Vanda Pharmaceuticals VNDA on Monday rejected the second takeover offer from Britain’s Cycle Pharmaceuticals, valuing the drugmaker at $8 a share, even as Vanda’s stock fell following the FDA’s rejection of its drug for stomach ailments.
The terms of Cycle Pharma’s offer are “commercially identical” to the offer previously evaluated and rejected, Vanda said in a statement.
WHY IT’S IMPORTANT
Cycle Pharma’s offer of $8 per share represents an 80 percent premium to Vanda’s most recent closing price and values the company at $488 million.
The potential offering follows a 4.5 percent drop in Vanda shares after the U.S. Food and Drug Administration (link) rejected approval of the drug for a stomach disorder that disrupts digestion.
Vanda rejected Cycle Pharma’s initial takeover offer and a revised offer from contract manufacturer Future Pak in June (link).
CONTEXT
In April, Vanda (link) adopted a shareholder rights plan, a so-called “poison pill,” to reduce the likelihood of a hostile takeover.
Vanda has three approved products: Hetlioz for the treatment of sleep disorders, Fanapt for bipolar disorder and Ponvory for the treatment of multiple sclerosis.
KEY QUOTE
Vanda’s Board of Directors has carefully considered the second proposal and has unanimously concluded that it significantly undervalues Vanda and is not in the best interests of the Company and its shareholders. Accordingly, the Board has decided not to pursue the proposal.
“We stand ready to work immediately with Vanda’s board of directors and management team to reach an agreement that would provide a compelling premium and secure cash value for all Vanda shareholders,” Cycle Pharma said in a statement.
MARKET RESPONSE
Shares of Vanda rose 11.37% to $4.95.
