Cycle Pharmaceuticals Announces All-Cash Proposal to Acquire Vanda Pharmaceuticals for $8.00 Per Share

Rhea-AI Summary

Cycle Pharmaceuticals has proposed an all-cash acquisition of Vanda Pharmaceuticals at $8.00 per share, representing a 98% premium over Vanda's closing price on April 16, 2024. This proposal exceeds the latest offer from Future Pak and provides a compelling value for Vanda shareholders. Cycle assures full financing and no contingency on this offer, valuing the transaction at $466 million. The proposal aims to offer immediate and certain cash value, benefiting both shareholders and patients due to Cycle's strong U.S. presence and proven commercial strategy. Cycle is ready to negotiate and finalize the agreement swiftly.

Positive

• Cycle's offer represents a 98% premium over Vanda's closing price on April 16, 2024.
• The proposed acquisition price of $8.00 per share is a 63% premium over Vanda's closing price on May 23, 2024.
• The all-cash offer exceeds Future Pak's revised proposal cash portion.
• Cycle has substantial cash on hand and assures no financing contingency.
• Cycle's strong operational and distribution footprint in the U.S. aligns well with Vanda's commercial and clinical pipeline.
• Cycle's established track record in delivering treatments for rare diseases supports potential benefits for patients.

Negative

• Potential resistance from Vanda's Board or shareholders might delay or complicate the acquisition process.
• The offer could undervalue Vanda if its stock price improves significantly in the near term.
• Public disclosure of the proposal might lead to speculative trading, affecting stock price volatility.

Insights

Financial Analyst

Cycle Pharmaceuticals’ all-cash proposal to acquire Vanda Pharmaceuticals for $8.00 per share represents a significant premium over Vanda's recent trading prices. This is an attractive offer for Vanda shareholders, particularly given Vanda's lower trading range over the past twelve months, with shares dipping as low as $3.30 per share.

From a financial standpoint, the 98% premium over Vanda’s closing share price prior to Future Pak’s initial proposal and a 63% premium over the closing share price before Cycle’s proposal indicate a strong strategic move by Cycle to outbid competitors and secure a favorable position. The fact that Cycle has substantial cash reserves and intends to obtain fully underwritten, binding commitment letters for any required debt financing also speaks volumes about their financial health and commitment to closing this deal.

For retail investors, this could mean immediate value realization, mitigating the risks associated with holding Vanda shares long-term in a volatile market. However, there are also potential downsides, such as the strategic direction post-acquisition, which might impact Vanda's current projects or its workforce.

Pharmaceutical Industry Expert

Cycle Pharmaceuticals’ proposal to acquire Vanda Pharmaceuticals highlights a strategic alignment between the two companies. Vanda’s portfolio, focusing on therapies for rare diseases, fits well with Cycle’s expertise in the same niche. This synergy could streamline operations and expand the reach of both companies' products, benefiting patients and possibly speeding up the development of new treatments.

Cycle's established U.S. distribution footprint is a vital asset that may enhance Vanda's capabilities in delivering its therapies more efficiently. This could lead to better patient outcomes and possibly increased market penetration for Vanda’s products. For shareholders, this alignment suggests the potential for future growth and stability within the combined entity. However, it is essential to consider any integration risks and possible disruptions to ongoing projects or clinical trials.

Market Research Analyst

The market reaction to Cycle Pharmaceuticals’ acquisition proposal will be telling. The significant premiums offered—98% over the pre-Future Pak proposal share price and 63% over the recent closing price—suggest strong confidence from Cycle in Vanda's value. The disclosure of the proposal aims to put pressure on Vanda's Board by garnering support from its shareholders. This tactic is common in acquisitions to ensure a favorable outcome when initial private negotiations may have stalled or faced resistance.

For retail investors, understanding the market dynamics and shareholder sentiment will be crucial. If Vanda's shareholders rally in support of the acquisition, it could drive up share prices in anticipation of the deal's closing. Conversely, any significant opposition or regulatory hurdles could introduce uncertainty and potential volatility.

