What changed in this filing

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Item 1. Business

2025-02-14 compared with 2024-02-08 · 328 added, 255 removed, 724 unchanged (45% of the section changed)

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We are committed to the use of technologies that support sound science, including genetics and genomics, in drug discovery, clinical trials and the commercial positioning of our products.

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.

HETLIOZ ® is the first product approved by the FDA for patients with Non-24 and for patients with SMS.

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;

Our commercial portfolio is currently comprised of three products:

Fanapt ® for the acute treatment of manic or mixed episodes associated with bipolar I disorder and the treatment of schizophrenia, HETLIOZ ® for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and for the treatment of nighttime sleep disturbances in Smith-Magenis syndrome (SMS) and PONVORY ® for the treatment of relapsing forms of multiple sclerosis (RMS) including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease.

HETLIOZ ® is the first product approved by the United States Food and Drug Administration (FDA) for patients with Non-24 and for patients with SMS.

In addition, we have a number of drugs and/or additional indications for current products in development, including:

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

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

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

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

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

• VHX-896, the active metabolite of iloperidone;

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

• VTR-297, a small molecule histone deacetylase (HDAC) inhibitor for the treatment of onychomycosis and hematologic malignancies and with potential use as a treatment for several oncology indications;

• Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors, including VSJ-110 for the treatment of dry eye and ocular inflammation and VPO-227 for the treatment of secretory diarrhea disorders, including cholera;

• 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;

• 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.

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

We were incorporated in 2002 and commenced operations in 2003.

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The key elements of our strategy to accomplish this goal are to:

• Maximize the commercial success of HETLIOZ ® , Fanapt ® and PONVORY ® ;

• Maximize the commercial success of Fanapt ® , HETLIOZ ® , and PONVORY ® ;

• Enter into strategic partnerships to supplement our capabilities and to extend our commercial reach;

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Product Indication 2024 Net Sales (in millions)

Schizophrenia (tablets)

Manic or mixed episodes associated with bipolar I disorder (tablets)

$94.3 United States

Israel (schizophrenia only)

Non-24 (capsules)

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Europe (Non-24 in blind patients only)

Schizophrenia (tablets) $90.9 United States

Relapsing forms of multiple sclerosis (tablets)

$27.8 United States

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.

At that time, we had certain worldwide exclusive rights relating to Fanapt ® , which we obtained pursuant to a sublicense agreement entered into with Novartis Pharma AG (Novartis) in June 2004.

In October 2009, we amended and restated our sublicense agreement with Novartis pursuant to which Novartis retained exclusive commercialization rights to all formulations of Fanapt ® in the U.S.

In January 2010, Novartis launched Fanapt ® in the U.S.

On December 31, 2014, Novartis transferred all the U.S.

and Canadian commercial rights to the Fanapt ® franchise to us as part of a settlement agreement.

Additionally, our distribution partners launched Fanapt ® in Israel in 2014.

In May 2016, the FDA approved a supplemental New Drug Application (sNDA) for Fanapt ® for the maintenance treatment of schizophrenia in adults.

Schizophrenia is a chronic, debilitating mental disorder characterized by hallucinations, delusions, racing thoughts and other psychotic symptoms (collectively referred to as “positive symptoms”), as well as moodiness, anhedonia (inability to feel pleasure), loss of interest, eating disturbances and withdrawal (collectively referred to as “negative symptoms”), and attention and memory deficits (collectively referred to as “cognitive symptoms”).

Schizophrenia develops in late adolescence or early adulthood in approximately 1% of the world’s population.

Most schizophrenia patients today are treated with drugs known as “atypical” antipsychotics, which were first approved in the U.S.

in the late 1980s.

These antipsychotics have been named “atypical” for their ability to treat a broader range of negative symptoms than the first-generation “typical” antipsychotics, which were introduced in the 1950s and are now generic.

Atypical antipsychotics are generally regarded as having improved side effect profiles and efficacy relative to typical antipsychotics.

See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® .

Fanapt ® for bipolar I disorder (tablets)

In April 2024, the FDA approved Fanapt ® tablets for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults.

We initiated the commercial launch of Fanapt ® for the acute treatment of bipolar I disorder in adults in the third quarter of 2024.

Bipolar disorders are brain disorders that cause changes in a person’s mood, energy and ability to function.

Bipolar disorder is a category that includes three different conditions - bipolar I, bipolar II and cyclothymic disorder.

People with bipolar disorders have extreme and intense emotional states that occur at distinct times, called mood episodes.

These mood episodes are categorized as manic, hypomanic or depressive.

People with bipolar disorders generally have periods of normal mood as well.

See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® .

HETLIOZ ® for Non-24 (capsules)

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patients per year.

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.

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.

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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.

While there are no EC approved treatments for Non-24 other than HETLIOZ ® , and only recently has the FDA approved generics for the treatment of Non-24, there are a number of drugs approved and prescribed for patients with sleep disorders.

While there are no EC approved treatments for Non-24 other than HETLIOZ ® , and the FDA has approved generics for the treatment of Non-24, there are a number of drugs approved and prescribed for patients with sleep disorders.

The most commonly prescribed drugs are hypnotics.

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In December 2020, HETLIOZ ® capsules and oral suspension (HETLIOZ LQ ® ) were approved in the U.S.

for the treatment of adults and children, respectively, with nighttime sleep disturbances in SMS.

for the treatment of nighttime sleep disturbances in SMS in adults 16 years and older and children 3 years to 15 years old, respectively.

HETLIOZ ® capsules, for adults with SMS, were immediately available after approval and the HETLIOZ LQ ® liquid formulation, for children with SMS, became available in the first quarter of 2021.

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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.

At that time, we had certain worldwide exclusive rights relating to Fanapt ® , which we obtained pursuant to a sublicense agreement entered into with Novartis Pharma AG (Novartis) in June 2004.

In October 2009, we amended and restated our sublicense agreement with Novartis pursuant to which Novartis retained exclusive commercialization rights to all formulations of Fanapt ® in the U.S.

In January 2010, Novartis launched Fanapt ® in the U.S.

On December 31, 2014, Novartis transferred all the U.S.

and Canadian commercial rights to the Fanapt ® franchise to us as part of a settlement agreement.

Additionally, our distribution partners launched Fanapt ® in Israel in 2014.

In May 2016, the FDA approved a supplemental New Drug Application (sNDA) for Fanapt ® for the maintenance treatment of schizophrenia in adults.

Schizophrenia develops in late adolescence or early adulthood in approximately 1% of the world’s population.

Most schizophrenia patients today are treated with drugs known as “atypical” antipsychotics, which were first approved in the U.S.

in the late 1980s.

Atypical antipsychotics are generally regarded as having improved side effect profiles and efficacy relative to typical antipsychotics.

See Competition below for a discussion of commonly prescribed atypical antipsychotics in addition to Fanapt ® .

PONVORY ® for relapsing multiple sclerosis (tablets)

PONVORY ® is a product approved for the treatment of relapsing forms of MS (RMS), to include clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults.

PONVORY ® is a product approved for the treatment of relapsing forms of MS (RMS), including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults.

In December 2023, we purchased the right to market and sell PONVORY ® in the U.S.

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Our product pipeline currently consists of the following products in clinical development or under regulatory review:

Fanapt ® for schizophrenia (LAI)

In October 2018, we enrolled our first patient in a pharmacokinetic study of the LAI formulation of Fanapt ® .

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.

We initiated a Phase III program for the LAI formulation of Fanapt ® in the fourth quarter of 2024.

Bysanti TM (Milsaperidone)

In 2021, we initiated a bioequivalence study of Fanapt ® and milsaperidone, the active metabolite of iloperidone.

We believe that milsaperidone represents a potential improvement over the clinical profile of Fanapt ® and has the potential to create sustained, long-term value in the treatment of psychiatric disorders, including bipolar I disorder and schizophrenia, the indications already approved for Fanapt ® , as well as new indications such as MDD.

We initiated a Phase III clinical study for milsaperidone for MDD in the fourth quarter of 2024.

