Less than a month after reporting the successful results of its phase 3 clinical trial for VEC-162, a drug that would have helped Ed Norton in Fight Club with his insomnia, Vanda Pharmaceuticals (NASDAQ:VNDA) reported another remarkable success earlier today. The company announced positive top-line results for iloperidone, a drug for the treatment of schizophrenia, in its phase 3 clinical trial. On news of the success, Vanda shares skyrocketed. During midday trading, shares of Vanda were trading near $26, up 68% from yesterday's closing price.
It was noted that iloperidone demonstrated statistically significant improvement compared to a placebo on the Positive and Negative Symptom Scale (PANSS). The drug was tested in a four-week trial that utilized 604 patients suffering from schizophrenia. "We are extremely pleased to have achieved this outcome with iloperidone. The success of this trial moves us one step closer to our NDA (New Drug Application) filing, expected in late 2007, and one step closer to making iloperidone available to patients and providers dealing with schizophrenia," stated Paolo Baroldi, senior vice president and chief medical officer of Vanda.
The Rockville, Md.-based company focuses on the development and commercialization of clinical-stage product candidates for central nervous system disorders. The company went public in April and saw its stock price steadily increase until it tanked in the days preceding the VEC-162 results in mid-November. Shareholders of this small cap have had an incredible few weeks since then. The VEC-162 results pushed the stock up 53%, and the iloperidone results put shareholders up 169% since the close of the company's first day of trading in April.
Needless to say, this IPO has been a major success thus far. Should iloperidone ultimately hit the shelves, though, Vanda will face stiff competition from AstraZeneca's (NYSE:AZN) Seroquel, Eli Lilly's (NYSE:LLY) Zyprexa, and Johnson & Johnson's (NYSE:JNJ) Risperdal, which are all among the top-selling schizophrenia drugs. Even if iloperidone were to experience only limited success in penetrating the market, the company would stand to profit nicely in an approximately $11 billion schizophrenia drug market. While nailing down a specific future valuation for Vanda is difficult at this point, the iloperidone results give shareholders added assurance going forward that the company could have multiple drugs in its arsenal and not be forced to rely on the success or failure of a single drug.
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Fool contributor Billy Fisher does own shares of Johnson & Johnson. Eli Lilly and Johnson & Johnson are Income Investor picks. The Fool has adisclosure policy.
