Vanda Pharmaceutical’s Stock Soars 11.37%! Rejects $800 Million Acquisition Offer from UK Company

In Monday's deal, Vanda Pharmaceutical Inc categorically rejected a second takeover proposal from Britain's Cycle Pharmaceuticals that valued the company at $8 per share. Vanda Pharmaceutical is sticking to its position despite a significant drop in its stock price following the US Food and Drug Administration's (FDA) refusal to approve its drug for a stomach ailment.

In a formal statement, Vanda Pharmaceutical pointed out that Cycle Pharma's proposed acquisition terms are economically identical to the previous proposal that was evaluated and rejected by Vanda Pharmaceutical. This means that Cycle Pharma's latest offer did not convince Vanda Pharmaceutical's board.

Cycle Pharma's $8 per share offer represents an 80% premium to Vanda Pharmaceutical's most recent closing price, valuing the company at $488 million. However, Vanda Pharmaceutical's Board of Directors believes that this valuation significantly undervalues the true value of the Company and is not in the best interests of the Company and its shareholders.

Earlier, the FDA refused to approve Vanda Pharmaceutical's stomach disease drug, and the news sent shares of Vanda Pharmaceutical down 4.5%. In June, Vanda Pharmaceutical had already rejected Cycle Pharma's initial offer, as well as a revised offer from contract manufacturer Future Pak.

To reduce the risk of a hostile takeover, Vanda Pharmaceutical adopted a shareholder rights plan, commonly known as a "poison pill," in April. Vanda Pharmaceutical has three approved products: Hetlioz for sleep disorders, Fanapt for bipolar I disorder and Ponvory for multiple sclerosis.

After carefully reviewing Cycle Pharma's second proposal, Vanda Pharmaceutical's Board of Directors unanimously concluded that the proposal did not adequately reflect the value of Vanda Pharmaceutical and decided not to pursue the proposal. In a statement, Cycle Pharma said it remains willing to work with Vanda Pharmaceutical's board of directors and management team to reach an agreement that provides a compelling premium and some cash value to all of Vanda Pharmaceutical's shareholders.

After Vanda Pharmaceutical rejected the takeover proposal, its shares rose 11.37 percent to $4.95 per share in trading on Monday. This increase in the share price reflects the market's positive reaction to Vanda Pharmaceutical's rejection of the acquisition proposal, as well as confidence in the company's future prospects.