Vanda Pharmaceuticals: Tomorrow's Headline Stock

After the close yesterday, the FDA announced the approval of Vanda's (VNDA) Fanapt, an anti psychotic drug for treatment of schizophrenia, sending share 800% higher in after hours trading, from $1 to $9.70.

Vanda (VNDA) shares were trading at 0.68x cash value, and I wish I had known the PDUFA data was 5/6 because the opportunity was glaring.

This is a potential giant market for Vanda if it can steal market share, and also makes Vanda a likely takeover target for large pharma. At more than a $15 billion market in 2007 and growing faster than many other markets, if Vanda can steal just 10% of this market, it makes for $1.5 billion in sales, and with 26.7 million shares outstanding, Vanda would price around $56, $28 if it takes just 5% of sales.

By 2012, 4 of the top 6 drugs lose patents, making room for generic competition, although if Vanda's drug can show less side effects, we could see it dominate the market.

Vanda is not a one hit wonder; it also has Tasimelteon in the pipeline for the treatment of sleep disorders. Vanda has 5 analysts covering it and I expect a multitude of upgrades to come. Shares were at $32.50 in early 2007 and I see no reason why shares cannot return to that level. Tang Capital recently called for liquidation of the company, and it will be interesting to see how that shakes out, as Tang can probably find a buyer for the firm now with a much higher value on a potential discounted cash flow basis.

You can also short some of the other names in sympathy, especially JNJ which is having issues with the FDA and its drug. Schering Plough (SGP) also has a drug in the pipeline, Saphris, and could see selling.

View of the market:

Disclosure: I own VNDA Shares

Comments

[raytayzmd:]

...one can only hope the Lord will have mercy on the ignorant...do your homework, son...ilioperidone is just a variant of respiridone, otherwise known as risperdal...risperdal has been around like 15 years and is already marketed as a generic...Hoechst Marion dumped ilioperidone onto Titan Pharmaceutical 13 years ago...Titan sold international rights to Novartis in 1998 and Novartis didn't do anything with it...Titan messed with it for a while but apparently realized what a waste of effort it was and sold it to VNDA in 2002...ostensibly, VNDA's chairman had some of genotype test that would allow him to identify patients on whom ilioperidone MIGHT work better...at one point there were several lawsuits being bounced around about the drug but I don't know whatever happened to those...if you want to know VNDA's real potential ask your family MD...tasimelteon???...... more than a variant of the currently available rozarem...the funny thing is that rozerem has never been shown to be any more safe OR effective than just taking plain old melatonin!...so VNDA successfully develops yet another drug that no one needs -- whoopee!...VNDA is nothing more than a stupid Wall Street trick that was probably never meant to do more than enrich some venture capitalists and company management at the expense of naieve investors.

May 07 05:19 PM

[Joe Kunkle:]

I expect the 2 Wall St Analysts uprading shares to Buy today did plenty of homework. Check back in a month.

May 07 11:15 PM

[raytayzmd:]

....you do?...brother, you've got no business giving investment advice.

On May 07 11:15 PM Joe Kunkle wrote:

> I expect the 2 Wall St Analysts uprading shares to Buy today did
> plenty of homework. Check back in a month.

May 08 12:56 AM

[Joe Kunkle:]

Seeing VNDA up another 25% today..hmmm..Good Job Ray! Stick to the Paper Money....


On May 08 12:56 AM raytayzmd wrote:

> ....you do?...brother, you've got no business giving investment advice.
>
>
> On May 07 11:15 PM Joe Kunkle wrote:

May 11 12:01 PM

[Hal:]

A lot of these drugs are sold "that no one needs." So....if they are sold there is money to be made. It's not the investor's job to pass moral judgments. His job is to make money investing.

May 13 06:32 PM