the Federal Circuit (Federal Circuit) in our HETLIOZ ® Abbreviated New Drug Application (ANDA) litigation against Teva Pharmaceuticals USA, Inc. (Teva), Apotex Inc. and Apotex Corp. (collectively, Apotex). Teva and Apotex have waived their opportunity to respond to our petition, which is now ripe for decision by the U.S. Supreme Court.
Removed
These fees are based on contracted terms and are known amounts.
Added
Fanapt ® • The article “Efficacy and Safety of Iloperidone in Bipolar Mania: A Double-Blind, Placebo-Controlled Study” was published in January 2024 in the Journal of Clinical Psychiatry.
Removed
There was no right of return asset as of December 31, 2022 or 2021.
Added
The findings of this pivotal study have been submitted to the FDA as part of our sNDA for Fanapt ® in the treatment of bipolar I disorder in adults. • The sNDA for Fanapt ® in the treatment of bipolar I disorder in adults is under review by the FDA with a PDUFA target action date of April 2, 2024.
Removed
District Court for the District of Delaware (Delaware District Court) against Teva Pharmaceuticals USA, Inc. (Teva), Apotex Inc. (Apotex), MSN Pharmaceuticals, Inc. and MSN Laboratories Private Limited (MSN) (collectively, the HETLIOZ ® Defendants) asserting infringement of patents covering HETLIOZ ® 20 mg capsules.
Added
PONVORY ® • We completed the acquisition of the U.S. and Canadian rights to PONVORY ® from Janssen for $100.0 million in December 2023 and the transition is ongoing.
Removed
In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC resolving the lawsuits against MSN. The consolidated lawsuits against the remaining HETLIOZ ® Defendants were tried in March 2022. In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S. Patent No. RE46,604, and that the asserted claims of U.S.
Added
PONVORY ® is a once-daily oral selective sphingosine-1-phosphate receptor 1 modulator, approved by the FDA and Health Canada to treat adults with relapsing forms of multiple sclerosis, and is a potential therapeutic candidate for the treatment of a diverse group of inflammatory/autoimmune disorders ranging from psoriasis to ulcerative colitis. • We announced in January 2024 that the U.S.

… 36 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed4 unchanged
Biggest changeWe are also exposed to unfavorable fluctuations of the U.S. dollar, which is our reporting currency, against the currencies of our operating subsidiaries when their respective financial statements are translated into U.S. dollars for inclusion in our consolidated financial statements. We do not currently hedge our foreign currency exchange rate risk.
Biggest changeWe are also exposed to unfavorable fluctuations of the U.S. dollar, which is our reporting currency, against the currencies of 78 Table of Contents our operating subsidiaries when their respective financial statements are translated into U.S. dollars for inclusion in our consolidated financial statements. We do not currently hedge our foreign currency exchange rate risk.
Foreign currency has not 72 Table of Contents had, nor do we believe that a decrease or increase in any foreign currency exchange rates would have, a material impact on our results of operations.
Foreign currency has not had, nor do we believe that a decrease or increase in any foreign currency exchange rates would have, a material impact on our results of operations.

Other VNDA 10-K year-over-year comparisons