Vanda Pharmaceuticals opposed to shareholder's proposals, proxy battle

By Lisa Kerner

Charlotte, N.C., Feb. 23 - Vanda Pharmaceuticals Inc. said it is "disappointed" that shareholder Tang Capital Partners, LP is opting to conduct an election contest that will create "unnecessary costs and distractions," especially when the company is close to receiving a response from the Food and Drug Administration on its lead compound, iloperidone.

Tang intends to nominate two directors to stand for election at Vanda's 2009 annual meeting and plans to submit proposals to amend Vanda's bylaws and request that the board of directors take action to liquidate the company, according to a Vanda news release.

Vanda said it is nominating for election company founder and current chief executive officer Mihael H. Polymeropoulos, M.D., and current chairman of the board and co-founder Argeris N. Karabelas, Ph.D.

Tang's proposals are to amend Vanda's bylaws to require unanimous board consent to approve certain transactions and to require Vanda to hold its annual meeting on April 30 of each year.

According to Vanda, the first proposal severely restricts the company's ability to conduct business and the second proposal would not allow Vanda time to prepare and file its annual proxy statement "in a careful, thoughtful and thorough manner."

Vanda is opposed to liquidating the company, believing it is not in its shareholders' best interests.

The company said it has been working with the FDA to re-evaluate its response to Vanda's new drug application for iloperidone for the treatment of schizophrenia. Vanda submitted a response in November to the FDA's not-approvable letter.

The FDA accepted the complete response for review and has set a new target action date of May 6, Vanda said.

In response to prior criticisms by Tang, Vanda said it has "substantially reduced spending and dramatically reduced its employee headcount in the wake of the FDA letter."

Vanda said it has also been working on a reduced budget and curtailed all non-essential spending.

Tang and Vanda have met to discuss the shareholder's proposals. The Rockville, Md., biopharmaceutical company said it would be willing to meet with Tang again.

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