HETLIOZ ® for jet lag disorder

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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 results support the previously reported pivotal JET5 and JET8 Phase III clinical studies, which demonstrated improvements in patients who experienced circadian advances of five and eight hours, respectively.

Additionally, in September 2018, we announced results from a driving study, which demonstrated that tasimelteon did not impair measures of driving performance.

The FDA accepted the filing of our sNDA for HETLIOZ ® for the treatment of jet lag disorder in December 2018.

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 determined the 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.

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We have asked the U.S.

District Court for the District of Columbia (DC District Court) to, among other things, compel the FDA to comply with its obligations and declare that its lack of compliance violates the FDCA and the FDA regulations.

In January 2024, the DC District Court held an oral argument on dispositive cross-motions, following which the DC District Court granted our motion for summary judgment.

The DC District Court ruled that the FDA violated the statute and ordered the FDA to either finally resolve our application or commence a hearing on or before March 5, 2024.

Our lawsuit remains pending.

We have asked the DC District Court to, among other things, compel the FDA to comply with its obligations and declare that its lack of compliance violates the FDCA and the FDA regulations.

District Court for the District of Columbia (DC District Court) to, among other things, compel the FDA to comply with its obligations and declare that the FDA’s lack of compliance violates the FDCA and the FDA regulations.

In January 2024, the DC District Court held an oral argument on dispositive cross-motions, following which the DC District Court granted our motion for summary judgment.

The DC District Court ruled that the FDA violated the statute and ordered the FDA to either finally resolve our application or commence a hearing on or before March 5, 2024.

Our lawsuit remains pending.

In March 2024, we and the FDA filed a consent motion for entry of final judgment in our favor on our Administrative Procedure Act claim for the FDA’s unreasonable delay in resolving the hearing request, following which the FDA refused to hold a hearing or approve our sNDA for HETLIOZ ® in the treatment of jet lag disorder.

We subsequently filed a petition for review in the U.S.

Court of Appeals for the District of Columbia Circuit (DC Circuit).

In January 2025, the DC Circuit held an oral argument on the petition.

Our petition remains pending.

Jet lag disorder is a common circadian disorder frequently observed in millions of travelers who cross multiple time zones.

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A Phase III, multi-center, placebo-controlled, 4-week trial evaluated patients with chronic primary insomnia.

Two transient insomnia studies induced by phase advance of the sleep-wake cycle were also conducted with five-hour and eight-hour phase advance, which showed a significant effect the first night in improving sleep parameters.

Two studies of transient insomnia induced by phase advance of the sleep-wake cycle were also conducted with five-hour and eight-hour phase advance, which showed a significant effect the first night in improving sleep parameters.

In July 2023, the FDA accepted our sNDA for HETLIOZ ® in insomnia for filing and set a target action date of March 4, 2024 under the Prescription Drug User Fee Act (PDUFA) for its decision.

HETLIOZ ® for pediatric Non-24

We plan to develop HETLIOZ ® for the treatment of pediatric Non-24.

A pharmacokinetic study of the HETLIOZ ® pediatric liquid formulation was completed in the first quarter of 2018.

On March 4, 2024, we received a CRL from the FDA.

In June 2024, we received a Notice of Opportunity for a Hearing, and we accepted the opportunity for a hearing in July 2024.

In August 2024, we filed for summary judgment requesting approval or a hearing on approvability of tasimelteon to treat insomnia associated with difficulties with sleep initiation.

In October 2024, we received a Proposed Order denying a hearing on approvability for the insomnia sNDA and we submitted a response to the Proposed Order in December 2024.

HETLIOZ ® for DSPD

A Phase III study of HETLIOZ ® in DSPD is ongoing.

A Phase III clinical study of HETLIOZ ® in DSPD is ongoing.

DSPD is a circadian rhythm disorder in which a person’s sleep is delayed beyond the socially acceptable or conventional bedtime.

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DSPD is likely the most prevalent circadian-rhythm sleep disorder, affecting approximately 1% of the population, and there is no FDA approved treatment at this time.

Fanapt ® for bipolar I disorder

In December 2022, we announced Fanapt ® was effective in the treatment of acute manic and mixed episodes associated with bipolar I disorder in adults in a randomized double-blind placebo controlled Phase III study.

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.

Statistically significant benefit in the Fanapt ® group over placebo was observed as early as the Week 2 assessment.

Consistent with the total YMRS score, the individual YMRS subscale items also showed improvement in the Fanapt ® group versus the placebo group over the course of the 4-week study.

Other outcomes, such as Clinician Global Impression of Severity (CGI-S) and Clinician Global Impression of Change (CGI-C), also achieved statistical significance.

Bipolar disorders are brain disorders that cause changes in a person’s mood, energy and ability to function.

Bipolar disorder is a category that includes three different conditions - bipolar I, bipolar II and cyclothymic disorder.

People with bipolar disorders have extreme and intense emotional states that occur at distinct times, called mood episodes.

These mood episodes are categorized as manic, hypomanic or depressive.

People with bipolar disorders generally have periods of normal mood as well.

In August 2023, the FDA accepted our sNDA for Fanapt ® in bipolar I disorder in adults for filing and set a PDUFA target action date of April 2, 2024 for its decision.

Fanapt ® for schizophrenia (LAI)

In October 2018, we enrolled our first patient in a pharmacokinetic study of the LAI formulation of Fanapt ® .

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.

The mechanism of action of PONVORY ® makes it also a potential therapeutic candidate for the treatment of a diverse group of inflammatory/autoimmune disorders including but not limited to ulcerative colitis, psoriasis, Crohn’s disease, atopic dermatitis, eosinophilic esophagitis and alopecia areata.

In a randomized placebo controlled clinical study, PONVORY ® has been shown to reduce the symptoms and signs of psoriasis.

Investigational New Drug (IND) applications for PONVORY ® in the treatments of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024.

HETLIOZ ® for pediatric Non-24

We plan to develop HETLIOZ ® for the treatment of pediatric Non-24.

A pharmacokinetic study of the HETLIOZ ® pediatric liquid formulation was completed in the first quarter of 2018.

Tradipitant for gastroparesis

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District Court for the District of Columbia (DC District Court) challenging the FDA’s position, but we ultimately did not prevail.

Despite our disagreement with the FDA, the preclinical package has allowed us to continue to

conduct all of the efficacy studies necessary for New Drug Application (NDA) filing.

Despite our disagreement with the FDA, the preclinical package has allowed us to continue to conduct all of the efficacy studies necessary for New Drug Application (NDA) filing.

Moreover, in July 2020, the FDA authorized tradipitant through an expanded access program (EAP) for a single patient.

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In December 2023, the FDA accepted our NDA for tradipitant in gastroparesis for filing and set a PDUFA target action date of September 18, 2024.

If approved, tradipitant will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years and tradipitant is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years.

The FDA may disregard such safety data when reviewing the NDA.

On September 18, 2024, we received a CRL from the FDA.

In January 2025, we received a Notice of Opportunity for a Hearing, and we have accepted the opportunity for a hearing.

Tradipitant is the first novel drug to be accepted for review by the FDA for gastroparesis in over 30 years and, if approved, will be the first novel drug to be approved by the FDA for the treatment of gastroparesis in over 40 years.

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.

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While this short-term indication is not preferred, we would consider accepting this limited indication while continuing to pursue a chronic indication.

However, the FDA may not deem the safety information sufficient even for a short-term indication.

Moreover, FDA authorization of an EAP is not a guarantee of or a step in obtaining full FDA approval of an NDA.

However, the FDA may

not deem the safety information sufficient even for a short-term indication.

Moreover, FDA authorization of an EAP is not a guarantee of or a step towards obtaining full FDA approval of an NDA.

Gastroparesis is a serious medical condition characterized by delayed gastric emptying associated with the symptoms of nausea, vomiting, bloating, fullness after meals and abdominal pain, along with significant impairment of social and occupational functioning.

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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.

In May 2023, we announced positive results from the first Phase III study of tradipitant in motion sickness, confirming the previously reported results demonstrating that tradipitant is effective in the prevention of vomiting associated with motion sickness.

A second Phase III study of tradipitant in motion sickness is ongoing.

