Cycle Pharmaceuticals Ltd.

In Monday's deal, Vanda Pharmaceutical Inc categorically rejected a second takeover proposal from Britain's Cycle Pharmaceuticals that valued the company at $8 per share. Vanda Pharmaceutical is sticking to its position despite a significant drop in its stock price following the US Food and Drug Administration's (FDA) refusal to approve its drug for a stomach ailment. In a formal statement, Vanda Pharmaceutical pointed out that Cycle Pharma's proposed acquisition terms are economically identical to the previous proposal that was evaluated and rejected by Vanda Pharmaceutical. This means that Cycle Pharma's latest offer did not convince Vanda Pharmaceutical's board. Cycle Pharma's $8 per share offer represents an 80% premium to Vanda Pharmaceutical's most recent closing price, valuing the company at $488 million. However, Vanda Pharmaceutical's Board of Directors believes that this valuation significantly undervalues the true value of the Company and is not in the best interests of the Company and its shareholders. Earlier, the FDA refused to approve Vanda Pharmaceutical's stomach disease drug, and the news sent shares of Vanda Pharmaceutical down 4.5%. In June, Vanda Pharmaceutical had already rejected Cycle Pharma's initial offer, as well as a revised offer from contract manufacturer Future Pak. To reduce the risk of a hostile takeover, Vanda Pharmaceutical adopted a shareholder rights plan, commonly known as a "poison pill," in April. Vanda Pharmaceutical has three approved products: Hetlioz for sleep disorders, Fanapt for bipolar I disorder and Ponvory for multiple sclerosis. After carefully reviewing Cycle Pharma's second proposal, Vanda Pharmaceutical's Board of Directors unanimously concluded that the proposal did not adequately reflect the value of Vanda Pharmaceutical and decided not to pursue the proposal. In a statement, Cycle Pharma said it remains willing to work with Vanda Pharmaceutical's board of directors and management team to reach an agreement that provides a compelling premium and some cash value to all of Vanda Pharmaceutical's shareholders. After Vanda Pharmaceutical rejected the takeover proposal, its shares rose 11.37 percent to $4.95 per share in trading on Monday. This increase in the share price reflects the market's positive reaction to Vanda Pharmaceutical's rejection of the acquisition proposal, as well as confidence in the company's future prospects.

iStock, Atstock Productions Cycle’s second unsuccessful takeover bid comes on the heels of the FDA denying approval for Vanda’s tradipitant, which was being proposed for the treatment of gastroparesis. Vanda Pharmaceuticals on Monday announced that it has rejected a second unsolicited and non-binding takeover proposal from Cycle Pharmaceuticals. The proposed buyout price of $8.00 per share “substantially undervalues Vanda and is not in the best interests of the company and its stockholders,” according to Monday’s announcement. Vanda’s board of directors called the latest takeover attempt from Cycle an “opportunistic attempt to purchase the company’s shares at a discount to Vanda’s intrinsic value.” Vanda’s leadership said it remains “confident” in the company’s growth—driven by a strong cash position and efficient operations—which puts the biopharma in a good position to deliver long-term value “far in excess” of Cycle’s offer. There is no action required for stockholders at this time, according to the announcement. Cycle in its press release on the offer encouraged Vanda shareholders to express their support for the proposal, insisting that the $8.00-per-share price tag “represents [an] 80% premium to Vanda’s share price at the close of business on October 11, 2024.” At this purchase price, Cycle’s offer amounted to a fully diluted equity value of $488 million. Cycle’s latest takeover bid, which it filed on Sept. 23, comes just days after the FDA rejected Vanda’s drug application for the investigational NK-1R antagonist tradipitant, which it was proposing for the treatment of gastroparesis. While some analysts have called the rejection “unsurprising”—given a failed Phase III trial and amid unaddressed prior concerns from the FDA—Vanda has continued to strongly stand by its drug candidate, even going so far as to challenge the regulator’s verdict. The biopharma blasted what it called the “delayed” verdict of the FDA, claiming the regulator “fails to satisfy the requirements specified by the Food Drug and Cosmetic Act (FDCA).” Despite the rejection, Vanda will continue to seek approval for tradipitant and sustain its expanded access program. Cycle previously attempted to acquire Vanda in June 2024, for which it similarly offered $8.00 per share. At the time, the proposal reflected a 63% premium to Vanda’s closing price on May 23, 2024, the day before the offer was submitted. Vanda was also locked in a regulatory row with the FDA when it received Cylce’s first offer—this time over its oral drug Hetlioz (tasimelteon), which the agency rejected for the treatment of insomnia. As in the case of tradipitant, Vanda slammed the FDA’s rejection insisting that it was late in releasing its verdict in violation of the FDCA.

Pictured: Businessman rejecting an offer/iStock, Atstock Productions Vanda Pharmaceuticals on Thursday announced that its board of directors rejected unsolicited takeover offers from Cycle Pharmaceuticals and Future Pak. After a lengthy and careful review, as well as a consultation with independent financial and legal advisors, Vanda’s board has found that both proposals “substantially undervalue” the biotech and “are not in the best interests of the Company and its shareholders,” according to the announcement. Vanda said its board considered the business in its entirety, including the development pipeline and growing commercial presence. The board also looked at the company’s ledger, particularly its “significant cash balance” and “robust revenue.” Taken together, the board’s review found that Vanda is well-positioned for “significant long-term growth” as well as for creating strong value “far in excess” of the acquisition offers. “The proposals are opportunistic attempts to purchase the company’s shares at a discount to Vanda’s intrinsic value,” the biotech said. The recent scramble to take over Vanda started in March 2024, when Future Pak made several unsolicited proposals to acquire the Washington-based biotech for $7.25 to $7.75 per share. Vanda rejected the offer in April 2024, with its board unanimously agreeing that the offer undervalues the company. Future Pak made its latest bid in May 2024, offering $7.25 to $7.75 per share plus certain contingent value rights. Trying to outbid Future Pak, Cycle also proposed buying Vanda for $8 per share last month, an offer that Cycle at the time claimed “delivers immediate, compelling and certain cash value” for Vanda “with a highly attractive premium.” Cycle’s acquisition proposal was for a total cash consideration of $466 million. In rejecting these offers, Vanda cited its strong market position and potential for growth. However, the biotech is currently embroiled in a regulatory row with the FDA, which in February 2024 turned down Vanda’s application for Hetlioz (tasimelteon) to treat patients with insomnia, as characterized by having a hard time initiating sleep. Vanda claimed that the FDA cited no deficiencies with its application, blasting the regulator’s decision to deny its application as a “part of an ongoing violation of the Federal Food, Drug, and Cosmetic Act (FDCA).” Under the FDCA, the FDA is required to give companies an opportunity for a hearing within 180 days after filing an application. Vanda’s application for Hetlioz was filed on May 4, 2023, meaning that it should have been given the chance to petition for hearing by October 2023. Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.