Vanda Pharmaceuticals (VNDA) Reaches Settlement with Novartis AG

Shares of Vanda Pharmaceuticals Inc. (VNDA) were up +2.09 or +17.55 percent to $14.00 per share in premarket trading this morning, after the company announced yesterday after the close that it had reached an agreement with Novartis AG (NVS) in ongoing arbitration proceedings on licensing for Fanapt. Vanda Pharmaceuticals stock closed at $11.91 per share, down -0.34 or -2.78 in Monday's regular trading session.

Washington, D.C.
based Vanda Pharmaceuticals Inc. is a biopharmaceutical company that focuses on developing and commercializing clinical stage products for the treatment of central nervous system disorders. The company's products include Fanapt (Iloperidone), which is used in the treatment of acute schizophrenia in adult patients. In addition to Fanapt, the company is also developing Tasimelteon, a treatment for sleep and mood disorders.

In a statement issued late yesterday, Vanda disclosed the terms for the settlement agreement with Novartis AG related to arbitration proceedings involving Fanapt. The parties in the dispute both agreed to dismiss the ongoing arbitration and release each other from any claims related to the proceedings.

According to the settlement agreement, Novartis will transfer to Vanda all U.S. and Canadian franchise rights to Fanapt. Novartis will also grant Vanda an exclusive worldwide license to another treatment for schizophrenia, a phase II alpha-7 nicotinic acetylcholine receptor partial agonist known as AQW051. In addition, the settlement will have Novartis make a $25 million investment in Vanda stock at $13.82 per share.

Novartis had originally signed a licensing agreement with Vanda for Fanapt in October of 2009, agreeing to pay $200 million upfront with additional payments of up to $265 million after the achievement of certain milestones.

In July of 2014, Vanda filed for an arbitration proceeding against Novartis seeking an award of $539 million. Novartis subsequently filed a counter-claim. Novartis never achieved significant sales for the drug.

Mihael H. Polymeropoulos MD, President and Chief Executive Officer of Vanda said in a statement that, "We are happy to have reached agreement with Novartis to settle our dispute, allowing us to focus on developing therapeutic solutions for our patients. The addition of the U.S. and Canadian rights for Fanapt to our commercial portfolio, which includes Hetlioz for the treatment of Non24, has the potential to be transformational for our company".

Fanapt currently has regulatory approval for the treatment of schizophrenia in adults in the United States and Canada through two key patents. The two patents include an NCE (new chemical entity) patent which will expire in 2016, and a method of treatment patent that expires in 2027.

While Fanapt is also approved and marketed in Mexico and Israel, in 2012, the European Medicines Agency's Committee for Medicinal Product for Human Use recommended against the approval of Fanaptum for the treatment of schizophrenia in the European Union.

Vanda Pharmaceutical stock will open in the middle of its yearly range, having made a high of $19.25 per share back in April. The company is optimistic about regaining the rights to one of its premier treatments and investors are giving their approval for the settlement, which is reflected in this morning's price action.

Other News About VNDA
Vanda Pharmaceuticals Inc. Prices Public Offering of Common Stock
Company sold 5 million shares at $11.80 per share in October.
Vanda Files Form 8K for Change in Directors or Principal Officers
Company discloses bonuses for principal officers.

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Published on Dec 23, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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