Vanda Pharmaceuticals Announces Successful Arbitration with Novartis AG
Saturday, January, 17, 2015
Vanda Pharmaceuticals Inc. announced a settlement via arbitration in the Fanapt licensing dispute between itself and Novartis AG. The settlement includes dismissing the arbitration and releasing each other from other claims stemming from the dispute without any prejudice or other requirements.
The settlement requires Novartis to hand over all rights in the U.S. and Canada to the drug Fanapt, an antipsychotic medication, to Vanda. Novartis has also agreed to invest $25 million in Vanda at a specific price per share, and to grant Vanda an exclusive global license to its other successful drug, AQW051. Fanapt is currently used widely in the U.S., Israel, and Mexico as a treatment for schizophrenia and is protected by two patents that expire in 2016 and 2027 respectively.
The two pharmaceutical giants have been locked in an expensive dispute over the licensing terms for the drug, which, although widely used has suffered from criticism that it is not very effective. Some studies have linked use of Fanapt to violent episodes. Still, it remains one of the most-prescribed drugs in the world and thus very profitable.
The announcement was a tonic for Vanda’s stocks, which initially closed slightly down but rebounded during after-hours trading to be up about 20% on the news of the new licensing deal. The arbitration decision is seen as an overall positive for both companies as it frees up cash and resources that would have been tied up in litigation and further arbitration proceedings for the foreseeable future in the absence of this deal.