Represents an immediate, compelling cash premium of 98% over Vanda’s closing share price prior to the initial Future Pak proposal announced on April 17, 2024

Vanda shares have not traded at $8.00 per share since January 2023 and have traded as low as $3.30 per share in the past twelve months

Cycle has an extensive U.S. operational footprint and distribution footprint, a strong strategic fit for Vanda’s commercialized therapies and clinical development pipeline

Cycle and its advisors are standing by to work immediately with Vanda’s Board and management team to quickly negotiate and finalize a definitive agreement

BOSTON & CAMBRIDGE, England--(BUSINESS WIRE)-- Cycle Pharmaceuticals Ltd (“Cycle” or the “Company”), a rapidly growing pharmaceutical company focused on treatments for the underserved rare disease patient community, today confirmed that it made a proposal to the Board of Directors of Vanda Pharmaceuticals, Inc. (“Vanda”) (NASDAQ: VNDA) on May 24, 2024 to acquire 100% of Vanda’s issued and outstanding shares for a cash consideration of $8.00 per Vanda share, representing a total cash consideration of $466 million.

Cycle’s proposal represents:

- Immediate and certain cash value for all Vanda shareholders;
- A 98% premium above Vanda’s closing share price on April 16, 2024, the day prior to the public disclosure of the initial offer by Future Pak LLC of $4.05 per share;
- A 63% premium above Vanda’s closing share price on May 23, 2024, the day before Cycle submitted its proposal to the Vanda Board;
- An all-cash upfront offer exceeding the cash portion of Future Pak’s revised proposal for Vanda on May 7, 2024; and
- A 58% premium above Vanda’s closing share price on June 5, 2024.

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.

Cycle issued the following statement regarding its proposal:

“Our proposal for Vanda delivers immediate, compelling and certain cash value for Vanda shareholders with a highly attractive premium. Cycle’s proposal represents a better outcome for shareholders, who would receive all-cash upfront value exceeding that of Future Pak’s cash portion of its latest offer announced May 7, 2024. It would also benefit patients, as Cycle has a proven commercial strategy in the U.S., a strong distribution footprint and an established track record of delivering medicines and individualized support to patients suffering from conditions with high unmet medical need.

While we would have preferred to reach an agreement privately, Cycle is publicly disclosing our proposal for the benefit of Vanda shareholders and to encourage Vanda shareholders to express their views on this proposal to the independent directors of the Vanda Board of Directors.

Given our familiarity with Vanda, its brands and our extensive knowledge of the industry, we believe we can efficiently and quickly complete our diligence. Once we receive access to the required information, we believe that we can complete our due diligence within 2-3 weeks and reach a definitive agreement shortly thereafter.

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.”

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. During May 2024, Cycle launched its 6th drug product in the U.S. market. 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 the Company’s unaudited 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240606193221/en/

U.S.

Tanner Kaufman / Kyla MacLennan

FTI Consulting

tanner.kaufman@fticonsulting.com / kyla.maclennan@fticonsulting.com



U.K.

Ben Atwell / Simon Conway

FTI Consulting

ben.atwell@fticonsulting.com / simon.conway@fticonsulting.com

Source: Cycle Pharmaceuticals

FAQ

What is Cycle Pharmaceuticals' acquisition proposal for Vanda Pharmaceuticals?

Cycle Pharmaceuticals has proposed to acquire Vanda Pharmaceuticals for $8.00 per share in an all-cash transaction.

How much is Cycle Pharmaceuticals offering to pay per share for Vanda Pharmaceuticals?

Cycle Pharmaceuticals is offering $8.00 per share for Vanda Pharmaceuticals.

What premium does Cycle Pharmaceuticals' offer represent over Vanda's share price?

The offer represents a 98% premium over Vanda's closing share price on April 16, 2024.

When was the acquisition proposal from Cycle Pharmaceuticals made?

The proposal was made on May 24, 2024.

What is the total value of Cycle Pharmaceuticals' acquisition proposal for Vanda?

The total value of the proposal is $466 million.

How does Cycle Pharmaceuticals' offer compare to Future Pak's offer?

Cycle's all-cash offer exceeds the cash portion of Future Pak's latest offer.

What is the financial status of Cycle Pharmaceuticals regarding the Vanda acquisition?

Cycle Pharmaceuticals has substantial cash on hand and assures no financing contingency for the acquisition.

What benefits does Cycle Pharmaceuticals' proposal offer to Vanda's shareholders?

Cycle's proposal offers immediate, compelling, and certain cash value with a significant premium over recent share prices.

How will the acquisition of Vanda benefit patients according to Cycle Pharmaceuticals?

Cycle's strong commercial strategy and distribution footprint in the U.S. will enhance the availability and support for Vanda's therapies.

What steps does Cycle Pharmaceuticals plan to take following the proposal?

Cycle plans to negotiate and finalize a definitive agreement with Vanda's Board and management team quickly.