Vanda bats away unwanted Cycle, Future Pak takeover bids

Vanda Pharmaceuticals' board is unimpressed with takeover offers from both Cycle Pharma and Future Pak, saying they both “substantially undervalue” the company.

In a statement, the Nasdaq-listed company said that both offers are “opportunistic attempts to purchase the company’s shares at a discount to Vanda’s intrinsic value,” adding that it has confidence in its “robust revenue, strong cash position, and efficient operations.”

US contract manufacturing organisation (CMO) Future Pak was the first of the would-be acquirers to break cover, making an initial cash offer of up to $7.75 per share that was later raised to $8.50-$9.00 per share plus contingent value right (CVR) payments tied to sales levels of Vanda’s antipsychotic drug Fanapt (iloperidone).

The company suggested the CVR could be worth $260 million to Vanda shareholders - up to $4.37 per share – but Vanda said this was “speculative […] given the uncertainty surrounding the achievement of the commercial milestones under [Future Pak’s] management.”

UK-based Cycle Pharma made its play earlier this month with an $8.00 per share cash bid that it said valued Vanda at around $466 million, hoping to convince the company that it made more sense to combine their respective product line-ups, commercial operations, and pipeline.

This marks the third time that Vanda has rejected a buyout offer from Future Pak, having already adopted a ‘poison pill’ strategy in the form of a shareholder rights plan to fend off its advances, and the first time it has rebuffed Cycle Pharma.

Vanda’s revenues have been under pressure of late, but the company seems poised for an uptick in its fortunes after a key approval for Fanapt in bipolar I disorder, adding to its 2009 okay in schizophrenia, and the planned launch later this year of Ponvory (ponesimod) for relapsing forms of multiple sclerosis.

The company acquired Ponvory from Johnson & Johnson last year and has an R&D pipeline that includes tradipitant, currently under FDA review for delayed gastric emptying (gastroparesis) and in phase 3 for motion sickness, and Fanapt follow-up milsaperdone, which is due to be filed for schizophrenia and bipolar disorder early next year.

Cycle Pharma, meanwhile, has six marketed products and a pipeline headed by oral CDK2/9 inhibitor fadraciclib in phase 2 for solid tumours and lymphoma.

Vanda was founded in 2003 by its current chief executive, Mihael Polymeropoulos, and listed on the Nasdaq in 2015. Shares slid around 4% after the announcement it was rejecting the takeover bids and were trading at just over $6 at the time of writing.