Test of Insomnia Drug Bolsters Vanda's Plan
Washington Post Staff Writer
Thursday, November 16, 2006; Page D01
A few years ago, drug giant Bristol-Myers Squibb Co. announced it was retooling its strategy, meaning a drug it was developing for insomnia was probably headed for the sidelines. Vanda Pharmaceuticals Inc. pounced.
The little Rockville start-up licensed the drug for $500,000 and additional royalty payments, then set off to finish developing it as part of its strategy to salvage other companies' drugs.
  Mihael Polymeropoulos is the founder of Vanda. (Courtesy Vanda Pharmaceuticals - Courtesy Vanda Pharmaceuticals) |
Yesterday, that investment showed its first clear hints of significant returns within the $4 billion-a-year insomnia market, as Vanda reported late-stage test results of the drug showing what one analyst called "profound" effects. Patients fell asleep up to 26 minutes faster when compared to a placebo. They slept up to 48 minutes longer.
The news sent Vanda's stock up 53 percent, or $5.14, with its shares closing at $14.90. The company went public in April at $10 per share, below the original $12-to-$14 range it had set. MedImmune Ventures Inc., a venture capital subsidiary of the Gaithersburg drug company, owns about 7 percent of the company's shares.
Vanda still has to complete two more studies for the drug, meaning it wouldn't hit the market until around 2010, but yesterday's results solidified the company's business plan of salvaging other companies' drugs. Vanda is developing a drug for schizophrenia that it licensed from Novartis AG.
"There's a huge opportunity to spin these compounds out into small companies that want to finish developing them," said Corey Davis, an analyst with Natexis Bleichroeder, which doesn't do business with Vanda.
"One man's trash," Davis reminded, "is another man's treasure."
Vanda was founded by its chief executive, Mihael Polymeropoulos, a former executive with Novartis whose expertise is understanding how a person's genetic footprint affects the way drugs work. With Vanda, Polymeropoulos is particularly interested in finding better ways of targeting drugs to patients, rather than by finding the right treatment for a person by trial and error.
"It's a matter of knowing who is the right patient and what is the right indication," Polymeropoulos said.
The firm's insomnia drug is specifically suited to treat circadian rhythm sleep disorders -- it essentially resets the body's natural sleep clock. That makes it a natural fit for people who need sleep when their body doesn't want to, particularly those who work odd, middle-of-the-night hours or suffer from frequent jet lag. About 15 million of the 70 million people who suffer from insomnia have circadian rhythm disorders. The company plans to study the effects of the drug on other forms of insomnia.
With its schizophrenia treatment, which is also in late-stage testing, Vanda has developed a genetic test to determine the patients most likely to respond favorably to the drug.
Rescuing or repositioning shelved drugs is becoming popular within the industry, with entrepreneurs hoping to replicate the phenomenal success of products such as Viagra. Pfizer Inc. originally intended to use that drug for heart disease. That didn't work out, but researchers noticed an interesting side effect -- the drug caused erections. Pfizer sold $1.6 billion worth of Viagra last year.
Another example: Thalomid, used in the 1950s and '60s to treat morning sickness during pregnancy, was known as thalidomide. It was later banned because it caused severe birth defects. But in 1998, a New Jersey drug company called Celgene completed a repositioning of Thalomid as a treatment for skin sores associated with leprosy. Earlier this year, it was approved to treat a form of bone cancer.
Locally, United Therapeutics of Silver Spring has become one of the region's few profitable drug companies after it bought a drug from GlaxoSmithKline Inc. to treat the rare disorder of abnormally high blood pressure in arteries between the heart and lungs that it had shelved. Martine Rothblatt, United Therapeutics' chief executive, pursued the drug because her daughter suffers from the condition.
Gene Logic Inc., one of the region's earliest genomics companies, has modified its own business to focus mainly on repositioning drugs. The Gaithersburg company has partnerships with Eli Lilly, Pfizer and Roche.
And Vanda is awaiting key test results on its schizophrenia drug. His firm, Polymeropoulos said, believes that many drugs "that have been abandoned in late-stage development have been abandoned for the wrong reasons."
