According to the Complaint, Vanda is a biopharmaceutical company focused on the development and commercialization of products for the treatment of central nervous system disorders. The Company’s product portfolio includes tasimelteon, a compound for the treatment of circadian rhythm sleep disorders (CRSD), which is currently in clinical development for “Non-24,” Fanapt, a compound for the treatment of schizophrenia, the oral formulation of which is currently being marketed and sold in the U.S. by Novartis Pharma AG (Novartis), and VLY-686, a small
molecule neurokinin-1 receptor (NK-1R) antagonist.
Non-24 is a serious, rare circadian rhythm disorder that affects a majority of totally blind individuals who lack light perception and cannot “entrain” (reset) their master body clock to the 24-hour day. Currently there is no approved treatment for Non-24. Because totally blind individuals lack perception of the light and dark periods of the day, these individuals frequently lack entrainment, and are unable to maintain a “normal” circadian rhythm, whereby they sleep during the night and wake during the day. Therefore, entrainment, the matching of an individual’s circadian rhythm to the daytime and nighttime periods of a day, is the primary goal of Non-24 therapy.
On January 23, 2013, the Company represented to investors that, the “results [of Phase III data] clearly demonstrate that tasimelteon can entrain the circadian clock and is able to align melatonin and cortisol rhythms to the 24-hour social day.”
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the results of the clinical trial for tasimelteon. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company was forced to unilaterally change the primary endpoint in the middle of the Phase III studies as it was already in possession of data suggesting that the original primary endpoint was not going to be met; (2) the Company eliminated nighttime total
sleep as the primary endpoint in its studies as there was no discernible difference in efficacy and safety in nighttime total sleep between those patients deemed to have Non-24 and those patients with a normal circadian rhythm; (3) the replacement primary endpoint installed to assess tasimelteon’s efficacy and safety was created ex ante by the Company and has never been used before in sleep-drug clinical trials, nor was it endorsed by the FDA; and (4) as a result of the foregoing, the Company’s statements were materially false and misleading at all relevant times.
On June 19, 2013, The Street published an article raising doubts about the quality and efficacy of Vanda’s clinical trial procedure and test data. Among other issues, the article noted multiple changes in the primary endpoint over the course of the trials, including a change just one month before study results were published to a new primary endpoint that has allegedly never been used before in sleep-drug clinical trials, nor was it endorsed by the FDA. The article also states that Vanda was forced to cut patient enrollment in the clinical trials in half because an insufficient number of totally blind patients with Non-24 could not be identified, and that ultimately less than 5% of the patients enrolled in the trials suffered from Non-24 according to the “textbook definition” of the disease. On this news, Vanda shares declined $2.41 per share or more than 22%, to close at $8.51 per share on June 19, 2013.
This case was voluntarily dismissed on February 3, 2014.