Thursday, July 31, 2008

VFC Has Wiped His Hands of Vanda (VNDA) and Titan (TTP)

After the bad news that hit Vanda Pharmaceuticals (VNDA) and Titan Pharmaceuticals (TTP) recently, both companies received extremely bad news from the FDA on Monday.

The FDA issued a non-approvable letter to Vanda for it's schizophrenia drug Iloperidone, or Fanapta, sending both stocks in a downward spiral, VNDA to under a buck (although it rebounded a bit today) and TTP to under fifty cents.

According to reports, the FDA based it's non-approvable letter based on the fact that Iloperidone did not offer any increase in efficacy over J&J's drug Risperdal, not based on the risk vs. reward on Iloperidone's own merit. The FDA claimed that Vanda will have to undergo an additional Phase III trial comparing Iloperidone to Risperdal to gain approval, as well as provide additional safety data at a higher dosage.

In VFC's opinion, once again the FDA showed it's true colors by backing and protecting a large Pharma at the expense of the little Pharma.

I viewed VNDA as a one-trick pony, taking a chance on the Iloperidone approval, so I wasn't heavily invested in the company, but what shares I did have I sold in the high ninety cent range, before the stock rebounded to over a dollar yesterday. Seemingly, the general consensus out there had Iloperidone being approved, so there's probably plenty of unhappy investors still hoping that Vanda will be bought out, complete the new Phase III or even pay out the company's cash to the shareholders.

One of those three things still may happen, but I'm not going to sit around and wait for any of those events; I'm not buying it from this company, and there's just as much a chance that the stock could drop further, so I'm out and moving on. The management team botched an offering at around ten bucks last year, and it looks like the trials were mis-managed also. However, the FDA was involved in the design of the Iloperidone trial, so it's somewhat surprising that they slammed the trials so much.

TTP is another story. What could have been a huge year for Titan has turned out to be the nail in TTP's coffin, in my opinion. Titan has spent no money on the Iloperidone trials but was due 10% of the take for a marketed Iloperidone. With the FDA rejection of Iloperidone and the Spheramine failure, TTP now trades below fifty cents.

On a positive note, on the same day that the Iloperidone news was released, Titan also released positive results for their Phase III trial for Probuphine to treat opiate addiction. The flip side to that is that the company will conduct an additional Phase III before going to the FDA with Probuphine. On that news I sold half of my TTP position and I'll move on. TTP is now a one trick pony, in my opinion. I'll either hold onto the other half waiting for a spike or maybe even wait on for a Probuphine to treat pain trial, but in the meantime, I'm not interested. There's plenty more out there.

The Titan and Vanda have both fallen, and I don't think they can get up from this. At least not anytime soon.


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