Shares of Rockville-based Vanda Pharmaceuticals Inc. lost more than half their price in Monday morning trading after the company announced that its lead drug candidate had been rejected by the Food and Drug Administration.
Regulators said Vanda’s schizophrenia drug candidate, called iloperidone which it hoped to brand as Fanapta, was “not approvable” — a harsh blow to the company that its officials and some analysts have described as surprising and one that leaves Vanda scrambling to figure out its next steps.
In a letter to the body, the FDA acknowledged that Fanapta acted similarly to another schizophrenia drug on the market, ziprasidone, labeled as Geodon by Pfizer Inc., in a clinical trial the local company passed in December 2006, unit that had sent Vanda’s dullard price soaring at the time.
But the agency before-mentioned it wanted Vanda to conduct further clinical tests on how Fanapta compared by another schizophrenia drug being sold on pharmacy shelves, citing in particular risperidone, marketed during the time that Risperdal by Johnson & Johnson, and olanzapine, marketed as Zyprexa by Eli Lilly & Co. Inc.
By noon, shares of Vanda (NASDAQ: VNDA) had taken a roughly 66 percent dive, losing $2.21 to settle at $1.13 severally.
Vanda officials said the FDA also asked the company to conduct any other safeness consider attentively on Fanapta to better gauge its long-term effects forward patients infectious doses of 20 to 24 milligrams a day. The company said it plans to confront with the FDA in the coming weeks to get more explanation, especially since company leaders and analysts said Geodon didn’t require a similar benchmark with another rival drug to win approval seven years ago.
“We’re very surprised by this decision,” related Mihael Polymeropoulos, chief executive of Vanda, in an algebraist conference call Monday morning to elaborate on the news. “There are numerous company things we have to discuss with the agency that were not to our understanding from prior discussions.”
He said the FDA’s call for more studies “is a bit inconsistent with the in-writing communication to us,” and could drag out Vanda’s chances for reaching the market. A comparative study with a marketed schizophrenia drug could take another year and a half, while another safety study could last up to two greater degree years, Polymeropoulos said.
“We have already conducted a study versus placebo and an active comparator,” or competitive drug, he said. “We do not understand why they would want us to reckon up another study with a different drug … to establish again the efficacy of iloperidone. … This is the intellect we want to happen upon with the direction and understand what they’re saying and why they’re asking that.”
And both studies will ramp up costs for the company at a time when observers aren’t sure it has enough in the bank to pass into next year. Vanda reported $65.6 million in money on hand as of Monday morning. In its ultimate clinical trial to standard Fanapta’s effectiveness fronting Geodon, Vanda spent upwards of $35 million.
While Polymeropoulos said he couldn’t talk about anticipated cash burn for the remainder of the year — a likely hot topic of discussion at the company’sitting earnings notice next week — he confirmed that the company didn’t have plenty cash to conduct the additional studies required by the agency of the FDA.
“If this drug cannot be approved, the survival of this company is in doubt,” said Maggie Liu, an equity analyst with Argus Research Co., which doesn’t own Vanda shares. “What truly happens to the company depends on the company’s conduct team.”
Indeed, that foliage fundraising options for Vanda slim, as it continues its delayed search for well-heeled partners to help fund its development or considers selling other product lines. Vanda, which has now put its Fanapta pipeline on hold, had pulled back on a $100 the great body of the people due offering after its absolute spectacle sent its stock price plunging last close.
And with this news from the FDA, Vanda could face a tougher time negotiating notwithstanding beneficial conditions in a partnership or selling stock for more money, analysts said. Except for its long-term lease to its 27,000-square-foot headquarters on Medical Center Drive, which expires in 2016, Vanda officials said their other contracts are cancelable within 60 days.
“They only have coin for two more quarters, so how long have power to they last is a different lump of matter,” Liu related, confirming that layoffs may be threatening harm. “This kind of negotiation with the FDA be able to be time-consuming. So as antidote to me, the immediate concern is the company’s solvency.”
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