In May 2023, we announced positive results from the first Phase III clinical study of tradipitant in motion sickness, confirming the previously reported results demonstrating that tradipitant is effective in the prevention of vomiting associated with motion sickness.

In May 2024, we announced positive results from the second Phase III study of tradipitant in motion sickness, confirming the previously reported results of two efficacy studies demonstrating that tradipitant is effective in the prevention of vomiting associated with motion sickness.

In addition, we submitted an NDA for tradipitant in the prevention of vomiting associated with motion sickness in the fourth quarter of 2024.

Motion sickness is a disorder that arises often as a response to real or perceived movement, as occurring during vehicular travel.

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On the pre-specified primary endpoint of Average Itch Visual Analog Scale (VAS), tradipitant showed improvement over placebo, but this improvement was not significant due to high placebo effect and the lack of sensitivity of this measure.

In June 2018, we initiated EPIONE, a Phase III study of tradipitant for pruritus in atopic dermatitis.

In June 2018, we initiated EPIONE, a Phase III clinical study of tradipitant for pruritus in atopic dermatitis.

In October 2019, we began enrolling patients in EPIONE 2, a second Phase III clinical study of tradipitant in atopic dermatitis.

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A 2015 Decision Resources Group report estimated that 9.8 million individuals were diagnosed with atopic dermatitis in the U.S., of which approximately 6.4 million were drug-treated atopic dermatitis patients.

In 2021, we initiated a bioequivalence study of Fanapt ® and VHX-896, the active metabolite of iloperidone.

We believe that VHX-896 has the potential to improve the clinical profile of Fanapt ® and create sustained, long-term value in the treatment of psychiatric disorders, including schizophrenia and bipolar I disorder.

Other products

Imsidolimab for GPP

Imsidolimab has successfully completed two global Phase III clinical studies for the treatment of GPP.

In January 2025, we entered into an exclusive global license agreement with AnaptysBio, Inc.

(Anaptys) under which we acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab, an IL-36R antagonist.

GPP is a rare, chronic, systemic autoinflammatory disease that is potentially life-threatening, if left untreated.

During a GPP flare, individuals experience the sudden eruption of painful pustules.

These pustules appear over large areas of the skin, accompanied by redness, severe itchiness, and dry, cracked, or scaly skin.

People with GPP may also experience more general symptoms such as fever, headache, extreme tiredness, or a burning sensation on the skin.

In the fourth quarter of 2018, we initiated a clinical study in patients with hematologic malignancies.

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VTR-297 is a small molecule HDAC inhibitor with potential use as a treatment for several oncology indications.

In January 2024, the FDA approved our Investigational New Drug (IND) application to evaluate VTR-297 for the treatment of onychomycosis.

In January 2024, the FDA approved our Investigational New Drug (IND) application to evaluate VTR-297 for the treatment of onychomycosis, a fungal infection of the nail.

The Phase I clinical study for VTR-297 for the treatment of onychomycosis was initiated in April 2024.

The study is fully enrolled.

Portfolio of CFTR activators and inhibitors

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VSJ-110 has shown efficacy in a dry eye model and exhibited anti-inflammatory properties in both in vitro and in vivo assays.

An ongoing proof of concept study for VSJ-110 indicates an effect in improving the signs (fluorescein corneal staining) of dry eye disease.

In addition, an early stage CFTR inhibitor program is planned for VPO-227 for the treatment of secretory diarrhea disorders, including cholera.

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In October 2022, VPO-227 was granted orphan drug designation by the FDA for the treatment of cholera.

We have also received approval to proceed in a Phase I study of VPO-227 for the treatment of cholera in Bangladesh, a country where the treatment of cholera remains a significant and unmet need.

We are evaluating VQW-765 for the treatment of psychiatric disorders.

In December 2022, we announced results from our Phase II study, VP-VQW-765-2201 (Study 2201), of a single-dose treatment to alleviate acute performance anxiety in social situations.

In December 2022, we announced results from our Phase II clinical study, VP-VQW-765-2201 (Study 2201), of a single-dose treatment to alleviate acute performance anxiety in social situations.

In the clinical study, 230 volunteers with prior history of performance anxiety were randomized to receive a single dose of VQW-765 or placebo and were challenged with the standardized Trier Social Stress Test (TSST).

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VQW-765 is a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist that we licensed from Novartis on December 31, 2014 pursuant to a settlement agreement.

Other products

ASO Molecules

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ASOs may have broad applicability in addressing a number of disorders, from nervous system treatments to systemic treatments.

In June 2023, VCA-894A, an ASO molecule, was granted orphan designation by FDA for the treatment of a patient with CMT2S, caused by cryptic splice site variants within IGHMBP2.

In June 2023, VCA-894A, an ASO molecule, was granted orphan designation by the FDA for the treatment of a patient with CMT2S, caused by cryptic splice site variants within IGHMBP2.

In January 2024, we announced that the FDA had approved the Investigational New Drug (IND) application to evaluate VCA-894A for the treatment of a patient with CMT2S.

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The prevalence of CMT2S is estimated to be less than 1 in 1,000,000 worldwide.

In addition, in December 2024, the FDA granted orphan drug designation for VGT-1849A, an ASO-based JAK2 inhibitor for the treatment of polycythemia vera (PV), a form of a rare hematologic malignancy that is estimated to affect 1 in 2,000 Americans.

For more detailed information regarding our clinical trial results and regulatory activities for our products, please refer to our SEC filings and press releases, which can be found on the SEC EDGAR website and on our website www.vandapharma.com.

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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.

In February 2004, we entered into a license agreement with Bristol-Myers Squibb (BMS) under which we received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize HETLIOZ ® .

We have paid BMS $37.5 million in upfront fees and milestone obligations.

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.

In December 2022, the royalty on net sales in the U.S.

decreased from 10% to 5%.

royalty will end in April 2024.

We are also obligated under the license agreement to pay BMS a percentage of any sublicense fees, upfront payments and milestone and other payments (excluding royalties) that we receive from a third party in connection with any sublicensing arrangement, at a rate which is in the mid-twenties.

We are obligated to use commercially reasonable efforts to develop and commercialize HETLIOZ ® .

Either party may terminate the HETLIOZ ® license agreement under certain circumstances, including a material breach of the agreement by the other.

In the event we terminate our license, or if BMS terminates our license due to our breach, all rights licensed and developed by us under this agreement will revert or otherwise be licensed back to BMS on an exclusive basis.

Pursuant to the terms of a settlement agreement with Novartis, Novartis transferred all U.S.

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No further royalties on manufacturing know-how are payable by us.

We are also obligated to pay Sanofi a fixed royalty on Fanapt ® net sales equal up to 6% on Sanofi know-how not related to manufacturing under certain conditions for a period of up to 10 years in markets where the NCE patent has expired or was not issued.

We are obligated to pay this 6% royalty on net sales in the U.S.

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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.

We have paid BMS $37.5 million in upfront fees and milestone obligations.

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.

In the U.S., the royalty on net sales decreased from 10% to 5% in December 2022.

royalty ended in April 2024.

We are obligated to use commercially reasonable efforts to develop and commercialize HETLIOZ ® .

Either party may terminate the HETLIOZ ® license agreement under certain circumstances, including a material breach of the agreement by the other.

Tradipitant (VLY-686)

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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 $5.0 million in upfront fees and development milestones, including a $2.0 million development milestone paid in December 2023 for the filing of the first marketing authorization for tradipitant in the U.S.

We have paid Lilly $5.0 million in upfront fees and development milestones, including a $2.0 million development milestone paid in December 2023 for the filing of the first

marketing authorization for tradipitant in the U.S.

As of December 31, 2024, 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.

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In the event that we terminate the agreement, or if Lilly 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 Lilly on an exclusive basis, subject to payment by Lilly to us of a royalty on net sales of products that contain tradipitant.

In January 2025, we entered into an exclusive global license agreement with Anaptys under which we acquired the worldwide rights to develop, manufacture, and commercialize imsidolimab, an IL-36R antagonist.

