Vanda has two attractive Phase III assets that address large market opportunities: VEC-162 for insomnia ($3.3 billion market) and Iloperidone for schizophrenia and bipolar ($8.7 billion market). They see Vanda as a 'problem solver' for many of the larger pharma companies that are losing patent protection on their respective CNS (central nervous system) drugs in the early part of the next decade.
Vanda is uniquely positioned with two late-stage CNS assets that possess the characteristics larger pharma companies want: 1) differentiated profiles; 2) the ability to treat several illnesses; and, 3) solid patent protection (beyond 2015). In firm's base case scenario, their 12-18 month price target is $29, which assumes the company will sign a partnership for VEC-162. Their work shows that licensees have returned an average 45% six months after a deal was announced.
MSCO thinks the frustration among investors that a deal hasn't happened yet is misplaced. The stock now reflects if any sort of deal will get done, not when. Thus, they think the downside risk is favorable.
Notablecalls: Given its relatively strong wording, I think the call will generate some buy interest in VNDA today and over the next couple of weeks.
VNDA 1-yr chart: