Cycle Pharmaceuticals Reaffirms All-Cash Proposal to Acquire Vanda Pharmaceuticals for $8.00 Per Share
Vanda Board Intensifies Entrenchment Efforts with Recent Bylaw Amendments Despite Active Premium Proposal
Proposal Delivers Immediate, Compelling and Certain Cash Value for Vanda Shareholders with a Highly Attractive Premium of 80% to Vanda's Closing Share Price on October 11, 2024
Urges Vanda Shareholders to Express Their Views on the Proposal to the Independent Directors of the Vanda Board of Directors
Cycle Pharmaceuticals Ltd ("Cycle"), a dynamic leader in developing rare disease therapies, today reaffirmed its proposal to acquire all of the issued and outstanding shares of Vanda Pharmaceuticals, Inc. ("Vanda") (NASDAQ:VNDA) for an all-cash consideration of $8.00 per Vanda share. Cycle is making its renewed proposal public for the benefit of Vanda shareholders in light of the Vanda Board's continued refusal to engage following the receipt of multiple premium proposals, Vanda's recent failure to receive FDA approval for tradipitant, following a failed Phase 3 trial that missed its primary endpoint, and the Vanda Board's recent entrenchment efforts that disenfranchise its shareholders.
Cycle's proposal represents a 80% premium to Vanda's share price at the close of business on October 11, 2024, compared to a 58% premium to Vanda share on June 5, 2024, the day prior to the public disclosure of Cycle's initial offer. Cycle's proposal represents a fully diluted equity value of $488 million.
On September 23, 2024, Cycle delivered a letter to the Board of Directors of Vanda reiterating its interest in pursuing a transaction. On September 30, 2024, Vanda responded that the Vanda Board was reviewing the proposal, noting that they needed an additional two weeks to evaluate the proposal and respond. On October 3, 2024, despite the active premium proposal from Cycle, Vanda's Board amended and restated its bylaws, which included further entrenching modifications related to both annual and special stockholder meetings and the nomination of directors, as well as the Vanda Board's ability to postpone, reschedule or cancel any such meetings and restrict stockholder business or director nominees that can be made at such meetings. Two business days later, on October 7, 2024, the Vanda Board rejected Cycle's proposal.
Cycle today issued the following statement:
"We are confident that our $8.00 per share, all-cash proposal maximizes value and would deliver immediate, compelling and certain cash value for Vanda shareholders.
Despite the significant value and highly attractive premium of our proposal, Vanda's Board and management team have refused to engage with us to discuss its merits and instead, have continued to prioritize their own interests and self-preservation with egregious actions that blatantly disenfranchise Vanda shareholders. When Vanda requested an additional two weeks to review our proposal, we gave them the extension as requested, underscoring our continued flexibility and willingness to collaborate in creating the best outcome for Vanda shareholders. Unfortunately, instead of reviewing and responding to our proposal, Vanda held a Board meeting to update its bylaws to further entrench the Board, which included the addition of multiple procedural obstacles in the way of nominating directors, unilaterally adding a whole new layer of arbitrary rules to the detriment of Vanda shareholders, all while failing to disclose the $8 per share cash offer that, in our view, clearly motivated the bylaw amendments in the first place. Most notably, these changes would apply ahead of Vanda's forthcoming annual meeting. Shortly thereafter, Vanda rejected our proposal. In short, it is clear that Vanda's Board is not acting in the best interests of shareholders.
Even more concerning is Vanda's failure to receive FDA clearance for tradipitant, whose prospects had been prominently cited in June by Vanda for its rejection of our initial offer. The rejection followed an unsuccessful Phase 3 clinical trial, where tradipitant didn't reach its primary endpoint and performed no better than a placebo.
We urge Vanda shareholders to express their views on this proposal to the independent directors of the Vanda Board of Directors. We stand ready to work immediately with Vanda's Board and management team to reach an agreement that would provide a compelling premium and certain cash value today for all Vanda shareholders."
Cycle has substantial cash on hand, and both of Cycle's financial advisors are highly confident that, following limited due diligence, committed financing will be put in place for the transaction. Cycle will obtain fully underwritten, binding commitment letters for any debt financing prior to signing a definitive merger agreement, which will not contain any financing contingency.
The full text of Cycle's proposal delivered to Vanda's Board on September 23, 2024 is below:
Vanda Pharmaceuticals Inc. 2200 Pennsylvania Avenue NW Suite 300E
Washington, DC 20037 Attn: Board of Directors
September 23, 2024
Reaffirmed Non-Binding Proposal to Acquire Vanda Pharmaceuticals Inc (NASDAQ:VNDA)
Dear Mihael Polymeropoulos - Vanda Pharmaceuticals President, Chief Executive Officer, Chairman of the Board, and Vanda Board of Directors:
Following the regulatory update and complete response letter ("CRL") received from the FDA with regards to the NDA of tradipitant, we are writing to reaffirm our continued interest in pursuing an acquisition of Vanda Pharmaceuticals Inc. ("Vanda" or the "Company"). We were disappointed in the Vanda board's rejection of our previously submitted preliminary non-binding indication of interest dated May 24, 2024 (the "May 24, 2024 Letter"), which would have yielded a very attractive outcome for Vanda shareholders. Since that time, Vanda's share price has not moved materially and with the price declining following issuance of the CRL, we reiterate that our unchanged offer is now even more attractive for shareholders. Having reviewed the implication of the CRL, which we had anticipated, we have concluded that this update does not impact our positive view of the Company and its potential value in combination with Cycle.
With the continued support of Cycle's management team, Board, and shareholders, we are pleased to re submit this letter ("Letter"), in addition to our previously submitted May 24, 2024 Letter summarizing our preliminary non-binding indication of interest (the "Indicative Offer") to acquire 100% of the issued and outstanding equity interest of Vanda (the "Proposed Transaction"), upon the terms and conditions set forth in the May 24, 2024 Letter.
We reaffirm our proposal, which remains subject to the pre-conditions set out in this Letter and the May 24, 2024 Letter, to make an offer to acquire 100% of the issued and outstanding equity interest of Vanda at USD $8.00 per share (the "Purchase Price") in cash, payable at the closing of the Proposed Transaction. We believe that our Purchase Price continues to represent a highly compelling proposition for your shareholders, representing:
- Fully diluted equity value of $488mm
- Enterprise value of $100mm
- A premium of approximately 74 per cent to the Vanda share price as at the close of business on September 20, 2024 of $4.61 per share, and an 11 per cent increase over the premium at the time of our May 24, 2024 Letter
Cycle's offer continues to represent a better outcome for i) shareholders, with an all-cash upfront offer, and ii) patients, as Cycle has an established track record of delivering medicines and individualized support to patients suffering from conditions with high unmet medical need.
This Purchase Price is based on publicly available information and our position remains the same as laid out in our May 24, 2024 Letter with respect to due diligence and access, approvals, financing and pathway to a definitive agreement.
We request that you provide a response to this Letter no later than September 30, 2024.
Very truly yours,
James Harrison
Cycle Group Holdings Limited CEO
About Cycle Pharmaceuticals
Cycle Pharmaceuticals was founded in 2012 with the sole aim of delivering drug treatments and product support to the underserved rare disease patient community, and the healthcare professionals and communities that support them.
Cycle focuses on rare metabolic, immunological, and neurological genetic conditions. Within neurological conditions, Cycle focuses on multiple sclerosis. Cycle's U.S. commercial drug products are:
- NITYR® (nitisinone) Tablets (since 2017)
- SAJAZIR™ (icatibant) Injection (since 2021)
- JAVYGTOR™ (sapropterin dihydrochloride) Tablets and Powder (since 2022)
- TASCENSO ODT® (fingolimod) (since 2023)
- TIOPRONIN delayed-release tablets (since 2024)
- ORMALVI™ (dichlorphenamide) Tablets (since 2024)
Cycle achieved $109m net sales and $40m operating profit in 2023 (according to FRS102 accounting principles). Extracts of Cycle's audited financial results for the year ending December 31, 2023 are available here.
Cycle is headquartered in Cambridge, U.K. and has offices in Boston, Massachusetts.
For more information, please visit www.cyclepharma.com and follow us on X, LinkedIn and Facebook.
Additional Information
The terms of this announcement are non-binding and intended solely to provide the basis on which Cycle is presently willing to negotiate definitive transaction documentation in respect of the proposal, and are not intended to, and should not be deemed or construed to, create or constitute any sort of binding offer, commitment, right or obligation on the part of Cycle, Vanda, Vanda's shareholders, or their respective affiliates. Any such offer, commitment, right or obligation will come into existence only by the execution and delivery of binding definitive transaction documentation by the parties setting forth the terms and conditions of such offer, right, commitment or obligation, and will be subject in each case to the satisfaction or waiver of all applicable conditions. The failure for any reason to execute and deliver the definitive transaction documentation or consummate the proposal will impose no liability on any party hereto or their respective affiliates.
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