The beleaguered Vanda Pharmaceuticals is resisting an attempt by Tang Capital Partners to replace two board members whose terms will expire this year. Additionally, Tang will urge Vanda to liquidate the company at the annual shareholder meeting.
Vanda stock plunged after the FDA rejected its schizophrenia drug iloperidone in July. The company sent a complete response to the agency and is once again awaiting a decision. However, in the meantime Vanda has had to cut staff to preserve its cash in light of the delay.
Tang Capital--which owns 15 percent of Vanda's stock--is taking aim at founder and CEO Mihael Polymeropoulos, M.D. and Chairman Argeris Karabelas. The group is unsatisfied with Vanda's handling of the FDA rejection and critical of Vanda's spending. But the company is standing by its directors. "Vanda believes that its current Board of Directors has the independence, the knowledge and the commitment to successfully implement the company's business plan and to deliver value for the company and its stockholders," Vanda said in a statement. Additionally, the company says the cost-saving measures it took following iloperidone's rejection address Tang Capital's concerns about spending.
In the statement, Vanda also rejected Tang Capital's urges to liquidate the company. "The company does not believe that liquidation is currently in the best interests of the company or its stockholders and intends to oppose TCP's proposal to liquidate the company," explained Vanda. Tang would certainly have an uphill battle; under Delaware law, the board has the power to determine whether the company should be dissolved. This can only be bypassed if all stockholders unanimously approve liquidation, which is extremely unlikely in Vanda's case.
"The Board is disappointed that Tang Capital has opted to conduct an election contest, particularly when the company is so close to receiving a response from the FDA regarding its lead compound, iloperidone. Instead of working with us to maximize stockholder value, Tang Capital has chosen to create unnecessary costs and distractions for the company at this important time," said Brian Halak, Ph.D., a member of the Company's Board of Directors. Vanda urged shareholders to re-elect Drs. Polymeropoulos and Karabelas, and continues to move forward with the company's current business plan.
- here's Vanda's release
- see the Washington Business Journal for more