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Cycle Pharmaceuticals Reaffirms All-Cash Proposal to Acquire Vanda Pharmaceuticals for $8.00 Per Share

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Cycle Pharmaceuticals has reaffirmed its proposal to acquire Vanda Pharmaceuticals (NASDAQ: VNDA) for $8.00 per share in an all-cash transaction. This offer represents an 80% premium to Vanda's closing share price on October 11, 2024, and values the company at $488 million on a fully diluted basis.

Cycle criticizes Vanda's board for refusing to engage and for implementing bylaw amendments that Cycle views as entrenching efforts. The proposal comes after Vanda's recent failure to receive FDA approval for tradipitant following an unsuccessful Phase 3 trial.

Cycle urges Vanda shareholders to express their views on the proposal to the independent directors of Vanda's board. The company states it has substantial cash on hand and is confident in obtaining committed financing for the transaction.

Cycle Pharmaceuticals ha riportato la propria proposta di acquisire Vanda Pharmaceuticals (NASDAQ: VNDA) per 8,00 dollari per azione in un'operazione completamente in contante. Questa offerta rappresenta un premio dell'80% rispetto al prezzo di chiusura delle azioni di Vanda dell'11 ottobre 2024 e valorizza l'azienda a 488 milioni di dollari su base completamente diluita.

Cycle critica il consiglio di Vanda per aver rifiutato di impegnarsi e per aver implementato modifiche allo statuto che Cycle considera manovre per mantenere il controllo. La proposta arriva dopo il recente fallimento di Vanda nell'ottenere l'approvazione della FDA per il tradipitant, a seguito di un tentativo di fase 3 non riuscito.

Cycle esorta gli azionisti di Vanda a esprimere le proprie opinioni sulla proposta ai direttori indipendenti del consiglio di Vanda. La società dichiara di avere liquidità sostanziale e di essere fiduciosa di ottenere finanziamenti impegnati per la transazione.

Cycle Pharmaceuticals ha reafirmado su propuesta de adquirir Vanda Pharmaceuticals (NASDAQ: VNDA) por 8,00 dólares por acción en una transacción totalmente en efectivo. Esta oferta representa un 80% de prima sobre el precio de cierre de las acciones de Vanda del 11 de octubre de 2024 y valora a la compañía en 488 millones de dólares en una base completamente diluida.

Cycle critica a la junta de Vanda por rechazar comprometerse y por implementar enmiendas a los estatutos que Cycle considera esfuerzos para afianzarse. La propuesta llega después del reciente fracaso de Vanda en obtener la aprobación de la FDA para tradipitant tras un ensayo de fase 3 fallido.

Cycle insta a los accionistas de Vanda a expresar sus opiniones sobre la propuesta a los directores independientes de la junta de Vanda. La empresa afirma que tiene una cantidad sustancial de efectivo disponible y está segura de obtener financiamiento comprometido para la transacción.

사이클 제약은 반다 제약을 인수하겠다는 제안을 재확인했습니다 (NASDAQ: VNDA), 주당 8.00달러의 전액 현금 거래로 제안합니다. 이 제안은 2024년 10월 11일 반다의 종가에 대해 80%의 프리미엄을 나타내며, 회사 가치는 4억 8천8백만 달러로 평가됩니다.

사이클은 반다의 이사회가 참여를 거부하고 사이클이 통제 노력을 고착화한다고 보는 정관 개정을 시행한 것을 비판하고 있습니다. 이 제안은 반다가 최근 3상 시험에 실패하여 FDA 승인을 받지 못한 후 나오게 되었습니다.

사이클은 반다 주주들이 반다 이사회의 독립 이사들에게 제안에 대한 의견을 표현할 것을 촉구합니다. 회사는 상당한 자금을 보유하고 있으며 거래를 위한 확정된 자금 조달 확보에 자신이 있다고 밝혔습니다.

Cycle Pharmaceuticals a réaffirmé sa proposition d'acquérir Vanda Pharmaceuticals (NASDAQ: VNDA) pour 8,00 $ par action dans une transaction entièrement en espèces. Cette offre représente une prime de 80% par rapport au prix de clôture de l'action de Vanda du 11 octobre 2024 et évalue la société à 488 millions de dollars sur une base totalement diluée.

Cycle critique le conseil d'administration de Vanda pour avoir refusé de s'engager et pour avoir mis en œuvre des modifications de règlement intérieur que Cycle considère comme des tentatives de renforcement. La proposition intervient après l'échec récent de Vanda à obtenir l'approbation de la FDA pour le tradipitant suite à un essai de phase 3 infructueux.

Cycle exhorte les actionnaires de Vanda à exprimer leurs opinions sur la proposition auprès des administrateurs indépendants du conseil d'administration de Vanda. La société déclare disposer de liquidités substantielles et être confiante d'obtenir un financement engagé pour la transaction.

