The FDA’s rejection of Vanda Pharmaceuticals’ stomach disease candidate has done little to dampen the enthusiasm of England’s Cycle Pharmaceuticals to acquire the Washington D.C.-based company.
On Monday, Vanda revealed that it has turned down a second $8-per-share takeover offer from Cycle, which works out to a $488 million deal to buy out the 18-year-old pharma company. In a release, Vanda said the offer came on September 23, five days after the FDA sent a complete response letter, swatting down its gastroparesis drug tradipitant.
When Vanda announced the FDA rejection last month, the share price of the company tumbled to $4.61. But the drugmaker still believes its intrinsic value is higher—even than $8 per share. It was the second time in four months that Vanda swatted away a takeover bid from Cycle, which specializes in rare diseases.
“Vanda’s board of directors carefully reviewed the second proposal and unanimously determined that it substantially undervalues Vanda and is not in the best interests of the company and its stockholders,” it said in a release.
Vanda also characterized Cycle’s bid as an “opportunistic attempt to purchase the company’s shares at a discount.”
With the revelation, Vanda’s share price increased by 10% on Monday to $4.88.
In its own release, Cycle urged Vanda stockholders to express their views on the proposal to Vanda's directors. After Cycle granted Vanda two extra weeks to review and respond to the proposal, Vanda held a meeting to “update its bylaws to further entrench the board," according to Cycle.
“Despite the significant value and highly attractive premium of our proposal, Vanda’s board and management team have refused to engage with us to discuss its merits and instead, have continued to prioritize their own interests and self-preservation with egregious actions that blatantly disenfranchise Vanda shareholders,” Cycle said.
Vanda has been a takeover target for a while. Earlier this year, the company rejected a buyout offer of between $7.25 and $7.75 per share from Michigan CDMO Future Pak.
The offers have come as Vanda has struggled throughout parts of 2024. In March, the FDA denied the company’s request to present its case in a hearing after the regulator rejected the company's bid to expand the label of its non-24 circadian rhythm disorder drug Hetlioz to treat those with jet lag disorder. Along with the revelation, Vanda said that the FDA had also turned down the company’s bid to gain approval for Hetlioz as a treatment for insomnia.
Vanda generated $192 million in 2023, a 24% decrease from the prior year as Hetlioz posted sharply lower sales thanks to U.S. generic competition. Seeking to regroup for a new phase of growth, Vanda acquired Ponvory, a former Johnson & Johnson multiple sclerosis drug, for $100 million.
The good news for Vanda came in April of this year when its schizophrenia stalwart Fanapt won an expanded label to treat bipolar I disorder.
On a year-to-date basis, Vanda's shares are trading up 7% to $4.84.