The agreement grants us exclusive rights to imsidolimab, which has successfully completed two global Phase III clinical studies for the treatment of GPP.

Under the terms of the agreement, we made an upfront payment of $10 million to Anaptys and an additional $5 million for existing drug supply.

Anaptys is eligible to receive up to $35 million in future regulatory approval and sales milestones.

Additionally, we are obligated to pay Anaptys a 10% royalty on global net sales of imsidolimab.

We are obligated to use commercially reasonable efforts to develop and commercialize imsidolimab.

Either party may terminate the agreement under certain circumstances, including a material breach by the other party.

In the event that we terminate the agreement, or if Anaptys terminates the agreement due to our breach, all rights licensed and developed by us under the agreement will revert or otherwise be licensed back to Anaptys on an exclusive basis.

Portfolio of CFTR activators and inhibitors

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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.

In addition, NCE patent protection has been sought for VTR-297 and CFTR activators and inhibitors.

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.

Although the NCE patents protecting Fanapt ® and HETLIOZ ® have expired, Fanapt ® remains protected by additional patents and HETLIOZ ® and HETLIOZ LQ ® remain 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.

For more on patent litigation, see Note 18, 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.

In addition, we have filed for patents based on our own discoveries that seek to provide additional protection for HETLIOZ ® and Fanapt ® .

In addition, we have filed for patents based on our own discoveries that seek to provide additional protection for Fanapt ® and HETLIOZ ® and HETLIOZ LQ ® .

A comprehensive list of active patents for our U.S.

commercial products is available in the Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) for our commercial products and is also provided in the table below.

commercial products is available in the Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) and is also provided in the table below.

Members of these patent families are also issued or pending in a number of territories, such as Europe and Japan.

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US 9,074,254 Method of treatment

US RE46604* 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

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

Method of treatment

US 10,071,977 Drug substance

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US 10,829,465 Drug substance

Product Number Type

US 10,945,988 Method of treatment

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Method of treatment

US 11,850,229

Method of treatment

US 11,918,556*

Method of treatment

US 11,918,557

Method of treatment

US 12,049,457

Drug substance

US 9,539,234 Method of treatment

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US 10,071,977 Drug substance

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 10,179,119*

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 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 11,266,622*

Method of treatment

US 11,285,129* Method of treatment

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Method of treatment

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

US 11,850,229*

Method of treatment

US 11,918,556

Method of treatment

Drug substance

US 11,918,557

Method of treatment

US 12,049,457

Drug substance

Method of treatment

Drug substance

US 10,220,023

Method of treatment

Product Number Type

New chemical entity

US 11,951,097

Method of treatment

The NCE patent for Fanapt ® , which expired in 2016 in the U.S.

and in 2010 in other countries, was owned by Sanofi.

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.

In November 2013, a U.S.

8,586,610) directed to a method of treating patients with Fanapt ® based on genotype was issued to us by the U.S.

Patent and Trademark Office (USPTO).

This patent, which was listed in the Orange Book in January 2015, is set to expire in 2027, and potentially further extends the U.S.

marketing exclusivity for Fanapt ® .

Additional method of treatment patents have been issued in the U.S.

and listed in the Orange Book, with the latest expiration date in December 2031.

We have also filed and plan on filing additional patent applications covering the use of iloperidone (Fanapt ® active ingredient) LAI formulations.

Patents for the microsphere LAI formulation of Fanapt ® expired in 2022 in some markets in Europe and expired in 2024 in the U.S.

Patents for the aqueous microcrystals LAI formulation of Fanapt ® expired 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.

We filed several Hatch-Waxman lawsuits in the Delaware District Court against a number of generic company competitors asserting infringement of two of our Fanapt ® patents.

The litigation has been resolved with respect to all but one of these competitors.

See Note 18, 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 Europe, the law provides for 10 years of regulatory exclusivity (with the potential for an additional year if the drug is developed for a significant new indication).

No generic versions of Fanapt ® would be permitted to be marketed or sold during the applicable regulatory exclusivity period in most European countries.

Outside the U.S.

and Europe, similar regulatory package protection periods may be available and could protect Fanapt ® from generic competition for varying numbers of years depending upon the country.

HETLIOZ ® and HETLOZ LQ ®

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Corresponding NCE patent protection has expired in most other markets.

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.

Patent and Trademark Office has issued a drug formulation patent for HETLIOZ LQ ® that will expire in 2040.

The USPTO has also issued 25 method of treatment patents for HETLIOZ ® that will expire between 2033 and 2041 and five drug substance patents that will expire in 2035.

Additionally, the USPTO has issued a drug formulation patent for HETLIOZ LQ ® that will expire in 2040.

We also have other pending patent applications covering methods of treatment and compositions of tasimelteon (HETLIOZ ® active ingredient) oral suspensions.

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(Apotex), MSN Pharmaceuticals, Inc.

and MSN Laboratories Private Limited (MSN) (collectively, the HETLIOZ ® Defendants) asserting infringement of patents covering HETLIOZ ® 20 mg capsules.

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.

and MSN Laboratories Private Limited (MSN) asserting infringement of patents covering HETLIOZ ® 20 mg capsules.

In January 2022, we entered into a license agreement with MSN and Impax Laboratories LLC resolving the lawsuits against MSN.

The consolidated lawsuits against Teva and Apotex were tried in March 2022.

In December 2022, the Delaware District Court ruled that Teva and Apotex did not infringe U.S.

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and 10,376,487 were invalid.

We have appealed the decision to the U.S.

We appealed the decision to the U.S.

Court of Appeals for the Federal Circuit (Federal Circuit) and in May 2023, a three-judge panel of the Federal Circuit affirmed the Delaware District Court’s ruling.

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Supreme Court to review the Federal Circuit’s decision.

In April 2024, the U.S.

Supreme Court denied

our petition.

We have also filed Hatch-Waxman lawsuits in U.S.

District Court for the District of New Jersey against each of Teva and Apotex and in the U.S.

District Court for the Southern District of Florida against Apotex, in each case, asserting infringement of a method of administration patent that was not litigated in the Delaware District Court.

The New Jersey cases have been transferred to the Delaware District Court, where they remain pending.

This litigation does not affect the sale of HETLIOZ ® in the E.U.

District Court for the Southern District of Florida against Apotex, in each case, asserting infringement of U.S.

11,285,129, which is a method of administration patent that was not litigated in the prior litigation.

The New Jersey cases have been transferred to the Delaware District Court, where they remain pending, and the Florida case was voluntarily dismissed.

We have also filed patent infringement lawsuits against each of Teva and Apotex in the Delaware District Court, in each case, asserting infringement of U.S.

11,918,556, another method of administration patent that was not litigated in the prior litigation.

These lawsuits do not affect the sale of HETLIOZ ® in the E.U.

and there is no generic litigation pending outside of the U.S.

with respect to HETLIOZ ® .

Furthermore, the litigation does not relate to the HETLIOZ LQ ® oral suspension formulation.

Furthermore, this litigation does not relate to the HETLIOZ LQ ® oral suspension formulation.

In July 2024, we filed a Hatch-Waxman lawsuit against MSN in the Delaware District Court asserting that the U.S.

10,179,119, 11,266,622, 11,285,129, 11,850,229, 10,610,510, 10,980,770, and 11,759,446 will be infringed by MSN’s generic version of HETLIOZ LQ ® for which MSN is seeking FDA approval.

Our lawsuit remains pending, and a trial is scheduled to begin on June 15, 2026.

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Additional patent applications directed to specific sleep disorders and to methods of treating patients with HETLIOZ ® , if issued, could provide exclusivity for such indications and methods of treatment.

The NCE patent for Fanapt ® , which expired in 2016 in the U.S.

and in 2010 in other countries, was owned by Sanofi.

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.

In November 2013, a U.S.

8,586,610) directed to a method of treating patients with Fanapt ® based on genotype was issued to us by the U.S.

Patent and Trademark Office.

This patent, which was listed in the Orange Book in January 2015, is set to expire in 2027, potentially further extending the U.S.

marketing exclusivity for Fanapt ® .

Additional method of treatment patents have been issued in the U.S.

and listed in the Orange Book, with the latest expiration date in December 2031.

