Vanda Pharmaceuticals Receives Coverage Initiation from HC Wainwright
Fanapt, Hetlioz, and Ponvory.
HC Wainwright also highlights Vanda's promising pipeline with several programs expected to reach significant clinical and regulatory milestones over the next 18 months. Despite this, Vanda's valuation appears surprisingly low, trading at a nearly 30% discount to its cash reserves and resulting in a negative enterprise value. This valuation seems incongruous with Vanda's strong sales and projected profitability through 2026, even if only some of its clinical and commercial projects succeed.
The analyst attributes Vanda's undervalued position to the ongoing generic competition within its sleep disorder portfolio centered around Hetlioz (tasimelteon) and a recent FDA Complete Response Letter (CRL) for tradipitant in gastroparesis. While Hetlioz is forecast to generate around $75 million in 2024 sales, it is expected to decline post-2028. However, ongoing litigation could slow generic entry, and Vanda may expand tasimelteon's indications.
Vanda has recently received acquisition proposals from both Cycle Pharmaceuticals and Future Pak, indicating its potential as an attractive M&A target for mid-size pharmaceutical firms. HC Wainwright believes that Vanda's intrinsic value is not reflected in its current share price, especially considering its negative enterprise value and promising pipeline.
Despite the challenges posed by generic competition and the CRL for tradipitant, HC Wainwright initiates coverage on Vanda with a Buy rating and a price target of $18. The analyst sees limited downside risk at current levels given Vanda's strong commercial portfolio, promising pipeline, and undervalued position.