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Oct 18, 2024

Cycle Pharmaceuticals reaffirms proposal to acquire Vanda Pharmaceuticals

Cycle Pharmaceuticals reaffirmed its proposal to acquire all of the issued and outstanding shares of Vanda Pharmaceuticals for an all-cash consideration of $8.00 per Vanda share. Cycle said it is

Cycle Pharmaceuticals reaffirmed its proposal to acquire all of the issued and outstanding shares of Vanda Pharmaceuticals for an all-cash consideration of $8.00 per Vanda share. Cycle said it 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, compared to a 58% premium to Vanda share on June 5, the day prior to the public disclosure of Cycle’s initial offer. Cycle’s proposal represents a fully diluted equity value of $488M. On September 23, Cycle delivered a letter to the board of directors of Vanda reiterating its interest in pursuing a transaction. On September 30, 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 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, 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.”

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