Cycle Pharmaceuticals hat seinen Vorschlag zur Übernahme von Vanda Pharmaceuticals (NASDAQ: VNDA) für 8,00 Dollar pro Aktie in einer rein bargeldbasierten Transaktion erneut bekräftigt. Dieses Angebot stellt einen 80% Aufschlag auf den Schlusskurs von Vanda am 11. Oktober 2024 dar und bewertet das Unternehmen mit 488 Millionen Dollar auf einer voll verwässerten Basis.

Cycle kritisiert den Vorstand von Vanda für die Verweigerung eines Engagements und für die Durchführung von Änderungen der Satzung, die Cycle als Maßnahmen zur Festigung des Einflusses betrachtet. Der Vorschlag folgt auf Vandas kürzlichen Misserfolg, die Zulassung der FDA für Tradipitant zu erhalten, nachdem eine Phase-3-Studie nicht erfolgreich war.

Cycle drängt die Aktionäre von Vanda, ihre Meinungen zu dem Vorschlag den unabhängigen Direktoren des Vanda-Vorstands mitzuteilen. Das Unternehmen erklärt, dass es über erhebliche Barmittel verfügt und zuversichtlich ist, eine gesicherte Finanzierung für die Transaktion zu erhalten.

Positive
  • Offer represents an 80% premium to Vanda's recent share price
  • All-cash transaction providing immediate and certain value to shareholders
  • Fully diluted equity value of $488 million
  • Cycle has substantial cash on hand for the transaction
Negative
  • Vanda's board has refused to engage with Cycle's proposal
  • Vanda recently failed to receive FDA approval for tradipitant
  • Vanda's Phase 3 trial for tradipitant missed its primary endpoint
  • Vanda's board implemented bylaw amendments that may entrench current management

Insights

The proposed acquisition of Vanda Pharmaceuticals by Cycle Pharmaceuticals for $8.00 per share represents a significant development for investors. This all-cash offer values Vanda at a 80% premium to its recent closing price, indicating a substantial immediate return for shareholders.

Key points to consider:

  • The $488 million fully diluted equity value offer comes amid Vanda's recent setbacks, including the FDA's rejection of tradipitant and a failed Phase 3 trial.
  • Cycle's persistence in pursuing the deal, despite these challenges, suggests they see untapped value in Vanda's assets or pipeline.
  • The Vanda board's reluctance to engage and their recent bylaw amendments raise concerns about potential conflicts between management's interests and shareholder value.
  • For investors, the certainty of an all-cash deal at a significant premium may be attractive given Vanda's recent clinical and regulatory disappointments.

This situation highlights the tension between short-term gains from a buyout versus long-term potential if Vanda remains independent. Investors should closely monitor further developments, as the board's response and potential shareholder pressure could significantly impact Vanda's future and stock price.

The recent bylaw amendments by Vanda's board raise significant corporate governance concerns. These changes, which include restrictions on shareholder meetings and director nominations, appear to be defensive measures against Cycle's acquisition attempt. Such actions often face scrutiny under Delaware corporate law for potentially breaching fiduciary duties.

Key legal considerations:

  • The timing of these amendments, shortly after receiving Cycle's proposal, could be viewed as an entrenchment tactic by the courts.
  • Shareholders may have grounds for legal action if they believe the board is not acting in their best interests.
  • The board's rejection of the offer without meaningful engagement could be challenged under the Revlon doctrine, which requires boards to maximize shareholder value when a company is for sale.
  • Cycle may consider launching a hostile takeover bid or initiating a proxy fight to replace board members.

These developments set the stage for potential shareholder litigation and regulatory scrutiny. Investors should be aware that legal challenges could significantly impact the timeline and outcome of any potential acquisition.

Vanda Board Intensifies Entrenchment Efforts with Recent Bylaw Amendments Despite Active Premium Proposal

Proposal Delivers Immediate, Compelling and Certain Cash Value for Vanda Shareholders with a Highly Attractive Premium of 80% to Vanda’s Closing Share Price on October 11, 2024

Urges Vanda Shareholders to Express Their Views on the Proposal to the Independent Directors of the Vanda Board of Directors

BOSTON & CAMBRIDGE, England--(BUSINESS WIRE)-- Cycle Pharmaceuticals Ltd (“Cycle”), a dynamic leader in developing rare disease therapies, today reaffirmed its proposal to acquire all of the issued and outstanding shares of Vanda Pharmaceuticals, Inc. (“Vanda”) (NASDAQ: VNDA) for an all-cash consideration of $8.00 per Vanda share. Cycle is making its renewed proposal public for the benefit of Vanda shareholders in light of the Vanda Board’s continued refusal to engage following the receipt of multiple premium proposals, Vanda’s recent failure to receive FDA approval for tradipitant, following a failed Phase 3 trial that missed its primary endpoint, and the Vanda Board’s recent entrenchment efforts that disenfranchise its shareholders.