We have also filed and plan on filing additional patent applications covering the use of iloperidone (Fanapt ® active ingredient) LAI formulations.

Patents for the microsphere LAI formulation of Fanapt ® expired in 2022 in some markets in Europe and will expire in 2024 in the U.S.

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.

We filed several Hatch-Waxman lawsuits in the Delaware District Court against a number of generic company competitors asserting infringement of two of our Fanapt ® patents.

The litigation has been resolved with respect to all but one of these competitors.

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 Europe, the law provides for 10 years of regulatory exclusivity (with the potential for an additional year if the drug is developed for a significant new indication).

No generic versions of Fanapt ® would be permitted to be marketed or sold during the applicable regulatory exclusivity period in most European countries.

Outside the U.S.

and Europe, similar regulatory package protection periods may be available and could protect Fanapt ® from generic competition for varying numbers of years depending upon the country.

Janssen has obtained patent protection for PONVORY ® and its formulations in selected countries worldwide, including the U.S.

Janssen obtained patent protection for PONVORY ® and its formulations in selected countries worldwide, including the U.S.

In December 2023, we acquired all rights that Janssen had in U.S.

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and Canadian derivative patents and patent applications arising from the foregoing patents and pending patent applications.

Regulatory exclusivity (NCE) protecting PONVORY ® in the U.S.

will expire on March 18, 2026.

The NCE protecting PONVORY ® in the U.S.

will expire in March 2026.

The NCE patent covering the active ingredient in PONVORY ® (Reissue Patent No.

43,728) is set to expire on November 16, 2024, but an application for term extension pursuant to the Hatch-Waxman Act was submitted, which would extend this patent’s term to November 16, 2029 if granted.

Patent and Trademark Office has granted additional patents, including a further patent directed to a crystalline form of the active ingredient in PONVORY ® , which will expire in May 2032 in view of awarded patent term adjustment.

Patent and Trademark Office has also issued three method of treatment patents for PONVORY ® , which will expire between November 2024 and December 2035.

Furthermore, on January 24, 2024, the U.S.

Patent and Trademark Office issued a Notice of Allowance in the case of U.S.

17/962,968, which covers other methods of treatment using the active ingredient in PONVORY ® .

Once issued, this patent would be expected to expire on October 10, 2042.

Also, a number of patent applications covering further methods of treatment remain pending at the U.S.

Patent and Trademark Office.

43,728) expired in November 2024, but an application for patent term extension (PTE) pursuant to the Hatch-Waxman Act was submitted to extend this patent’s term to November 2029.

The PTE application was granted on January 31, 2025.

The USPTO has granted additional patents, including a further patent directed to a crystalline form of the active ingredient in PONVORY ® , which will expire in May 2032 as a result of the awarded patent term adjustment.

The USPTO has also issued four method of treatment patents for PONVORY ® , of which one expired in November 2024, and the remaining three will expire between December 2025 and October 2042.

Also, a number of patent applications covering further methods of treatment remain pending at the USPTO.

Because PONVORY ® was granted NCE exclusivity, no generic applications can be filed until one year prior to the expiration of that exclusivity, in March 2025.

In Canada, the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) create a regime analogous to the Hatch-Waxman Act and link the regulatory approval process for generic and biosimilar drugs to the adjudication of innovator patent rights.

To be eligible for protection under the PM(NOC) Regulations, patents must first be listed on the Patent Register in connection with an innovator’s drug submission to Health Canada.

A generic or biosimilar manufacturer must then provide notice to the innovator of its plans to market a drug that it compared to the innovator’s patented drug in the Health Canada approval process.

A generic or biosimilar

manufacturer must then provide notice to the innovator of its plans to market a drug that it compared to the innovator’s patented drug in the Health Canada approval process.

Within 45 days of receiving such a notice of allegation, an innovator drug company may commence patent infringement proceedings against the generic or biosimilar manufacturer.

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Health Canada’s Patent Register lists Canadian Patent Nos.

2545582, 2740313, and 2968180 for PONVORY ® , which are respectively directed to the active ingredient in PONVORY ® , the crystalline form of that active ingredient, and methods of treatment.

These listed patents will respectively expire November 16, 2024;

October 19, 2029;

and April 29, 2036 in view of the CSP.

2740313 and 2968180 for PONVORY ® , which are respectively directed to the crystalline form of ponesimod, the active ingredient in PONVORY ® and methods of treatment.

These listed patents will respectively expire in October 2029 and, as a result of the CSP granted for 2968180, in April 2036.

The ponesimod compound patent Canadian Patent No.

2545582 expired in November 2024.

Canada also employs a data exclusivity regime for innovative drugs that provides an eight-year period of data protection from the date of market approval by Health Canada.

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Generic or biosimilar drug submissions remain on hold until expiry of the innovator’s data protection term, unless the innovative product is a patented drug subject to further protection under the PM(NOC) Regulations.

The six-year no-file date for PONVORY ® is April 28, 2027, and data protection for ponesimod ends April 28, 2029 according to the Canadian Register of Innovative Drugs, the Products for Human Use - Active Data Protection Period.

Canada has no distinct drug submission process for biosimilar or orphan drug products.

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These patents and patent applications have been licensed to us.

The NCE patent covering tradipitant expired in April 2023, except in the U.S., where it expires normally in June 2024, subject to any extension that may be received under the Hatch-Waxman Act.

The NCE patent covering tradipitant expired in April 2023, except in the U.S., where it expired in June 2024, subject to any extension that may be received under the Hatch-Waxman Act.

We have filed additional patent applications based on discoveries made during recent studies with tradipitant.

Anaptys owns patents and patent applications covering imsidolimab, an IL-36R antagonist, which have been licensed to us under an exclusive global license agreement.

These patents and applications include claims directed to antibodies that inhibit the interleukin-36 receptor, methods of use and formulations.

Patent protection for imsidolimab has been sought in the U.S.

and other countries.

In the U.S., the patent protection may be subject to extension under the Biologics Price Competition and Innovation Act (BPCIA), which provides a framework similar to the Hatch-Waxman Act for small molecules, allowing for potential exclusivity extensions for biologics.

The patents protecting imsidolimab are expected to provide exclusivity into the late 2030s.

We are committed to advancing the development of imsidolimab and may file additional patent applications based on discoveries made during its development.

For more on the license and sublicense arrangements related to imsidolimab, see License Agreements above.

VTR-297 is a small molecule HDAC inhibitor with potential use as a treatment for several oncology indications.

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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.

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.

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.

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Marketing and Sales

Fanapt ® oral tablets were approved in the U.S.

for the treatment of schizophrenia in May 2009 and commercially launched in the U.S.

in January 2010.

Fanapt ® tablets for the acute treatment of bipolar I disorder in adults were approved in April 2024 and commercially launched in the U.S.

in the third quarter of 2024.

We continue to explore the regulatory path and commercial opportunity for Fanapt ® oral formulation in other regions.

HETLIOZ ® capsules were approved in the U.S.

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We commercially launched HETLIOZ ® capsules in the U.S.

in April 2014 and the oral suspension in March 2021.

in April 2014 and the oral suspension (HETLIOZ LQ ® ) in March 2021.

Additionally, HETLIOZ ® capsules were approved in the E.U.

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Given the range of potential indications for HETLIOZ ® , we may pursue one or more partnerships for the development and commercialization of HETLIOZ ® worldwide.

Fanapt ® oral tablets were approved in the U.S.

for the treatment of schizophrenia in May 2009 and commercially launched in the U.S.

in January 2010.

We continue to explore the regulatory path and commercial opportunity for Fanapt ® oral formulation in other regions.

PONVORY ® tablets were approved in the U.S.

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We acquired the U.S.

and Canadian rights to PONVORY ® in December 2023 from Janssen.

Janssen will continue PONVORY ® operations during a transition period, following which, regulatory and supply responsibilities will be transitioned to us.

and Canadian rights to PONVORY ® in December 2023 from Janssen and we transitioned U.S.

operations of PONVORY ® during 2024.

Major Customers

Our revenues are generated from product sales and are concentrated with two specialty pharmacies and three wholesalers.

