Vanda’s fortunes advance

Rockville drugmaker trumpets progress in treatments for schizophrenia, insomnia

Friday, Nov. 3, 2006

Vanda Pharmaceuticals Inc., a Rockville company that is developing drugs to treat schizophrenia and nervous system disorders, had some good news for investors and patients alike Thursday.

Company officials said they expect to publish results from final phases of its clinical trials on its two lead products ahead of schedule this year.

Also, they projected the company will lose $5 million less in 2006 than previously forecast.

Following the announcement, the company’s stock price rose 6.8 percent by Thursday afternoon.

The final tests of its schizophrenia drug candidate, iloperidone, with 604 patients at nearly 40 clinics in the United States and India, will be reported in December.

The company estimates a $13 billion market for schizophrenia drugs.

Vanda will probably submit the drug to the U.S. Food and Drug Administration for approval next year, CEO Dr. Mihael H. Polymeropoulos said in a conference call.

The company also expects results from an advanced clinical trial of its insomnia drug candidate, VEC-162, to be made public this month. Polymeropoulos said the results from the phase 3 trial will be ‘‘pivotal” in determining if the drug will market successfully following another trial next year.

Vanda licensed the drug from Novartis of Basel, Switzerland, Polymeropoulos’ former employer.

Vanda is developing a version of the drug that can be injected once a month, which will improve patient compliance, officials said. Current treatments are taken orally.

CFO Steven Shallcross said Vanda is also developing a blood test that can identify patients who will respond well to iloperidone. Polymeropoulos said the investigators conducting the clinical trial ‘‘show much enthusiasm for this test.”

Schizophrenia is a chronic, severe and disabling brain disorder that affects about 1 percent of the population. It causes them to be fearful and withdrawn, according to the National Institute of Mental Health, part of the National Institutes of Health in Bethesda.

The institute’s Web site indicates that schizophrenic people have more reason for hope in recent years because of new medications that are better targeted to their causal biology and symptoms.

‘‘Although the causes of the disease have not yet been determined, current treatments can eliminate many of the symptoms and allow people with schizophrenia to live independent and fulfilling lives in the community,” according to the Web site.

Shallcross said iloperidone has fewer side effects than current treatments. Those effects include weight gain, diabetes, shaking, men growing breasts, women losing their menstrual cycles and inability to sit still, he said.

Vanda also plans to market its insomnia drug ‘‘in a commercially unique way,” Polymeropoulos said.

The drug is designed to work by resetting the body clock, or circadian rhythm. He said previous clinical trials by Vanda showed that VEC-162 resets the circadian rhythm by several hours. It will be marketed to ‘‘serious sleep disorder patients,” for whom there is no effective current treatment, Polymeropoulos said. It will also be marketed for shift workers, travelers with jet lag, college students who can‘t sleep after studying, and others.

‘‘We have already demonstrated that VEC-162 can help people fall asleep and maintain sleep,” Polymeropoulos said. He said because it works by adjusting the circadian rhythm, the drug will not have the ‘‘common side effects” of sedatives and anti-depression drugs.

The current trial involves 412 insomniac patients.

Vanda is in a position to partner with companies globally, David Maris, an analyst with Banc of America Securities, said during Thursday’s call.

Vanda would likely market the schizophrenia drug to specialized physicians with its own limited sales force, Polymeropoulos said. But the insomnia drug would require a larger sales force to target general practitioners, so a partner would be needed, he said.

Also Thursday, Vanda reported a net loss of $12.1 million for quarter ended Sept. 30, compared with a net loss of $5.7 million in the prior-year quarter. The company projects 2006 losses to be between $65 million and $70 million.

Research and development expenses for the quarter were $9.5 million, versus $4.1 million a year ago.

The company reported no revenues for the quarter, nor any last year. The company’s balance sheet on Sept. 30 showed $43.0 million in cash and related assets.

Vanda, founded in March 2003, has 45 employees.