Cycle’s proposal represents a 80% premium to Vanda’s share price at the close of business on October 11, 2024, compared to a 58% premium to Vanda share on June 5, 2024, the day prior to the public disclosure of Cycle’s initial offer. Cycle’s proposal represents a fully diluted equity value of $488 million.

On September 23, 2024, Cycle delivered a letter to the Board of Directors of Vanda reiterating its interest in pursuing a transaction. On September 30, 2024, Vanda responded that the Vanda Board was reviewing the proposal, noting that they needed an additional two weeks to evaluate the proposal and respond. On October 3, 2024, despite the active premium proposal from Cycle, Vanda’s Board amended and restated its bylaws, which included further entrenching modifications related to both annual and special stockholder meetings and the nomination of directors, as well as the Vanda Board’s ability to postpone, reschedule or cancel any such meetings and restrict stockholder business or director nominees that can be made at such meetings. Two business days later, on October 7, 2024, the Vanda Board rejected Cycle’s proposal.

Cycle today issued the following statement:

“We are confident that our $8.00 per share, all-cash proposal maximizes value and would deliver immediate, compelling and certain cash value for Vanda shareholders.

Despite the significant value and highly attractive premium of our proposal, Vanda’s Board and management team have refused to engage with us to discuss its merits and instead, have continued to prioritize their own interests and self-preservation with egregious actions that blatantly disenfranchise Vanda shareholders. When Vanda requested an additional two weeks to review our proposal, we gave them the extension as requested, underscoring our continued flexibility and willingness to collaborate in creating the best outcome for Vanda shareholders. Unfortunately, instead of reviewing and responding to our proposal, Vanda held a Board meeting to update its bylaws to further entrench the Board, which included the addition of multiple procedural obstacles in the way of nominating directors, unilaterally adding a whole new layer of arbitrary rules to the detriment of Vanda shareholders, all while failing to disclose the $8 per share cash offer that, in our view, clearly motivated the bylaw amendments in the first place. Most notably, these changes would apply ahead of Vanda’s forthcoming annual meeting. Shortly thereafter, Vanda rejected our proposal. In short, it is clear that Vanda’s Board is not acting in the best interests of shareholders.

Even more concerning is Vanda’s failure to receive FDA clearance for tradipitant, whose prospects had been prominently cited in June by Vanda for its rejection of our initial offer. The rejection followed an unsuccessful Phase 3 clinical trial, where tradipitant didn’t reach its primary endpoint and performed no better than a placebo.

We urge Vanda shareholders to express their views on this proposal to the independent directors of the Vanda Board of Directors. We stand ready to work immediately with Vanda’s Board and management team to reach an agreement that would provide a compelling premium and certain cash value today for all Vanda shareholders.”

Cycle has substantial cash on hand, and both of Cycle’s financial advisors are highly confident that, following limited due diligence, committed financing will be put in place for the transaction. Cycle will obtain fully underwritten, binding commitment letters for any debt financing prior to signing a definitive merger agreement, which will not contain any financing contingency.

The full text of Cycle’s proposal delivered to Vanda’s Board on September 23, 2024 is below:

Vanda Pharmaceuticals Inc. 2200 Pennsylvania Avenue NW Suite 300E

Washington, DC 20037 Attn: Board of Directors

September 23, 2024

Reaffirmed Non-Binding Proposal to Acquire Vanda Pharmaceuticals Inc (NASDAQ: VNDA)

Dear Mihael Polymeropoulos - Vanda Pharmaceuticals President, Chief Executive Officer, Chairman of the Board, and Vanda Board of Directors:

Following the regulatory update and complete response letter ("CRL") received from the FDA with regards to the NDA of tradipitant, we are writing to reaffirm our continued interest in pursuing an acquisition of Vanda Pharmaceuticals Inc. ("Vanda" or the "Company"). We were disappointed in the Vanda board's rejection of our previously submitted preliminary non-binding indication of interest dated May 24, 2024 (the "May 24, 2024 Letter"), which would have yielded a very attractive outcome for Vanda shareholders. Since that time, Vanda's share price has not moved materially and with the price declining following issuance of the CRL, we reiterate that our unchanged offer is now even more attractive for shareholders. Having reviewed the implication of the CRL, which we had anticipated, we have concluded that this update does not impact our positive view of the Company and its potential value in combination with Cycle.

