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(Reuters) - An experimental sleep-disorder drug made by Vanda Pharmaceuticals Inc is safe and effective enough to warrant approval, a U.S. Food and Drug Administration review found, sending the company's stock up as much as 88 percent on Tuesday.
The report, posted on the FDA's website, comes two days ahead of a meeting of outside medical experts who will discuss the drug and recommend whether or not it should be approved. The FDA is not bound to follow the advice of its advisory panels but typically does so.
The drug, tasimelteon, is designed to treat Non-24-Hour Disorder, or Non-24, a circadian rhythm disorder that is most commonly found in the totally blind and can cause disrupted nighttime sleep patterns and excessive daytime sleepiness.
Non-24 is rare, affecting between 65,000 and 95,000 people, according to Vanda. It occurs almost exclusively in people who lack light, which is needed to synchronize the body's internal clock.
The FDA is due to make a decision by January 31, 2014.
In two clinical trials, Washington, D.C.-based Vanda said the drug offered improvements to patients across a variety of sleep-and-wake measures, including total sleep time, daytime nap duration and overall functioning.
The most common side effects included back pain, vivid dreams, diarrhea, dry mouth, headache, sleepiness and upper respiratory tract infections.
"The efficacy for tasimelteon in the treatment of Non-24 Hour Disorder has been demonstrated on clinical outcomes in two clinical studies," Dr. Devanand Jillapalli, the reviewer, wrote. He added that there were no major safety issues associated with the drug, and that the drug should be approved.
The review was more positive than investors had expected. The FDA review did not call for additional studies to assess different doses once the drug has been approved.
The FDA has given tasimelteon Orphan Drug status, meaning it is designed to treat diseases that affect fewer than 200,000 people. If approved, the drug would receive seven years of U.S. market exclusivity.
Tasimelteon affects melatonin, a hormone produced by the body's pineal gland that plays a key role in regulating the body's master circadian clock. When taken before bed time, the drug resets the circadian clock by replacing the normal resetting triggered by light.
Vanda's only marketed product is its schizophrenia drug Fanapt, which is commercialized in the United States and Canada by the Swiss drugmaker Novartis AG under a licensing agreement with Vanda.
In January the company said tasimelteon failed to improve symptoms in a clinical trial of patients with major depressive disorder.
Vanda's shares rose 79 percent to $12.13 in mid-morning trading on Nasdaq. They rose as high as $12.74 at the open.
Editing by Gerald E. McCormick, Alden Bentley and Jeffrey Benkoe