There were five major customers that each accounted for more than 10% of total revenues for 2023 and, as a group, represented 80% of total revenues for the year ended December 31, 2023.

Our revenues are generated from product sales and are concentrated in a limited number of specialty pharmacies, specialty distributors and wholesalers.

There were four major customers that each accounted for more than 10% of total revenues for 2024 and, as a group, represented 69% of total revenues for the year ended December 31, 2024.

The pharmaceutical industry, in particular, is highly competitive and includes a number of established large and mid-sized companies with greater financial, technical and personnel resources than we have and significantly greater commercial infrastructures than we have.

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These developments may render our products or technologies obsolete or noncompetitive.

We believe the competitors for HETLIOZ ® , Fanapt ® and PONVORY ® are as follows:

We believe the competitors for Fanapt ® , HETLIOZ ® and PONVORY ® are as follows:

• For Fanapt ® in the treatment of schizophrenia, the atypical antipsychotics competitors are Risperdal ® (risperidone), including the LAI formulation Risperdal Consta ® , and Invega ® Sustenna ® (paliperidone), 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 ® ), Abilify Asimtufi ® and Rexulti ® (brexpiprazole), all by Lundbeck/Otsuka America Pharmaceutical Inc., Geodon ® (ziprasidone) by Viatris, Inc., Saphris ® (asenapine) and Vraylar ® (cariprazine), both by AbbVie Inc., Latuda ® (lurasidone) by Sunovion Pharmaceuticals Inc., Aristada ® (aripiprazole lauroxil) extended-release injectable suspension and Lybalvi ® (olanzapine and samidorphan), both by Alkermes, plc, Caplyta ® (lumapteperone) by Intra-Cellular Therapies, Inc., Cobenfy TM (xanomeline/trospium chloride) by BMS, Secuado ® (asenapine) by Noven Pharmaceuticals and generic clozapine and quetiapine, as well as the typical antipsychotics haloperidol, chlorpromazine, thioridazine, and sulpiride (all of which are generic).

For Fanapt ® in the treatment of bipolar I disorder, competitors include Lithobid ® (lithium) by ANI Pharmaceuticals, Depakote ® (divalproex sodium) and Vraylar ® (cariprazine), both by AbbVie Inc., Lamictal ® (lamotrigine by GlaxoSmithKline, Seroquel ® (quetiapine fumarate) by AstraZeneca, Risperdal ® (risperidone), including the LAI formulation Risperdal Consta ® , by Johnson & Johnson, Abilify ® (aripiprazole) by Otsuka America Pharmaceutical Inc., Abilify Maintena ® (the LAI formulation of Abilify ® ) and Abilify Asimtufi ® , both by Lundbeck/Otsuka America Pharmaceutical Inc., Latuda ® (lurasidone) by Sunovion Pharmaceuticals Inc., Zyprexa ® (olanzapine) and Symbyax ® (olanzapine/fluoxetine), both by Lilly, Caplyta ® (lumapteperone) by Intra-Cellular Therapies, Inc., Lybalvi ® (olanzapine and samidorphan) by Alkermes, plc, Geodon ® (ziprasidone) by Viatris, Inc.

and Equetro ® (carbamazepine) by Validus Pharmaceuticals LLC.

• For HETLIOZ ® in the treatment of nighttime sleep disturbances in SMS, there are no FDA approved direct competitors.

For HETLIOZ ® in the treatment of Non-24, Teva has launched at risk, and the FDA has approved the Abbreviated New Drug Applications (ANDA) for Apotex and MSN.

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 ® .

The class of melatonin agonists includes Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, and the food supplement melatonin.

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.

For HETLIOZ ® in the treatment of Non-24, Teva and Apotex have launched their respective Abbreviated New Drug Application (ANDA) products at risk, and the FDA has also approved the ANDA for MSN.

In addition, sedative-hypnotic treatments for certain sleep-related disorders include, Ambien ® (zolpidem), including Ambien CR ® , by Cosette Pharmaceuticals, Inc., Lunesta ® (eszopiclone) by Woodward Pharma Services LLC, 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 ® .

The class of melatonin agonist treatments includes Rozerem ® (ramelteon) by Takeda Pharmaceuticals Company Limited, and the food supplement melatonin.

Shift work and excessive sleepiness disorder treatments include Nuvigil ® (armodafinil) and Provigil ® (modafinil) both by Apotex.

• For PONVORY ® in the treatment of RMS, the competitors include Avonex ® (interferon beta-1a), Tysabri ® (natalizumab), Tecfidera ® (Dimethyl fumarate) 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), Mayzent ® (siponimod), Gilenya ® (fingolimod) and Kesimpta ® (ofatumumab), all by Novartis AG, Lemtrada ® (alemtuzumab) and Aubagio ® (teriflunomide), both by Sanofi, Ocrevus ® (ocrelizumab) by Roche Holding AG/Biogen Inc., Zeposia ® (ozanimod) by BMS, Briumvi ® (ubiltuximab) by TG Therapeutics, Inc., Tyruko ® (natalizumab) by Sandoz Group AG and Copaxone ® (glatiramer acetate) by Teva.

Our ability to compete successfully will depend, in part, on our ability to utilize our pharmacogenetics and pharmacogenomics and drug development expertise to identify, develop, secure rights to and obtain regulatory approvals for promising pharmaceutical products before others are able to develop competitive products.

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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.

manufacturer, or financial instability of manufacturers, all of which could negatively impact our operations and our financial results.

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.

Under the HETLIOZ ® manufacturing agreement, we are responsible for supplying the active pharmaceutical ingredient (tasimelteon) for HETLIOZ ® to Patheon and have agreed to order from Patheon at least 80% of the total expected yearly production of new units of HETLIOZ ® capsules.

Patheon is responsible for manufacturing the HETLIOZ ® 20 mg capsules, conducting quality control and stability testing, and packaging the HETLIOZ ® capsules.

The HETLIOZ ® manufacturing agreement had an initial term of five years and automatically renews after the initial term for successive terms of one year each, unless either party gives notice of its intention to terminate the agreement at least 12 months prior to the end of the then current term.

Either party may terminate the HETLIOZ ® manufacturing agreement under certain circumstances upon specified written notice to the other party.

(collectively, Patheon), subsidiaries of Thermo Fisher Scientific, for the manufacture of Fanapt ® oral tablets and HETLIOZ ® capsules.

As part of a settlement agreement in 2014, we assumed Novartis’ manufacturing agreement with Patheon for the manufacture of commercial supplies of Fanapt ® .

In May 2016, we entered into a new manufacturing agreement with Patheon for the manufacture of commercial supplies of Fanapt ® 1, 2, 4, 6, 8, 10 and 12 mg tablets at Patheon’s Mississauga, Ontario, Canada manufacturing site.

Under the Fanapt ® manufacturing agreement, we are responsible for sourcing the supply of the active pharmaceutical ingredient (iloperidone), and have agreed to order from Patheon at least 70% of the total expected yearly production of new units of Fanapt ® tablets for the U.S.

Under the Fanapt ® manufacturing agreement, we are responsible for supplying the active pharmaceutical ingredient (iloperidone) and have agreed to order from Patheon at least 70% of the total expected yearly production of new units of Fanapt ® tablets for the U.S.

and other specified countries each year for the term of the agreement.

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Either party may terminate the Fanapt ® manufacturing agreement under certain circumstances upon specified written notice to the other party.

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.

Patheon is responsible for manufacturing the HETLIOZ ® 20 mg capsules, conducting quality control and stability testing, and packaging the HETLIOZ ® capsules.

Either party may terminate the HETLIOZ ® 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.

The HETLIOZ LQ ® manufacturing agreement has an initial term of five years and automatically renews after the initial term for successive terms of one year each, unless either party gives notice of its intention to terminate the agreement at least 12 months prior to the end of the then current term.

PONVORY ® is manufactured by third parties and supplied to Jannsen, which is currently distributing PONVORY ® pursuant to the terms of a transition agreement.

During the transition period, Vanda and Janssen will transition supply responsibility for PONVORY ® to us.