With the continued support of Cycle's management team, Board, and shareholders, we are pleased to re­ submit this letter ("Letter"), in addition to our previously submitted May 24, 2024 Letter summarizing our preliminary non-binding indication of interest (the "Indicative Offer") to acquire 100% of the issued and outstanding equity interest of Vanda (the "Proposed Transaction"), upon the terms and conditions set forth in the May 24, 2024 Letter.

We reaffirm our proposal, which remains subject to the pre-conditions set out in this Letter and the May 24, 2024 Letter, to make an offer to acquire 100% of the issued and outstanding equity interest of Vanda at USD $8.00 per share (the "Purchase Price") in cash, payable at the closing of the Proposed Transaction. We believe that our Purchase Price continues to represent a highly compelling proposition for your shareholders, representing:

  • Fully diluted equity value of $488mm
  • Enterprise value of $100mm
  • A premium of approximately 74 per cent to the Vanda share price as at the close of business on September 20, 2024 of $4.61 per share, and an 11 per cent increase over the premium at the time of our May 24, 2024 Letter

Cycle's offer continues to represent a better outcome for i) shareholders, with an all-cash upfront offer, and ii) patients, as Cycle has an established track record of delivering medicines and individualized support to patients suffering from conditions with high unmet medical need.

This Purchase Price is based on publicly available information and our position remains the same as laid out in our May 24, 2024 Letter with respect to due diligence and access, approvals, financing and pathway to a definitive agreement.

We request that you provide a response to this Letter no later than September 30, 2024.

Very truly yours,

James Harrison
Cycle Group Holdings Limited CEO

About Cycle Pharmaceuticals

Cycle Pharmaceuticals was founded in 2012 with the sole aim of delivering drug treatments and product support to the underserved rare disease patient community, and the healthcare professionals and communities that support them.

Cycle focuses on rare metabolic, immunological, and neurological genetic conditions. Within neurological conditions, Cycle focuses on multiple sclerosis. Cycle’s U.S. commercial drug products are:

  • NITYR® (nitisinone) Tablets (since 2017)
  • SAJAZIR™ (icatibant) Injection (since 2021)
  • JAVYGTOR™ (sapropterin dihydrochloride) Tablets and Powder (since 2022)
  • TASCENSO ODT® (fingolimod) (since 2023)
  • TIOPRONIN delayed-release tablets (since 2024)
  • ORMALVI™ (dichlorphenamide) Tablets (since 2024)

Cycle achieved $109m net sales and $40m operating profit in 2023 (according to FRS102 accounting principles). Extracts of Cycle’s audited financial results for the year ending December 31, 2023 are available here.

Cycle is headquartered in Cambridge, U.K. and has offices in Boston, Massachusetts.

For more information, please visit www.cyclepharma.com and follow us on X, LinkedIn and Facebook.

Additional Information

The terms of this announcement are non-binding and intended solely to provide the basis on which Cycle is presently willing to negotiate definitive transaction documentation in respect of the proposal, and are not intended to, and should not be deemed or construed to, create or constitute any sort of binding offer, commitment, right or obligation on the part of Cycle, Vanda, Vanda’s shareholders, or their respective affiliates. Any such offer, commitment, right or obligation will come into existence only by the execution and delivery of binding definitive transaction documentation by the parties setting forth the terms and conditions of such offer, right, commitment or obligation, and will be subject in each case to the satisfaction or waiver of all applicable conditions. The failure for any reason to execute and deliver the definitive transaction documentation or consummate the proposal will impose no liability on any party hereto or their respective affiliates.

U.S.

Tanner Kaufman / Kyla MacLennan

FTI Consulting

tanner.kaufman@fticonsulting.com / kyla.maclennan@fticonsulting.com



U.K.

Ben Atwell / Simon Conway

FTI Consulting

ben.atwell@fticonsulting.com / simon.conway@fticonsulting.com

Source: Cycle Pharmaceuticals

FAQ

What is Cycle Pharmaceuticals' offer to acquire Vanda Pharmaceuticals (VNDA)?

Cycle Pharmaceuticals has offered to acquire Vanda Pharmaceuticals (VNDA) for $8.00 per share in an all-cash transaction, valuing the company at $488 million on a fully diluted basis.

What premium does Cycle's offer represent for Vanda Pharmaceuticals (VNDA) shareholders?

Cycle's offer represents an 80% premium to Vanda's closing share price on October 11, 2024.

How has Vanda Pharmaceuticals' (VNDA) board responded to Cycle's acquisition proposal?

According to Cycle, Vanda's board has refused to engage with the proposal and has implemented bylaw amendments that Cycle views as entrenching efforts.

What recent setback did Vanda Pharmaceuticals (VNDA) face with its drug tradipitant?

Vanda recently failed to receive FDA approval for tradipitant following an unsuccessful Phase 3 trial that missed its primary endpoint.

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