Several pharma/biotech companies collaborate for the development and commercialization of products and later terminate the same to obtain full rights to the products due to various reasons.
Vanda Pharmaceuticals Inc. (VNDA) recently announced that it has reached a settlement agreement with Novartis AG (NVS) related to Fanapt.
The agreement is related to the ongoing Fanapt license arbitration proceedings. Both the parties have agreed to dismiss the ongoing arbitration.
While Novartis held the rights to the product in the U.S. and Canada, Vanda possessed Fanapt rights elsewhere in the world.
As a part of the settlement, Novartis will transfer all rights of the Fanapt franchise to Vanda in the U.S. and Canada. In addition, Novartis will make a $25 million equity investment in Vanda at a price per share equal to $13.82 along with granting license rights to Vanda for AQW051, a phase II alpha-7 nicotinic acetylcholine receptor partial agonist.
We note that Fanapt is currently approved in the U.S for the treatment of schizophrenia in adults. Fanapt has patent coverage through two key patents, a new chemical entity (NCE) patent set to expire in Nov 2016 and a method of treatment patent set to expire in 2027.
We remind investors that Fanapt is also approved in Israel and Mexico.
The resolution of the dispute and consequent addition of the rights to Fanapt in the U.S. and Canada bode well for Vanda and will strengthen the company’s portfolio, which includes Hetlioz for the treatment of non-24-hour sleep-wake disorder.
Investors looking for well-positioned stocks in the health care sector may consider stocks like Biogen Idec (BIIB) and Shire (SHPG). Both carry a Zacks Rank #2 (Buy).
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