Cycle Makes $466M Unsolicited Offer to Vanda Amid FDA Dispute

Vanda Pharmaceuticals confirmed receiving an unsolicited, non-binding takeover offer from Cycle Pharmaceuticals, proposing $8 per share. This offer price is notable because Vanda’s stock has not reached this level since January 2023. Cycle’s per-share offer represents a substantial 63% premium to Vanda’s closing price on May 23, 2024, and a 58% premium to the biotech’s share price on the preceding Wednesday. The offer values the total deal at $466 million in cash.

Cycle emphasized that its offer provides immediate and compelling cash value for Vanda shareholders with a highly attractive premium. Moreover, the company asserted that the acquisition would benefit patients due to Cycle’s proven commercial strategy in the U.S., a strong distribution network, and a solid track record of delivering medicines and individualized support.

This offer surpasses a revised takeover bid from Future Pak, which was filed in May 2024. Future Pak’s proposal was valued between $7.25 and $7.75 per share, plus certain contingent value rights (CVR). Vanda had previously rejected an initial offer from Future Pak that proposed a similar per-share price range without the CVR.

Vanda’s board of directors will carefully review Cycle’s offer and decide on the appropriate course of action. For now, the company has not disclosed further details about the offer or its interest in the proposal, advising shareholders that they currently do not need to take any action.

This takeover offer comes amid Vanda’s ongoing regulatory issues with the FDA. In February 2024, the agency denied approval of Vanda’s supplemental New Drug Application (sNDA) for using its oral drug Hetlioz (tasimelteon) to treat insomnia characterized by difficulty with sleep initiation. Vanda noted that the FDA did not disclose any deficiencies in its notification. The company criticized the regulator’s rejection, asserting that it believes the timing of the FDA’s communication is part of an ongoing violation of the Federal Food Drug, and Cosmetic Act (FDCA). The act mandates that the regulator must either approve a new drug application or offer a hearing within 180 days after the filing.

Vanda filed its sNDA on May 4, 2023, making the FDA’s deadline October 31, 2023. According to Vanda, the FDA failed to comply with the statute by neither approving the application nor providing a hearing opportunity within the required timeframe.

In an unusual move, the FDA released documentation on a Friday detailing its reasons for rejecting Hetlioz and offering Vanda an option to seek a hearing. The FDA stated that Vanda’s application lacked substantial evidence of effectiveness for tasimelteon and did not demonstrate the drug’s safety for treating insomnia.

This regulatory challenge comes during a significant moment for Vanda as it considers the takeover proposal from Cycle Pharmaceuticals, which could greatly affect its future operations and strategies. The offer and the ongoing issues with the FDA will likely play crucial roles in shaping Vanda’s next steps and overall direction.

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