Vanda Snaps Up Victory from the Jaws of Defeat

Wednesday, Vanda Pharmaceuticals (VNDA) had a market value of $28 million. That's way too small to mention on CNBC, here on the blog or even on Twitter.

But exceptions can be made when a company, even one that little, has real news.

Out of nowhere late Wednesday the FDA approved VNDA's schizophrenia drug with the funky name Fanapt. I've gotta hand it to Adam Feuerstein at TheStreet.com on this one. He summarized the shock and awe of the situation when he wrote, "Hell froze over Wednesday night, right before a squadron of flying pigs took to the sky." Nice write, dude.

Vanda's M-O is to take other drug companies' trash in hopes of turning it into treasure. But the business model wasn't working out so well. The FDA had given Vanda what's called a "non-approvable" letter. That almost always means the drug is pretty much dead in the water. One major investor was pushing the company to fuggedaboutit.

VNDA became a penny stock.

I had once covered the company for awhile a couple or three years ago when it looked like it had something going on. We even had the CEO on live once or twice when I had to rehearse his name, Mihael Polymeropoulos, over and over and over to make sure I didn't mess it up on TV.

In this case, drug giant Novartis (NVS) used to own the Fanapt, but unloaded it. NVS will still get a royalty on sales, but in an exclusive interview on CNBC's "Squawk on the Street" Thursday morning, I asked the Swiss drugmaker's Chairman and CEO, Dr. Daniel Vasella (yes, he's an M.D. who specialized in psychosomatic illness), if he had seller's regret.

Is this a one-off or, to use an overworked term these days, a green shoot sprouting at the previously very stingy FDA? Natixis Bleichroeder analyst Corey Davis is one of the few analysts who was still covering the left-for-dead company. He writes in a research note to clients, "In one of the most surprising moves we've seen out of the FDA this year, the agency did a complete about face on Vanda's (Fanapt) and gave it outright approval. Perhaps the presence of a new commissioner is already having an effect." Davis, by the way, has to be a happy camper because he owns VNDA shares. And his firm makes a market in the stock.

I think it's too early to call this the dawn of a new day at the FDA. But when hell freezes over and pigs fly, who knows?

Comments

[174460:]

It's a big mistake to assume that large pharmaceutical companies have a lock on the ability to get drugs approved by FDA or that FDA has somehow become more difficult. It just isn't my experience and I have gotten a number of drugs approved over the years; some for small companies and some for large companies. There are a few groups of people who know how to get new drugs approved and they often move from company to company and the approvals follow them. Think the FDA is harder now? Think again. If you check the FDA website, you will see that most of the guidelines that control drug approval policies have remained essentially unchanged for years or decades. By and large it's the companies that have changed. Many have simply lost the ability to fulfill FDA requirements. Remember, the FDA can't refute criticism from companies, it bound by legal confidentiality requirements. So, its easy for companies to blame them. However, it is my experience that the FDA reviewers want to approve new drugs, especially important ones that help patients. BUT, they have to follow the laws, regulations and guidelines. If companies follow these, they are generally successful. If then don't, they get non-approvable letters. If Novartis had a "niche" product, it would make sense to out-license it and use their own expertise on bigger things. In this case, it seems like their strategy worked although belatedly. My guess is that the original, non-approvable letter was based on some really silly mistake by the company that was rectified by someone more knowledgeable about the drug approval process. I've seen this happen many times.

Disclosure, small position in NVS.

May 08 08:15 AM

[raytayzmd:]

...if risperdal has approval then ilioperidone should have approval as well since they basically are identical...does that mean VNDA is worth a dime -- no......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 ilioperidones's real potential ask your family MD...VNDA is also wasting time and money on tasimelteon -- which is nothing 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 might 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 08 09:31 AM

[jerph:]

Your family MD prescribing antipsycotics on a routine basis ... I hope not and as was mentioned in the VNDA conference call the antipsychotic prescirbers are very concentrated. The cardiac side effects which initially sidelined and delayed iloperidone have now been proven to be a "class" effect for atypicals. Do your homeworkl. This drug has a place as does Geodon and others. They ALL have serious problems but that is the clinical nature of treating the disease currently. Instead of investigating VNDA someone might want to look into why the FDA denied this to patients and health care professionals last year.


On May 08 09:31 AM raytayzmd wrote:

> ...if risperdal has approval then ilioperidone should have approval
> as well since they basically are identical...does that mean VNDA
> is worth a dime -- no......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 ilioperidones's
> real potential ask your family MD...VNDA is also wasting time and
> money on tasimelteon -- which is nothing 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 might 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 08 06:34 PM

[raytayzmd:]

...response to "jerph"...your family M.D. may or may not prescribe anti-psychotics -- certainly, if Janssen had their way, he or she would use it to treat everything from dandruff to hemorrhoids...neverthe... they are capable of providing an reasonably informed opinion...as I said, if risperdal is aprroved then iloperidone should have been approved as well since they are basically the same...that said, the fact is that several studies have shown that second generation anti-psychotics don't improve quality of life any more than first generation ones...studies have demonstrated that second generation drugs are less cost-effective than first generation drugs...in fact, the primary determinant of effectiveness in both classes is patient compliance...and that typically is very poor with less than 25% maintaining their regimen as prescribed...in other words, billions and billions of dollars have been spent with the net effect of zero progress...VNDA continues this fine tradition by seeking to market two drugs -- iloperidone and tasimelteon -- that are neither needed nor wanted...and why do they do this?...for no other purpose than to line the pockets of venture fund capitalists and the company's management at the expense of a naieve public....

May 09 11:50 AM