In December 2024, we entered into a non-exclusive manufacturing agreement of PONVORY ® .

The PONVORY ® manufacturing agreement has an initial term of three years and automatically renews after the initial term until the termination or expiration of any outstanding project agreements.

Government Regulation

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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.

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Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected, serious harm to study subjects.

In addition, clinical trials may be overseen by a DSMB, an independent group of qualified experts organized by the sponsor.

In addition, clinical trials may be overseen by a Data and Safety Monitoring Board (DSMB), an independent group of qualified experts organized by the sponsor.

Depending on its charter, the DSMB may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

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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 may occur prior to the submission of an IND, at the end of Phase II clinical trials, or before an NDA is ultimately submitted.

These meetings may occur prior to the submission of an IND, at the end of Phase I and Phase II clinical trials, or before an NDA is ultimately submitted.

Sponsors typically use the meetings at the end of the Phase II trials to discuss Phase II clinical results and present plans for the pivotal Phase III clinical trials that they believe will support approval of the new drug.

Meetings at other times may be made upon request.

Meetings at other times may be scheduled upon request.

Concurrent with clinical trials, companies typically complete additional animal or other non-clinical studies, develop additional information about the chemistry and physical characteristics of the drug, and finalize a process for manufacturing the product in commercial quantities in accordance with the FDA’s current Good Manufacturing Practices (cGMP) requirements.

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A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin.

The sponsor or FDA may also request a waiver of the requirement to submit pediatric assessments.

A waiver may be granted for one of several reasons, including because the necessary studies are impossible or highly impracticable.

The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

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Failure to comply with the applicable governmental requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity.

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.

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.

Orphan drug designation

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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.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Recently, the accelerated approval pathway has come under scrutiny within the FDA and by Congress.

The FDA has put increased focus on ensuring that confirmatory studies are conducted with diligence and, ultimately, that such studies confirm the benefit.

For example, the FDA has convened its Oncologic Drugs Advisory Committee to review what the FDA has called dangling or delinquent accelerated approvals where confirmatory studies have not been completed or where results did not confirm benefit.

In addition, Congress is considering various proposals to potentially make changes to the accelerated approval pathway, including proposals to increase the likelihood of withdrawal of approval in such circumstances.

In addition, the FDA requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

The Food and Drug Administration Safety and Innovation Act established a category of drugs referred to as “breakthrough therapies” that may be eligible to receive breakthrough therapy designation.

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 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.

The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance.

The breakthrough therapy designation is a distinct status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met.

The breakthrough therapy designation is a distinct status from

both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met.

If a product is designated as a breakthrough therapy, the FDA will work to expedite the development and review of such drug.

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If a product is not eligible for the NCE exclusivity, it may be eligible for three years of exclusivity.

Three-year exclusivity is available to the holder of an NDA, including a 505(b)(2) NDA, for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical trials, other than bioavailability or bioequivalence trials, was essential to the approval of the application and was conducted or sponsored by the applicant.

Three-year exclusivity is available to the holder of an NDA, including a 505(b)(2) NDA, for a particular condition of approval, or change to a marketed product, such as a new formulation, route of administration or indication for a previously approved product, if one or more new clinical trials, other than bioavailability or bioequivalence trials, was essential to the approval of the application and was conducted or sponsored by the applicant.

This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval.

As a general matter, three-year exclusivity does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.

Five-year and three-year exclusivity will not delay the submission or approval of a full NDA;

however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.

As a general matter, three-year exclusivity granted for a new drug does not prohibit the FDA from approving additional ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.

Five-year and three-year exclusivity will not delay the submission or approval of an NDA where an applicant obtained a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.

Pediatric exclusivity is another type of marketing exclusivity available in the U.S.

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Orange Book listing, the Hatch-Waxman Act

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s drug.

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.

In seeking approval for a drug through an NDA, applicants are required to submit to the FDA each patent with at least one claim that covers the applicant’s drug substance (active ingredient), drug product (formulation or composition) or a method of using the drug which is sought or has been granted in the application.

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, which potential competitors seeking approval of ANDAs must certify against.

An ANDA provides for marketing of a drug that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug.

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The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved drug in the Orange Book.

Specifically, the applicant must certify that:

Specifically, the applicant must certify for each listed patent that:

(i) the required patent information has not been filed;

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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.

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.

If the applicant does not challenge the listed patents through a Paragraph IV certification, the ANDA application will not be approved until all the listed patents claiming the referenced drug have expired.

If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA.

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The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA applicant.

The ANDA application also will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of an NCE, listed in the Orange Book for the referenced drug has expired.

Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the “Hatch-Waxman Act,” provides a period of five years following approval of a drug containing no previously approved active ingredients, during which ANDAs for generic versions of those drugs cannot be submitted unless the submission contains a Paragraph IV challenge to a listed patent, in which case the submission may be made four years following the original drug approval.

Federal law provides for a period of three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage form, route of administration or combination, or for a new use, the approval of which was required to be supported by new clinical trials conducted by or for the sponsor, during which FDA cannot grant effective approval of an ANDA based on that listed drug.

In addition to patent exclusivity, the NDA holder may be entitled to additional exclusivities.

The ANDA application also will not be approved until any non-patent exclusivity listed in the Orange Book for the referenced drug has expired.

For example, the FDA provides an NCE exclusivity period of five years following approval of a drug containing no previously approved active ingredients.

For drugs that have NCE exclusivity, ANDAs for generic versions of those drugs cannot be submitted until four years following the original drug approval.

Federal law also provides for a period of three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage form, route of administration or combination, or for a new use, the approval of which was required to be supported by new clinical trials conducted by or for the sponsor, during which the FDA cannot grant effective approval of an ANDA based on that listed drug.

Fraud and abuse laws and other U.S.

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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.

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.

The Prescription Drug Marketing Act (PDMA) imposes requirements and limitations upon the distribution of drugs and drug samples, and prohibits states from licensing distributors of prescription drugs unless the state licensing program meets certain federal guidelines that include minimum standards for storage and handling, as well as recordkeeping and other requirements.

The Prescription Drug Marketing Act of 1987 (PDMA), as modified by the Prescription Drug Amendments of 1992 and the FDA Modernization Act of 1997, along with regulations promulgated thereunder, imposes, among other things, requirements and limitations upon the distribution of drugs and drug samples, and prohibits states from licensing distributors of prescription drugs unless the state licensing program meets certain federal guidelines that include minimum standards for storage and handling, as well as recordkeeping and other requirements.

Violations of the PDMA may result in criminal and civil penalties.

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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.

The federal 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.

Certain marketing practices may implicate the False Claims Act, including promotion of pharmaceutical products for unapproved uses, providing free product to customers with the expectation that customers would bill federal programs for the product, or inflating prices reported to private price publication services used to set drug reimbursement rates under federal healthcare programs.

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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.

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable not only to covered entities (e.g., health care providers and health plans), but also to business associates (i.e., independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity).

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable not only to covered entities (e.g., certain health care providers and health plans), but also to business associates (i.e., independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity).

HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

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.

Failure to report relevant data may result in civil fines and/or penalties.

Physician Payments Sunshine Act

The Physician Payments Sunshine Act (Sunshine Act), as amended by the SUPPORT Act and its implementing regulations, requires certain applicable 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 the Centers for Medicare & Medicaid Services (CMS) information related to direct or indirect payments or other “transfers of value” made to physicians, certain non-physician practitioners, such as nurse practitioners and physician assistants, and teaching hospitals (“covered recipients”), as well as payments or other transfers of value provided to a third party on behalf of a covered recipient.

The Sunshine Act also 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 related payments or other “transfers of value.” Failure to report relevant data may result in civil fines and/or penalties.

Foreign Corrupt Practices Act

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The scope of the FCPA includes interactions with certain healthcare professionals in many countries.

Violation of the FCPA could result in substantial civil and criminal penalties and remedies, including fines, disgorgement, and/or imprisonment.

Violation of the FCPA could result in substantial civil and criminal penalties and remedies, including fines, disgorgement, debarment and/or imprisonment.

