Vanda Inks Novartis Deal (NASDAQ:VNDA)
On Monday morning, shares of Vanda Pharmaceuticals went up sharply after the announcement that they have inked a new licensing deal with Novartis that would earn them around US$ 465 million, of which US$ 200 million will be paid as upfront fees by Novartis.
Novartis is paying Vanda Pharmaceuticals for the exclusive rights to market Vanda’s newly approved schizophrenia drug Fanapt (iloperidone) in the United States and Canada. The Switzerland-based Novartis AG will pay the rest of the US$ 265 million as milestone payments for the FDA approved injectable formulation of Fanapt which is required to be used once a month. The rest of the milestone payments are totally sales-based and Vanda Pharmaceuticals CEO Mihael Polymeropoulos said that these payments are highly reasonable and achievable. Additionally, Vanda Pharmaceuticals will also receive some royalties but Vanda’s CEO did not highlight much about it in the conference.
The approved drug, Fanapt was originally developed by Hoechst Marrion Roussel (Sanofi-Aventis Group) and was licensed to Titan Pharmaceuticals, but was later passed on to Novartis and eventually it was given to Vanda Pharmaceuticals. As per the deal, Novartis AG will cover all the marketing cost for Fanapt in the United States and Canada and will also bear all the expenditure associated with the development of injectable formulation for those markets.
Vanda CEO has stated that they are excited about the agreement with Novartis AG as it is one of the premier pharmaceutical company in the world and also that Novartis will help them commercialize the oral formulation and develop Fanapt in the US and Canada market. Vanda Pharmaceuticals have always realized the importance of Fanapt in the European market as so far only Johnson and Johnson’s Risperdal Consta (risperidone) is the leading schizophrenic drug available overseas. It is speculated that both the companies might come to terms on worldwide rights in the near future.
