Vanda Pharmaceuticals, Inc. (VNDA)

[moneytalksbswalks]

Interesting post from yahoo.
There is no mention of where this was published, if it was at all. Some very good points made in this post.

Here it is:


Within six months, Vanda Pharmaceuticals VNDA will face an approval decision for lead drug candidate Iloperidone, a treatment for schizophrenia. While we're sticking with our fair value estimate for now, we'll almost certainly adjust it after the Food and Drug Administration renders its final verdict. If regulators approve Iloperidone, we'll raise our fair value estimate by as much as $8 per share; if they don't, we'll cut it by more than two thirds.
Vanda's future hinges almost entirely on Iloperidone. With its stock trading at depressed levels, the firm may not be able to raise additional capital until after the FDA makes its final decision on Iloperidone, which, coincidentally, is right around the time the firm's cash balance will run out. While Vanda has two drugs for sleep disorders in its pipeline, we're not big fans of either and think the company will have a difficult time raising funds on the promise of those candidates alone. Given the recent stock price, the market is forcing Vanda's hand: Either raise funds now and dilute shareholders but ensure access to capital whether or not Iloperidone is approved, or don't raise funds now and bet everything on an Iloperidone approval. Given its recent decision to abandon a convertible debt offering because of unattractive terms, we think Vanda is favoring the latter.

We think Iloperidone's chances for approval are high. Before Vanda acquired the compound, Novartis NVS conducted three Phase III trials for Iloperidone, to mostly mixed results. While Iloperidone improved symptoms of schizophrenia at higher doses, its benefits failed to reach statistical significance at lower doses. In addition, at these higher doses, the drug was shown to prolong the heart's QTc interval in patients, a potentially serious side effect. However, all of this was known before Vanda bought the compound, and it approached its development of the drug from an entirely different framework.

Using whole-genome association studies, Vanda found genetic mutations that correlate with patient responses to Iloperidone. As a result, through a blood test, Vanda can predict which patients will benefit most from treatment. In Vanda's Phase III trial for Iloperidone, while the overall group showed statistically significant improvement in symptoms, the benefits fell mainly to patients with the genetic markers, including a reduction in the prolongation of the QTc interval. Armed with this data, Vanda may side-step regulators' potential concerns about Iloperidone's safety by requiring a blood test for each patient. By marketing the drug to patients with specific genetic markers, Vanda could appeal to the clear need for more personalized schizophrenia medicines, since 75% of schizophrenia patients discontinue drug treatment before 18 months.

We think investors with a big appetite for risk have the right odds to call the market's all-or-nothing bet on Vanda.

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_V/threadview?m=tm&bn=28025&tid=7839&mid=7839&tof=2&frt=2