Vanda Pharmaceuticals, Inc. (VNDA)

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Vanda fights proposal to sellWashington Business Journal - by Vandana Sinha Staff Reporter

Mihael Polymeropoulos told Vanda employees to carry on, despite calls for the company to sell itself.
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Vanda Pharmaceuticals Inc. is opposing a recent shareholder proposal to replace two board members and for the Rockville company to sell itself.

Tang Capital Partners LP, which owns nearly 15 percent of Vanda’s shares, has said it plans to submit the names of its own two executives to replace two board members whose terms are set to expire this year, including Vanda Chief Executive Officer and founder Mihael Polymeropoulos and Chairman Argeris Karabelas. Tang, which has criticized Vanda’s plummeting market value, has also called for the company to shut down, sell off its parts and distribute the returns to fellow shareholders.

“The board is disappointed that Tang Capital has opted to conduct an election contest, particularly when the company is so close to receiving a response from the FDA regarding its lead compound, iloperidone,” said Brian Halak, a Vanda (NASDAQ: VNDA) board member. “Instead of working with us to maximize stockholder value, Tang Capital has chosen to create unnecessary costs and distractions for the company at this important time.”

Vanda is awaiting the Food and Drug Administration’s decision on iloperidone, its schizophrenia drug candidate, in May -- the second time the biotech finds itself at this point after getting rejected the first time last July. That sent the company’s stock price spiraling downward, and has led to layoffs that cut its staff in half, also affecting some executive team members. Vanda has also postponed its clinical and commercial activities until it hears FDA’s final word on iloperidone.

Vanda said those moves have slashed its spending considerably, making such a shift in board makeup unnecessary and more expensive. The company said it plans to remain in operation, a decision it said could only be counteracted now by a unanimous shareholder vote for liquidation.

“The company believes that, even in the absence of an approval by the FDA for iloperidone, there remains significant unrealized value in the company’s other compounds,” Vanda said in a statement. “Therefore, the company does not believe that liquidation is currently in the best interests of the company or its stockholders and intends to oppose TCP’s proposal to liquidate the company.”

Company officials said they are the latest victim of shareholder activism. “This will play out over the weeks and months to come, and I will be as transparent with you as possible,” Polymeropoulos wrote in a letter to employees Monday. “While this may be a distraction, I do not anticipate any interruption in our day-to-day business as a result of Tang Capital’s proposal.”