Cycle Pharma makes $466m takeover bid for Vanda

UK group Cycle Pharma has made an unsolicited takeover bid to buy Vanda Pharma of the US, which is already fending off an overture from Future Pak.

The $8-per-share offer values Nasdaq-listed Vanda at around $466 million and, according to Cycle, is a 98% premium to Vanda’s share price before Future Pak made a play for the company in April with an initial cash offer of up to $7.75 per share.

Vanda was unimpressed with contract manufacturing organisation (CMO) Future Pak’s bid, adopting a ‘poison pill’ strategy in the form of a shareholder rights plan to fend off its advances, and Future Pak came back to the table a few weeks later with a revised deal.

While the cash offer stayed the same, Future Pak added $260 million of potential contingent value right (CVR) payments tied to sales levels of Vanda’s antipsychotic drug Fanapt (iloperidone), which it said represented up to $4.37 per share in additional value for Vanda shareholders.

Cycle said its offer, which was made to Vanda’s board on 24th May and only just made public, represents “immediate and certain cash value for all Vanda shareholders.”

It added that it would also benefit patients, as it offers “a proven commercial strategy in the US, a strong distribution footprint, and an established track record of delivering medicines and individualised support to patients.”

Vanda issued a statement in response to the offer, saying it “will carefully review and evaluate the indication of interest to determine the course of action”, but will not comment any further until that process is completed.

In its first-quarter results update, Vanda reported sales of $47.5 million, which was a 5% gain on the last quarter of 2023, but a 24% drop from the year-earlier period and fell short of analyst estimates.

Much of the decline was down to the start of generic competition to its Hetlioz (tasimelteon) product for sleep disturbances, while Fanapt – still a key product for the company despite being launched more than a decade ago – fell 10%.

However, that was before a key approval for Fanapt in bipolar I disorder in April, which is expected to drive renewed sales momentum, as well as the planned launch later this year of Ponvory (ponesimod) – acquired from Johnson & Johnson last year – for relapsing forms of multiple sclerosis.

The potential sales revenue growth from those products is likely part of the interest in Vanda, along with the prospects for pipeline drugs. Those include tradipitant, which is under FDA review for delayed gastric emptying (gastroparesis) and in phase 3 for motion sickness, as well as Fanapt follow-up milsaperdone, which is due to be filed for schizophrenia and bipolar disorder early next year.

Cycle, meanwhile, has six marketed products, generating $420 million in revenues last year, and a pipeline that is headed by oral CDK2/9 inhibitor fadraciclib in phase 2 for solid tumours and lymphoma.

“While we would have preferred to reach an agreement privately, Cycle is publicly disclosing our proposal for the benefit of Vanda shareholders,” said the Cambridge, UK-headquartered company.