Vanda turns back on hostile takeover bid by CDMO Future Pak

Two weeks after gaining a hard-earned FDA label expansion for its long-established antipsychotic drug Fanapt (iloperidone), Vanda Pharmaceuticals has derailed a hostile takeover bid.

By employing a shareholder rights plan, commonly known as a “poison pill,” Vanda has warded off an attempt by Future Pak to acquire the Washington, D.C.-based company at what it claimed was a “discount” to its “intrinsic value,” Vanda said in a release.

The "poison pill" approach works by imposing a significant penalty on any person or group that acquires ownership of 10% or more of its shares of common stock without prior approval of the board, Vanda explained (PDF) in a securities filing.

Future Pak, a 47-year-old, privately-held, Michigan-based contract manufacturer which specializes in solid dose packaging of pharmaceuticals, had offered to buy out Vanda at a share price of between $7.25 and $7.75 on April 1. In a release, Future Pak added that was “open to increasing the value of its offer based on due diligence and good faith negotiations with Vanda and its board.”  

It was one of three proposals by Future Pak to acquire all of Vanda’s outstanding shares, the company added, with the first coming in February of this year.

While the April 1 bid represented an 80% to 92% premium on Vanda’s share price at Tuesday’s closing price of $4.03, Vanda’s board of directors still considered it an “opportunistic” attempt which “would transfer significant value to Future Pak at the expense of Vanda shareholders,” the company said in its release.

In response to the rejection of the takeover bid, Vanda’s share price has increased by 29% to $5.20, which is still 28% to 33% below the Future Pak offer.

Vanda says the value of its cash, cash equivalents and marketing securities at the end of 2023 adds up to $6.75 per outstanding share, meaning that Future Pak’s latest proposal “provides a mere 7 to 15% premium to such cash balance, ascribing therefore very little value to the company’s significant revenue stream and pipeline,” Vanda added.  

Earlier this month, Vanda achieved an FDA approval for Fanapt to treat manic or mixed episodes associated with bipolar I disorder. The nod came 15 years after Fanapt was first approved for schizophrenia.

The boost was much needed for Vanda, which has seen revenue fall from a record high of $269 million in 2021 to $193 million last year, with Fanapt accounting for $90 million of the total.

The company is hoping to fill the revenue void by spending $100 million to secure rights in the U.S. and Canada to Johnson & Johnson's multiple sclerosis treatment Ponvory. Vanda made the deal in December of last year.