Analogous state laws

Analogous state fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to the business practices of pharmaceutical companies, including but not limited to research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors and are generally broad and are enforced by many different federal and state agencies as well as through private actions.

Analogous state fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to the business practices of pharmaceutical companies, including but not limited to research, distribution, sales or marketing arrangements as well as claims involving healthcare items or services reimbursed by non-governmental third-party payors, and are generally broad and are enforced by many different federal and state agencies as well as through private actions.

In addition to requiring reporting transfers of value, some states have imposed price reporting requirements.

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Many state laws govern the privacy and security of personal information in specified circumstances.

For example, the California Consumer Privacy Act (CCPA), which became effective on January 1, 2020, established a new legal framework governing covered businesses’ collection and use of personal information of California residents by, among other things, creating an expanded definition of covered personal information, establishing new privacy rights for California residents, imposing an opt-in standard for certain disclosures of personal information about minors, and creating a new and potentially severe statutory damages framework for businesses subject to certain data breaches resulting from the failure to implement and maintain reasonable security procedures and practices.

For example, the California Consumer Privacy Act (CCPA), which became effective on January 1, 2020, as further amended by the California Privacy Rights Act, along with corresponding regulations, established a new legal framework governing covered businesses’ collection and use of personal information of California residents by, among other things, creating an expanded definition of covered personal information, establishing new privacy rights for California residents, imposing an opt-in standard for certain disclosures of personal information about minors, and creating a new and potentially severe statutory damages framework for businesses subject to certain data breaches resulting from the failure to implement and maintain reasonable security procedures and practices.

While properly collected clinical trial data and all protected health information governed by HIPAA are exempt from the current version of the CCPA, other personal information may be applicable and possible changes to the CCPA may broaden its scope.

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Foreign drug development, review and approval processes

Regardless of whether a sponsor obtains FDA approval for a product, it must obtain approval by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries.

Regardless of whether a sponsor obtains FDA approval for a product, it must obtain approval by the comparable regulatory authorities of foreign countries before it can commence clinical trials or marketing of the product in those countries.

The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.

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Member States.

This authorization is a marketing authorization approval.

This authorization is referred to as a marketing authorization approval.

The decentralized procedure provides for mutual recognition of national approval decisions.

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Foreign fraud and abuse laws and other regulatory matters

Outside the U.S., companies are subject to similar regulations in those countries where we market and sell products, including with respect to transparency, bribery and other laws mentioned above.

Outside the U.S., companies are subject to similar regulations, including with respect to transparency, bribery and other laws mentioned above.

In some foreign countries, including major markets in the E.U.

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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.

To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product to other available therapies, which can be costly and time-consuming.

To obtain reimbursement or pricing approval in some countries, companies may be required to conduct a clinical trial that compares the cost-effectiveness of their product to other available therapies, which can be costly and time-consuming.

The collection and processing of personal data in the E.U.

is governed by the General Data Protection Regulation (GDPR), which became applicable in May 2018.

The GDPR applies to personal data processing carried out by a controller or processor (i) located within the E.U.

or (ii) targeting E.U.

individuals regardless of controller or processor’s location.

The 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, shortened 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.

The GDPR applies to personal data processing carried out by a controller or processor (i) established in the E.U.

or (ii) offering goods or services to E.U.

individuals, or monitoring their behavior within the E.U., regardless of the controller’s or processor’s location.

The GDPR implements stringent operational requirements for controllers and processors of personal data, including, for example, the implementation of transparent information for data subjects regarding the processing of their personal data, appropriate legal basis for the processing of personal data, which may include the obtaining of valid consent in certain circumstances, expanded individual data subject rights, limitations on retention of personal data, increased requirements pertaining to data security and confidentiality, mandatory data breach notification to the competent supervisory authority and higher standards for controllers and processors to demonstrate their compliance with

the GDPR through appropriate documentation.

The GDPR provides that E.U.

Member States may supplement the GDPR with their own additional laws and regulations in relation to the personal data processing, in particular regarding sensitive personal data (e.g., genetic, biometric or health data), which could result in differences between E.U.

Member States, limit our ability to collect, use and share such personal data or cause our costs to increase, and harm our reputation, business and financial condition.

Member States may supplement the GDPR with their own additional laws and regulations in relation to certain processing of personal data, in particular regarding sensitive personal data (e.g., genetic, biometric or health data), which could result in differences between E.U.

Member States, limit a company’s ability to collect, use and share such personal data or cause their costs to increase, and harm their reputation, business and financial condition.

Further, the U.K.’s exit from the E.U., often referred to as Brexit, has created uncertainty with regard to applicable data protection regulation in the U.K.

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data protection provisions further to Brexit.

We are also subject to evolving and strict rules on the transfer of personal data out of the E.U., in particular to the U.S.

Failure to comply with the GDPR results in fines of up to the higher of €20,000,000 or 4% of total worldwide annual revenue of the preceding financial year, and other administrative penalties.

Companies are also subject to evolving and strict rules on the transfer of personal data out of the E.U., in particular to the U.S.

Failure to comply with the GDPR may result in fines of up to the higher of €20,000,000 or 4% of total worldwide annual revenue of the preceding financial year, and other administrative penalties.

Pharmaceutical Coverage, Pricing and Reimbursement and Healthcare Reform

13 unchanged sentences

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;

• added 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;

• expanded the 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 the types of entities eligible for the 340B drug discount program;

9 unchanged sentences

These changes include the Budget Control Act of 2011, which, among other things, included aggregate reductions of Medicare payments to providers that started in 2013 and will stay in effect through 2032 unless additional congressional action is taken.

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.

More recently, in March 2021, President Biden signed into law the American Rescue Plan Act of 2021, which, beginning January 1, 2024, eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs.

Additionally, in December 2020, CMS issued a final rule that materially modifies current MDRP regulations by, among other things, broadening the definitions of what constitutes a “line extension.” A “line extension” drug may be subject to a higher Medicaid rebate, and broadening this definition is likely to subject a greater number of drugs to the higher rebate.

These new definitions became effective on January 1, 2022.

In September 2024, CMS issued a final rule that implemented regulations to, among other things, reflect the removal of the rebate cap in accordance with the American Rescue Plan Act of 2021.

Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law.

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;

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap, with the first drug price negotiations effective January 1, 2026;

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).

and replaces the Medicare Part D coverage gap discount program with a new discounting program beginning January 1, 2025.

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

On March 15, 2023 and June 30, 2023, HHS issued guidance regarding implementation of the Medicare drug price negotiation program in initial price applicability year 2026.

HHS stated it would provide additional information in the future related to implementation for initial price applicability years 2027 and beyond.

More recently, in October 2024, HHS released guidance related to implementation for initial price applicability year 2027.

In August 2024, CMS announced prices for the first ten drugs under the drug price negotiation program, with the new prices going into effect in 2026, and is expected to announce the next fifteen drugs to be selected for the second round of negotiations by February 1, 2025.

Several manufacturers and industry groups have challenged the drug price negotiation program for Medicare Parts B and D in federal court.

These lawsuits are ongoing, and additional lawsuits may be filed in the future related to provisions of the IRA.

It is unknown whether such litigation or other litigation, if brought, will be successful.

It is unknown whether such litigation or other litigation, if brought, will be successful, or whether there will be future changes to the IRA.

Moreover, the recent change in presidential administrations in the U.S.

may introduce additional unpredictability regarding the future of the IRA.

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.

12 unchanged sentences

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.

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 and additional downward pressure on the price for any approved product and/or the level of reimbursement physicians receive for administering any approved product.

Reductions in reimbursement levels may negatively impact the prices we can charge or the frequency with which products are prescribed or administered.

28 unchanged sentences

Our code of business conduct and ethics, other corporate policies and procedures, and the charters of our Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee are available at our corporate website at www.vandapharma.com.

To access these documents from the main page of our website, click on “Investor” at the top of the page, then click on “Learn More” under “Corporate Governance” and then click on the desired document.

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.

To access these documents from the main page of our website, click on “Investors” at the top of the page, then click on “Learn More” under “Corporate Governance” and then click on the desired document.

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.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business