Shares of Vanda Pharmaceuticals (VNDA) were skyrocketing 37.8% higher as of 10:09 a.m. ET on Wednesday. The huge gain came after the company confirmed it had received -- and rejected -- several unsolicited acquisition proposals from pharmaceutical contract-manufacturing and packaging-services provider Future Pak.
Why Vanda isn't interested in Future Pak's offer
Future Pak's most recent proposal to acquire Vanda was made on April 1, 2024. The offer was to buy Vanda for $7.25 to $7.75 per share.
The low end of this range reflects a premium of 79% to Vanda's closing price on Tuesday. However, the company's board of directors concluded the offers "significantly undervalue" the company.
Why would Vanda's board dislike Future Pak's bid? For one thing, Vanda's cash and marketable securities total around $6.75 per share, and Future Pak's offer is only 7% to 15% higher than this cash balance.
The takeover proposals also give short shrift to Vanda's growth opportunities. Although the biotech's revenue declined 30% year over year in the fourth quarter of 2023, it recently won U.S. Food and Drug Administration (FDA) approval for Fanapt in treating bipolar I disorder.
Is Vanda Pharmaceuticals stock a buy?
Vanda Pharmaceuticals has a firm proposal from a potential suitor well above the current share price and a recent FDA victory in hand. The FDA set a PDUFA date of Sept. 18, 2024 for an approval decision on tradipitant in treating symptoms of gastroparesis.
The drugmaker still faces some risks, especially with an FDA decision on Hetlioz in treating insomnia in limbo. However, with a cash position greater than its market cap, Vanda could be a good pick for aggressive investors.
