Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Targets Upside on an FDA Nod for Fanapt


Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) could pick up some upside this week if the agency approves its lead schizophrenia candidate. Here’s why.

The coming week is set to be a big one in the development stage biotech space, with a number of companies scheduled to report what could be game changing data. The FDA is also sets to rule on a couple of long-standing development stage candidates, one of which is Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) lead schizophrenia candidates, Fanapt.  The drug is already approved in a host of other indications, and the company submitted a supplemental new drug application (SNDA) at the end of 2015 for this extension. So, what might the FDA ruling mean for Vanda,  and in turn, its shareholders, as the news hits press? Let’s take a look.

First, a look at the drug in question. Fanapt is what’s called a monoamine, and it’s an antagonist of a host of receptors – specifically, dopamine and serotonin receptors in the CNS. It differs from the current standard of care in that it activates the latter – serotonin – as opposed to just the former – dopamine. This – in turn – translates to not just an increased efficacy, but also a reduction in the standard associated side effects, and perhaps even more importantly, it aids an aversion to addiction.

Safety and tolerability shouldn’t be a problem, so the ruling will come down to efficacy. The data on which the supplemental NDA is based looked positive, and we expect the agency to give Fanapt a green light before the week draws to a close.

So what’s the potential upside on an agency nod? Vanda has a market capitalization of just shy of $406 million as things stand, and currently trades just shy of $10 a share – midrange on its 52-week range of an upside $14 a share and a downside $6 a share.  With it being a development stage prospect, the upside on approval looks to be  mid double digits – perhaps as high as 40-60%.  Concurrently, downside comes in at a similar scale if the agency declines the application.

PDUFA is scheduled for April 27, so keep an eye on premarket releases to get ahead of the market on the announcement.


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