BOSTON & CAMBRIDGE, England - Cycle Pharmaceuticals Ltd, a company specializing in rare disease therapies, has made a public proposal to acquire all outstanding shares of Vanda (NASDAQ:VNDA) Pharmaceuticals Inc. (NASDAQ: VNDA) for $8.00 per share in cash. This offer represents an 80% premium over Vanda's closing share price on October 11, 2024.
The proposal, which amounts to a fully diluted equity value of $488 million, comes after Vanda's recent setback with the FDA's rejection of tradipitant, a drug that failed to meet its primary endpoint in a Phase 3 trial. Despite this, the board of Vanda has amended its bylaws, which Cycle claims further entrench the board and disenfranchise shareholders, particularly ahead of the upcoming annual meeting.
Cycle's CEO, James Harrison, has urged Vanda shareholders to express their views on the proposal to the independent directors of Vanda's board. The company has criticized Vanda's board for not acting in the best interests of its shareholders and for rejecting the proposal without engaging in discussions.
Cycle has substantial cash reserves and states that it will secure fully underwritten, binding commitment letters for any debt financing needed for the transaction, eliminating any financing contingency. The company has a track record of delivering medicines to patients with high unmet medical needs and achieved $109 million in net sales with a $40 million operating profit in 2023.
The acquisition offer is part of Cycle's reaffirmed interest, following a previous indication of interest that was rejected by Vanda. The proposal is non-binding and subject to certain pre-conditions, including due diligence and approvals.
The news is based on a press release statement from Cycle Pharmaceuticals.
In other recent news, Vanda Pharmaceuticals reported a net loss of $8.7 million for the first half of 2024, despite a 10% revenue increase in the second quarter compared to the previous year. The company provided revenue guidance for 2024 between $180 million and $210 million, and cash guidance between $360 million and $390 million. In a significant development, the FDA did not approve Vanda's New Drug Application for tradipitant, a proposed treatment for gastroparesis, requesting further research. However, Vanda remains committed to pursuing the drug's approval.
Vanda also highlighted the FDA approval of Fanapt for bipolar I disorder and the expansion of its commercial organization. The company is initiating a clinical program for major depression and developing a new drug application for milsaperidone. Furthermore, Vanda has amended its bylaws and shareholder rights agreement, introducing changes to provide a clearer framework for identifying potential significant interest acquisitions in the company. These are among the recent developments for Vanda Pharmaceuticals.
InvestingPro Insights
Cycle Pharmaceuticals' offer of $8.00 per share for Vanda Pharmaceuticals represents a significant premium over the company's current market valuation. According to InvestingPro data, Vanda's market cap stands at $258.81 million, substantially below the proposed $488 million acquisition value. This discrepancy highlights the potential value Cycle sees in Vanda's assets and pipeline.
InvestingPro Tips reveal that Vanda "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors could make the company an attractive acquisition target, as they suggest financial stability despite recent challenges. Additionally, Vanda boasts "impressive gross profit margins," with InvestingPro data showing a gross profit margin of 93.03% for the last twelve months as of Q2 2024. This high margin could be a key driver of Cycle's interest, as it indicates strong potential for profitability in Vanda's product portfolio.
However, it's worth noting that Vanda is "quickly burning through cash" and has not been profitable over the last twelve months, according to InvestingPro Tips. This may explain why Vanda's board has been resistant to acquisition offers, as they might believe the company's true value is not reflected in its current financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Vanda Pharmaceuticals, providing deeper insights into the company's financial health and prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.