Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) yesterday announced that the US Food and Drug Administration (FDA) had granted marketing approval following its Phase III clinical study of Fanapt™ (iloperidone). Tang Capital Partners has ended its proxy contest by withdrawing its nominations of director candidates for election to VNDA’s Board of Directors and its stockholder proposal to liquidate VNDA. We are closing our position too. The stock ran 900% on the announcement to $10.00 in after-hours trade and closed yesterday at $7.84. We opened the position on March 12, 2009 at $0.78, so we’re up 905.1% on an absolute basis. The S&P500 Index closed at 721.36 on the same day, and closed yesterday at 907.39, which means we’re up 881.7% on a relative basis.
We started following VNDA (see our post archive here) because it was trading below its net cash value and Tang Capital Partners (TCP) had called for the company to “cease operations immediately, liquidate [VNDA]’s assets and distribute all remaining capital to the Stockholders.” TCP had filed a preliminary proxy statement for the 2009 Annual Meeting urging stockholders to support TCP’s slate of two director nominees, Kevin C. Tang and Andrew D. Levin, M.D., Ph.D. We estimated VNDA’s net cash value to be around $38.6M or $1.45 per share, and believed that the investment turned on TCP’s ability to get control of the board at the Annual Meeting. It seems we were wrong about that. The big run up in the stock occurred because the FDA granted marketing approval of Fanapt™, which demonstrates one of the great things about investing in liquidation plays: good surprises. We generally ascribe zero value to the intangibles, because more often than not, that’s what they’re worth. Very occassionaly, however, the intangibles are worth something, and purchasers below liquidation value have a free option on them. We’re not going to pretend that we thought it was a real possibility in this instance. As Lefty Gomez liked to say, “I’d rather be lucky than good.”
Here’s the text of the announcement of the FDA approval:
FDA Approves Vanda Pharmaceuticals’ Fanapt for the Treatment of Schizophrenia
Rockville, MD. (May 6, 2009)— Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) announced today that the US Food and Drug Administration (FDA) has granted marketing approval of Fanapt™ (iloperidone) for the acute treatment of adult patients with schizophrenia. The approval was supported by two placebo-controlled Phase III clinical studies comparing Fanapt™ to placebo and active control in patients with schizophrenia, as well as safety data from more than 3,000 patients.
Fanapt™ is a mixed dopamine D2 / serotonin 5HT2A receptor antagonist, and belongs to the class of atypical antipsychotics.
“The approval of Fanapt™ marks a new opportunity for many patients with schizophrenia, who experience only partial responses to current therapies, to achieve better control of their symptoms,” remarked Dr. Peter J. Weiden, Professor of Psychiatry and Director of the Psychotic Disorders Program at the University of Illinois at Chicago. “Having Fanapt™ available is a major help for our patients in offering an effective antipsychotic with an excellent side effect profile across a wide range of major tolerability problems associated with other antipsychotic therapies.”
The efficacy of Fanapt™ for the treatment of schizophrenia was supported by two placebo-controlled short-term (4- and 6-week) trials. Both trials enrolled patients who met the DSM-III/IV criteria for schizophrenia, and Fanapt™ was shown to be superior to placebo in controlling symptoms of schizophrenia across doses of 12mg to 24mg per day. The recommended target dose range of Fanapt™ is 12mg to 24 mg per day. Titration to the target dose of 12mg per day can be achieved in 4 days.
Vanda plans to make Fanapt™ available in pharmacies later this year.
–snip–
And TCP’s withdrawal of its director nominees:
Vanda Pharmaceuticals Announces Withdrawal of Director Nominees and Proposal to Liquidate Submitted by Tang Capital
Rockville, MD. (May 7, 2009) — Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) (“Vanda” or the “Company”) announced today that Tang Capital Partners, LP (“TCP”) has ended its proxy contest by withdrawing its nominations of director candidates for election to Vanda’s Board of Directors and its stockholder proposal to liquidate the Company. TCP had previously notified the Company of its intention to solicit proxies for the election of two of its candidates to the Vanda Board at the Company’s 2009 Annual Meeting and for its proposal that the Board take action to liquidate the Company.
Kevin Tang, the managing director of the general partner of TCP, notified Vanda of TCP’s intention not to pursue a proxy contest on May 6, 2009 in an email to Vanda’s Chief Executive Officer, Mihael H. Polymeropoulos, M.D. and Chairman of the Board, Argeris N. Karabelas, Ph.D. TCP’s withdrawal of its nominations and stockholder proposal follows Vanda’s announcement that the U.S. Food & Drug Administration had granted marketing approval of its product, Fanapt™ (iloperidone), for the acute treatment of adult patients with schizophrenia.
[Full Disclosure: We do not have a holding in VNDA. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]
@Potax
It was “lucky” in the fact that it increased in value to the point in which it did, it WASN’T “luck” in the fact that it was worth more than what it had been trading for. I exited at $9.80. Congratulations to Greenbackd as well.
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lol what a gain in 1 day!!!
however I would avoid biotech and mining stocks because they want to spend all the cash they have for a “discovery” and don’t care much of the company’s survival and stockholders… i believe VNDA was only a lucky bet…
however congrats!
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No disagreements from us, Potax.
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